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first answer is correct. need part B Beryi's loed Toa currently rents a bothing machine for $50,000 per year, incluxing all maintenance expenses, It is
first answer is correct. need part B
Beryi's loed Toa currently rents a bothing machine for \$50,000 per year, incluxing all maintenance expenses, It is corisidering purchasing a machine insteat and is comparing two options: a. Purchase the machine it is currently renting for $160,000. This machine will rocuire $20.000 per year in ongoing mainfenance expenset. b. Putchase a new, more advanced machine for $260,000. This machene will require $16,000 per year in ongeing mairtenance expenses and wit lower beit ryg costs by $14,000 per year. Also, $35,000 wili be spent up ficont to train the new operators of the muchine. Suppose the appropriate discount rate is 7% pet year and the machine is purchased today. Maintenance and botting coets are paid at the end of each year, at is the cost of the rental machine. Assume also that the machines will be depreciated via the straight-line mothod over seven years and that they have a 10 -year life with a nogligible salvage value. The marginal corporate tax rate is 35% Should Beryl's Iced Tea continue to rent, purchase as current machine, or purchase the advanced machine? To make this decision, calcutute the NPY of the FCF associated with oach altemative. The NPV of renting the current machine is ? (Round to the nearest dollar) Step by Step Solution
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