Question: Beryis loed Tea currently rents a botting machine for $ 5 1 , 0 0 0 per yoar, including all maintenance expenses. It is considering
Beryis loed Tea currently rents a botting machine for $ per yoar, including all maintenance expenses. It is considering purchasing a machine insiead, and is oomparing two options:
a Purchase the machine it is currently reanting for $ This machine wit require $ per year in ongoing maintonance experset.
b Purchase a new, more advanced machine for $ This machine will require $ per year in ongoing maintenance axpenses and will lower bottling costs by $ per year. Aso, $ will be spent upfront training the new operators of the machine.
Suppose the appropriate discount rate is per year and the machine is purchased today. Mairlenance and boetling costs are paid at the ond of asch year, as is the rental of the machine. Assume also that the machines wilr be depreclated va the straightiline method over years and that they have a year Ife with a negligble salvage value. The copporate tax rate is Should Beryfs lced Tea continue to rent, purchase its current machine, or purchase the advanced machine?
Notec: To make this decision, calculate the NPV of the FCF associated with each alternative. The NPV will be negathe, and represents the PV of the costs of the machine in each case.
The NPV of renting the machine is $ Round to the nearest dolar. Enter a negative NPV as a negative value.
The NPV of Purchasing the current machine is $
The NPV of purchasing the advanced machine is : Round to the nearest dollar. Enter a negative NPV as a negative value.
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