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Beryl's lced Tea currently rents a bottling machine for $52,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is

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Beryl's lced 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 $155,000. This machine will require $24,000 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 $14,000 per year. Also, $36,000 will be spent up front to train the new operators of the machine. Suppose the approp ate discourt rate is 9% per year and he machine is purchased today. Maintenance and bottlig costs are paid at the end o each year, asis e costo the rental machine. Assu me also hat he mad ines wil be deprec a ed 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 asscciated with each altemative The NPV of renting the current machine ound to the nearest dolar.) The NPV of purchasing the current machine is (Round to the nearest dollar.) The NPV of purchasing the advanced machine is Round to the nearest dollar.) Which of the following is the best choice? (Select the best choice below.) O A. Rent the current machine. O B. Purchase the current machine. O C. Purchase the advanced machine

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