Question: plz answer fast Big Rock Brewery currently ronts a botting machine for $54,000 per year, including all maintenance expenses. The company is considering purchasing a
Big Rock Brewery currently ronts a botting machine for $54,000 per year, including all maintenance expenses. The company is considering purchasing a machine instead and is comparing two alternate options: option a is to purchase the machine it is currently renting for $165,000, which will require $22,000 per year in ongoing maintenance expenses, or option b, which is to purchase a new, more advanced machine for $250,000, which will require $19,000 per year in ongoing maintenance expenses and will lowor bottling costs by $11,000 per yeat. Also, $40,000 wil be spent upfront in training the new operators of the machine. Supposo the appropriate discount rate is 8% per year and the machine is purchased today. Maintenance and botting costs are poid at the end of each year, as is the rental of the machine. Assume also that the machines are subject to a CCA rate of 25% and there will be a negligible salvage value in 10 years' time (the end of each machino's life). The marginal corporate tax rate is 30%. Should Big Rock Brewory 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 allernative. (Note: the NPV will be negative, and represents the PV of the costs of the machine in each case.) The NPV (rent the machine) is 5 (Round to the nearest dollaf.) The NPV (purchase the current machine) is : (Round to the nearest doflac.) The NPV (purchase the advanced machine) is ? (Round to the nearest dollar,)
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