Beryl's Iced Tea currently rents a bottling machine for $52,000 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 $21000 per year in ongoing maintenance expenses

b. Purchasing a new, more advaned machine for $265000. This machine will require $20000 per year in ongoing maintenance expenses and will lower bottling costs by $13000 per year. Also, $36000 will be spent up from training the new operators of the machine

Suppose the appropriate discount rate is 8% per year and the machine is purchased today. Maintenance and bottling 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 life with a negligible savage value. The marginal corporate tax rate is 30%.

Should Beryl's Iced Tea continue to rent, purchas its current machine, or purchased the advanced machine? To make this decision, calculate the NPV of the FCF associated with each alternative

The NPV of renting the current machine is $...................

The NPV of purchasing the current machine is $....................

The NPV of purchasing the advanced machine is $..........................