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Beryl's Iced Tea currently rents a bottling machine for $ 5 3 comma 0 0 0 per year, including all maintenance expenses. It is considering

Beryl's Iced Tea currently rents a bottling machine for $ 53 comma 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 $ 160 comma 000. This machine will require $ 24 comma 000 per year in ongoing maintenance expenses.
b. Purchase a new, more advanced machine for $ 260 comma 000. This machine will require $ 20 comma 000 per year in ongoing maintenance expenses and will lower bottling costs by $ 11 comma 000 per year. Also, $ 39 comma 000 will be spent up front training the new operators of the machine.
Suppose the appropriate discount rate is 7% 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 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.
Question content area bottom
Part 1
The NPV of renting the current machine is $
enter your response here. (Round to the nearest dollar.)
Part 2
The NPV of purchasing the current machine is $
enter your response here. (Round to the nearest dollar.)
Part 3
The NPV of purchasing the advanced machine is $
enter your response here. (Round to the nearest dollar.)
Part 4
Which of the following is the best choice? (Select the best choice below.)
A.
Purchase the advanced machine.
B.
Purchase the current machine.
C.
Rent the current machine.

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