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Big Rock Brrwery currertit rents a boting machine lor 352,000 per year, inctuding at maintenance expenses. The compary is considering purchasing a machine inatead and

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Big Rock Brrwery currertit rents a boting machine lor 352,000 per year, inctuding at maintenance expenses. The compary is considering purchasing a machine inatead and is comparng two opticns. a. Purchase the machine it is currerliy renting for $155.000. This machine wit require $20,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for 5250,000 . This machine wal roquire $19,000 per year in ongoing maintenance expenses and will lower botiling costs by 513,000 per year Aso, 535 , 000 will be spert uptront in treining the new operators of the machine. Suppose the appropriate discount rate is b\% per year and the machine is purchased today Mantenance and boling costs are paid at the end of each yeat, as is the rental of the machine. Assums also Rock Erbwery contenue to rent, purchase is curent machine; of purchase the advanced machine? To make this decaion, calculate the NPV of the FCF associatod with each alternative. (Note the NPV wil be negative, and represents the pV of the costs of the machine in each case) The Nov (vent the machine) is 1 (Round to the nearest colar) The NPV (ourchase the ourert machine) is 1 (Hound to the nearest dollar) The NPV (purchase the advanced machine) is 1 (rhound is the nearns dolied Which of the following is the best choice? A. Purchate the current machine B. Prethase the atvanced machine. c. Fient the current elachine

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