Find:

1. NPV of renting current machine

2. NPN of purchasing current machine

3. NPV of renting new machine

4. NPV of purchasing new machine

Beryl's Iced Tea currently rents a bottling machine for $50 000 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 $150 000. This machine will require $24 000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $250 000. This machine will require $20 000 per year in ongoing maintenance expenses and will lower bottling costs by $14 000 per year. Also, $37 000 will be spent up front training the new operators of the machine. Suppose he appropriate discount rate s 8% per year and he machine is purchased Oday Maintenance and bo ng costs are paid at een o each year, ass he rem o the machine 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% sume a o at the 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