How do it solve this? what processes and equations?

Problem 14-25 (Algo) Net Present Value Analysis of a Lease or Buy Decision [LO14-2] 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 sold 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: dies Purchase alternative: The company can purchase the cars, as in the past, and sell the cars after three years of use. Ten cars will be needed, which can be purchased at a discounted price of $18,000 each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole: Annual cost of servicing, taxes, and licensing Repairs, first year Repairs, second year Repairs, third year $ 5,100 $ 3,000 $ 5,500 $ 7,500 At the end of three years, the fleet could be sold for one-half of the original purchase price, Lease alternative: The company can lease the cars under a three-year lease contract. The lease cost would be $70,000 per year (the first payment due at the end of Year 1). As part of this lease cost, the owner would provide all servicing and repairs, license the cars, and pay all the taxes. Riteway would be required to make a $15,000 security deposit at the beginning of the lease period, which would be refunded when the cars were returned to the owner at the end of the lease contract. beginning of the lease 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 20%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the net present value of the cash flows associated with the purchase alternative? (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.) Net present value de of the cash flows associated with the lease alternative? 3. Which alternative should the company accept? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the net present value of the cash flows associated with the lease alternative? (Enter negative amount wit sign. Round your final answer to the nearest whole dollar amount.) Net present value Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tab 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 which alternative should the company accept? Purchase alternative Lease alternative (Required 2 EXHIBIT 14B-2 Present Value of an Annuity of $1 In Arrears; ! Periods 1 2 3 6 T ag 10 7161 496 596 6% TH BE 10% 1196 1226 13% 1598 1696 1786 0.962 0.952 18% 19% 20% 21% 0.943 0.935 2295 23% 2496 25% 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 10847 1.886 0.840 0.833 1.859 0.826 0.820 0.813 1833 1.809 0.806 0.800 1.783 1759 1.736 1.713 1.690 1.626 1605 1.585 1.566 2.775 1.547 1.528 1.509 2.723 1.492 1,474 2,673 2.624 1457 1.440 2.577 2.531 2.487 2.444 2.402- 2.361 2002 2.283 2.246 2.210 2.174 2140 2.106 2.074 2.042 2.011 3.630 3.546 1.981 3.465 3.387 1.952 3.312 3.240 3.170 3.102 3.037 2 974 2914 2.855 2.798 2.743 2.690 2.639 2.589 2540 2.494 2448 2404 2362 4.452 CCP 11212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3:27418 3 199 3.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 5.242 5.076 4917 ATG7 4.623 4.486 4.355 4.231 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 3.092 3.020 2951 5002 5.786 5158 51389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4160 039 3.9 3.812 3706 3.605 3.508 3.416 3.327 3.242 3.161 CITICE 6.463 162101 SS 5747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4 344 LATE 3.954 3.837 3.7.26 3.619 3518 3.421 3.329 7.435 108 BBOR 6.515 1627 5905 5.759 5.537 5.328 5.132 4.946 4772 4.607 4451 1100 4.163 II 3.673 35663.463 11 122 TOGO ITION 610 6.418 6.145 5.889 5.650 5.426 5.216 5.019 4.833 41659 40543923799 3.6823.571 BTS E30 1987 49 7.189 6.806 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4836 4656 4.4864 41827 4.177 ACE BREE 8/2014 TE 6.814 6.492 6.194 5.918 5.660 5.421.5.197 4 988 4.796 49 39 | 418 3.725 UPS 100 ACE 7.904 7.487 2010 6.750 6.424 6.122 5.842 5.583 5.342 5.119 