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Beryls Iced Tea currently rents a botting machine for 550.000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is

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Beryls Iced Tea currently rents a botting machine for 550.000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options A Purchase the machine it is currently renting for $165,000. This machine will require 524.000 per year in ongoing maintenance expenses B. Purchase a new, more advanced machine for $250,000. This machine will require $15.000 per year in ongoing maintenance expenses and will lower bottling costs by $13.000 per year Also $35.000 will be spent uptront training the new operators of the machine Suppose the appropriate discount rate is 7% per year and the machine is purchased today Maintenance and boiling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a ten-year fe with a negligible salvage value. The marginal corporate tax rate is 30% Should Beryl's Iced Tea continue to rent purchase its current machine or purchase the advanced machine? To make this decision, calculate the NPV of the FCF associated with each alternative. (Note: the NPV will be negative, and represents the PV of the cost of the machine in each CRSO) The NPV of renting the machine is (Round to the nearest dollar Enter a negative NPV as a negative value The NPV of option Ais (Round to the nearest dollar. Enter a negative NPV as a negative value) The NPV of option is (Round to the nearest dollar Enter a negative NPV as a negative value) Which of the following is the best choice? (Select the best choice below) O A Purchase the current machine BB Rent the current machine OC Rent the advanced machine OD Purchase the advanced machine Click to select your answers)

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