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Bery'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

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Bery'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 is currently tenting for S165.000 This machine will require $20.000 per year in ongoing maintenance expenses b. Purchase a now more advanced machine for $250.000 This machine will reqare $10.000 per your in ongoing maintenance expenses and will lower botting costs try $15,000 per year Ako, $35.000 will be spent up front to train the new operators of the machine Suppose the appropriate discount ite is 0% per year and the machine is purchased today Maintenance and botting costs are paid at the end of each your, as is the cost of the rental machine. Assume so that the machines will be depreciated via the straight method over seven years and that they have a 10 year with a negligible salvage Value The marginal corporate tax rate is 30% Should Beryis Iced Tea continue to rent purchase is current machine, or purchase the advanced machine? To make this decision, calculate the NPV of the FCF assocated with each alternative

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