​Beryl's Iced Tea currently rents a bottling machine for $54,000per​ year, including all maintenance expenses. It is consideringpurchasing a machine​ instead, and is comparing two​ options:

A. Purchase the machine it is currently renting for $150,000.This machine will require $22,000 per year in ongoing maintenanceexpenses.

B. Purchase a​ new, more advanced machine for $265,000. Thismachine will require $15,000 per year in ongoing maintenanceexpenses and will lower bottling costs by $11,000 per year.​Also,$39,000 will be spent upfront on training the new operators ofthe machine.

Suppose the appropriate discount rate is 8% per year and themachine is purchased today. Maintenance and bottling costs are paidat the end of each​ year, as is the rental of the machine. Assumealso that the machines will be depreciated via the​ straight-linemethod over seven years and that they have a​ ten-year life withnegligible salvage value. The marginal corporate tax rate is35%.

Should​ Beryl's Iced Tea continue to​ rent, purchase itscurrent​ machine, or purchase the advanced​ machine? To make this​decision, calculate the NPV of the FCF associated with eachalternative.​ (Note: the NPV will be​ negative, and represents thePV of the costs of the machine in each​ case.)

The NPV of renting the machine is $______?

The NPV of Option A is $_______?

The NPV of Option B is $________?

Which of the following is the best choice?

A.Purchase the Advanced Machine

B.Rent the current Machine

C.Purchase the Current Machine

D.Rent the Advanced Machine