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Big Rock Brewery cutently rents a botting machine for $52.000 per year including all maintenance expenses. The company is considering purchasing a machine instead and

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Big Rock Brewery cutently rents a botting machine for $52.000 per year including all maintenance expenses. The company is considering purchasing a machine instead and is comparing two alternate options option is to purchase the machine it is currently renting for $165,000, which will require $25,000 per year in ongoing maintenance expenses or option b, which is to purchase a new, more advanced machine for $265.000, which will require $15,000 per year in ongoing maintenance expenses and will lower bottling costs by $14.000 per you Also $35,000 will be spent upfront in training the new operators of the machine Suppose the appropriato discount rate is 9% per your and the machine is purchased loday Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine Assume also that the machines are subject to a CCA rate of 30% and there will be a negligiblo salvage value in 10 years time (the end of each machine's wo) The marginal corporate tax rate is 30% Should Big Rock Brewery continue to rent purchase is current machine, or purchase the advanced machine? To make this decision, calculate the NPV of the FCF associated with each alternative (Note the NPV will be negative, and represents the PV of the costs of the machine in each CO) The NPV (rent the machine is (Round to the nearest dollar)

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