Beryl's Iced Tea currently rents a bottling machine for

$55,000

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

$150,000.

This machine will require

$20,000

per year in ongoing maintenance expenses.

b. Purchase a new, more advanced machine for

$260,000.

This machine will require

$20,000

per year in ongoing maintenance expenses and will lower bottling costs by

$13,000

per year. Also,

$36,000

will be spent up front to train the new operators of the machine.

Suppose the appropriate discount rate is

9%

per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the cost of the rental machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a 10-year life with a negligible salvage value. The marginal corporate tax rate is

40%.

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.

Plz with details.Thx

Questo Beryl's led Tea currently rents being machine for $85,000 per year, including al maintenance expenses. It is considering purchasing machine sted and is comparing two options Purchase the machine is currenty rating for $150.000. This machine will require $20,000 per year in ongoing maintenance expenses b. Purchase a new, more advanced machine for $200,000. This machine will require $20,000 per year in ongoing maintenance expenses and will lower boting costs by $13,000 per year. Ao M. De foto operators of the machine Suppose the appropriate discount rates 9% per you and the machine is purchased today. Maintenance and boring cow we paid at the end of each year, as is the cost of the mental race. Assume that the machine wie der via the straight-ine method over seven years and that they have a 10-year with a negliole salvage value. The marginal corporate tax rate is 10% Should Beryfsloed Te continue to rent purchase its current machine, or purchase the avanced machine? To make the decision of the NPV of the FCF Mood with each The NPV of renting the current machine is $) Round to the nearest dollar)