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l Beryl's loed Tea currenyrents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is

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Beryl's loed Tea currenyrents a bottling machine for $53,000 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 $165,000. This machine wll require $21,000 per year In ongoing malntenance expenses B. Purchase a new, more advanced machine for $265,000. This machine will require $20,000 per year in ongoing maintenance expenses and will lower botting costs by $12,000 per year. Also, $39,000 will be spent upfront training the new operators of the machine. Suppose the appropriate discount rate is 9 per year and the machline is purchased today. Malntenance and bottling costs are pald at the end of each year, as is the rental ot the machine. Assume also that the machines will be depreclated via the stra ght ne method over seven ears and that they have a ten ear lite with a negligible salvage value. The marginal corporate tax rate is 35% Should Be 's Ice Tea continue rent, purchase its current machine, or purchase the advanced machine? To make this decision, calculate the NPV of the FCF asscciated with each alternative. (Note: the NPV will be negative, and represents the PV of the costs of the machine in each case.) The NPV of renling the machine is $ 34450 (Round to the nearest dollar. Enter a negative NPV as a negative valuc.)

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