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The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then soid the cars after three years of use. The company's present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives: Purchase alternative. The company can purchase the cars, an in the past, and sell the cars after three years of une. Ten cars will be needed, which can be purchased at a discounted price of $29,000 each. It this alternative to accepted the following coate will be incurred on the fleet as a wholet Annual cost of revien, taxes, and licensing $4,500 Repairs, first year 2.400 Ropains, second year 4.900 Repairs, third year 6.900 At the end of three years, the fleet could be sold for one-half of the original purchase price. Lease alternativer The company can leave the cars under a three-year lease contract. The lease cost would be $64.000 per year the trat payment due at the end of Year 1). As part of this lone coat, the owner would provide all servicing and repairs, license the carn, and pay all the taxe. Riteway would be required to make a $12.000 Becurity deposit at the beginning of the late period, which would be refunded when the cars were returned to the owner at the end of the lease contract. Riteway Ad Agency's required rate of return is 17% Click here to view Exhiba 148-1 and Exhibit 148 2. to determine the appropriate discount factors) using tables, Required: 1. What is the net present value of the cash flows associated with the purchase alternative? 2. What is the net present value of the cash flows associated with the lease alternative? 3. Which alternative should the company accept? The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then soid the cars after three years of use. The company's present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives: Purchase alternative. The company can purchase the cars, an in the past, and sell the cars after three years of une. Ten cars will be needed, which can be purchased at a discounted price of $29,000 each. It this alternative to accepted the following coate will be incurred on the fleet as a wholet Annual cost of revien, taxes, and licensing $4,500 Repairs, first year 2.400 Ropains, second year 4.900 Repairs, third year 6.900 At the end of three years, the fleet could be sold for one-half of the original purchase price. Lease alternativer The company can leave the cars under a three-year lease contract. The lease cost would be $64.000 per year the trat payment due at the end of Year 1). As part of this lone coat, the owner would provide all servicing and repairs, license the carn, and pay all the taxe. Riteway would be required to make a $12.000 Becurity deposit at the beginning of the late period, which would be refunded when the cars were returned to the owner at the end of the lease contract. Riteway Ad Agency's required rate of return is 17% Click here to view Exhiba 148-1 and Exhibit 148 2. to determine the appropriate discount factors) using tables, Required: 1. What is the net present value of the cash flows associated with the purchase alternative? 2. What is the net present value of the cash flows associated with the lease alternative? 3. Which alternative should the company accept

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