Answer Happy

Beryrs Iced Tea currently cents a botting machine for $51 000 per yout, 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 $155 000. This machine will require 523 000 per year in ongoing maintenance expenses b. Purchase a new more advanced machine for $256.000 This machine will require 517 000 per year in ongoing maintenance axpenses and will lower botting costs by 513 000 per year. Also, $40 000 will be spent up front training the new operators of the machine Suppose the appropriate discount rate is 9% per year and the machine is purchased today. Maintenance and botting costs are paid at the end of each year, as is the rental of the machine Assume alss that the machines will be depreciated in the straight-line method over seven years and that they have a ten-year ite with a negligible salvage value. The marginal corporate tax rate is 40% Should Bery's Iced Tea continue to rent, purchase is current machine, or purchase the advanced machine? To make this decision calculato the NPV of the FCF associated with each alternative GID The NPV of renting the current machine is $ The NPV of purchasing the current machine in Fround to the nearest dolar) (Round to the nearest stor) (Round to the catrost dotar) The NPV of purchasing the advanced machine is s Which of the following is the best choice? (Select the best choice below) OA Purchase the advanced machine OB. Rent the current machine