4.9104,715 2:53164.362 4.20 3.912 HOSITE 9295 EPAN 8.242 ITBC 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.2295.00 880214.60 TOBO 1900 OSED 8.06 7,506 7.191 6.611 6.462 6.142 5.847 5.575 EUE 150 4.3 1575 | 4.489 4.315 BE HIRE 8.85 8.313 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5.405 5.162 4.983 14.730 20160 270 922 18.54 8.022 7.549 7.120 6.729 6.373 6.047 5749 EATE 5.57539 12,659890 0820 TOTO EB 8.750 1920 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.B 510334812 4419 HEIRAIN 0 11160 3000 0.950 81365 7.839 7.366 6.938 6.550 6.199 5.877 5 58 190 0 3 590 2402 INFO HOBA 929 9,514 7.963 7.469 7.025 6.623 6.259 5.929 5623 5.35 0 1 SC 22 750 0806 1007 9292 8.649 8.075 7.562 7.102 6.687 6.312 SITE 5.665 | 5684 5.27 2015 1292 4121 3.963 12092 ID 100 WAT 9442 SITE 8.175 LG 7.170 16 6.659 100 5.6969 4130 4302 390 LEE M.2012 13.489 DCT 9.883 8.2 66 7318 91580 7.230 HP10 STA 4.137 IAE208 6.792 6.399 6.641 4.499 4.31 5.43 05.167 3.976 IC 19 8 995 8.348 TOTA 7781 650 7. 15 26,835 6.634 GECE 0 13 2.507 318 5 SET 4143 9.623 TADA 9.07 8!40127 43 NODIG 6.83 TS 120780 1644 60 5.755 51622141094 4.948 5.40 5.1955 4.514 4.721 4.323 4.142 CG 2040 1900 OPE 1826 59 500 61118 1 11328 5.4805 206 4 956 4.728 4.520 151993 3.988 4.151 EEE B92 4.734 GE 6.98 6.89 51215 4.524 4.352 4.154 3.990 9232 HSPEED 640 TOCA 100) 110 5.840 11759 6.526.152 TAE 4528 4.335 4.157 5.502 5.223 4.970 3.992 11.05 16 663 190 BED 100B) 18 13 105 580 16.510 6.5 6.551 151229 475 4743 4.337 4531 4.159 5602 13.09 50 59 13.59 112 5.235 4.979 4746 5.829 5.512 4.534 41839 4.160 3.995 171292 SET 18.768 8694 19.055 12.109 250 H0427 47601 5.508 5/258 4997 145 602 623 5.37 41347 4165 3.999 1535 ROBE 17159 10 257 13. B1906 15.046 16 447 10 22 20 3005 20 126 14.964 27 CO 40 EXHIBIT 148-1 Present Value of St; to Periods 1 NM 15 6regu 7 8 11 112 118 0.52 1496 590 696 796 890 993 100% 12 1395 1498 1586 1696 1785 18% 1996 0.962 0.952 0.943 2098 21% 22% 2325 24% 25% 0.935 0.926 0.917 0.909 0.901 0.893 0.885 01877 0.870 0.862 0.855 0.847 0.840 0.836 0.826 0.820 0.813 0.925 0.806 0.800 01907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0783 0769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0.672 0.661 0.650 0.640 0.889 0.864 0.840 0.816 0.794 0.772 0.7751 0.731 0.712 0.6930.675 0658 0.641 0624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.855 0.823 0792 0.763 0.735 0708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.523 0.519 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 = 0.455.0.432.0 410 0.390 0.370 0.352 0.335 0.319 0.303 0.289 0.275 0.262 0.760 01711 0.665 0.623 0.583 0.547 01513 0.482 02:52 0-1425 0 40001276 01354 0.333 01314 0.296 0.279 0.263 0.249 0.235 0.222 0210 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.3270 0.305 0.285 0.265 0.249 0.233 0.218 0204 0.191 0.179 0.168 0.703 0.645 0.5920544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 01225 0 209-10194 0167 0.155 0.34 0.876 0.614 0.558 0.508 0.463 0.422 0.386 0,352 0.322 0.295 0.270 0.247 0.-227-0.208 0.191 04176 10162 0.137 0.126 0107 0.65001585 0.527 0.475 0.429 0.388 0:350 0.317 0.287 0.261 0.237 0.215 0 195 0178 0.162 0148 11135 0923012 009 0.086 0.625 01557 0.497 01444 01397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.137 10.124 0.1020.092 093 0.0760.069 0.601 0.530 0969 0415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0163 0 145 0130 3:16 a jou 0.002 0.03400068 000055 0.673 0.506042 01388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 04125 0.111 6.099.000 TOIO 78 005550431 0917 1362 DOS 0.275 0.239 0.209 0.133 0.160 0.140 0.123 0.108 10.095 30.05.1907- 06004469.89 08189 0.2920.252 0.218 0.188 0.163 0.141 0.123 0107 0.093 0.00 361 DL062 031 0408 KOMEN 0812 020 0.198 0.170 0.146 0125 0.108 01 093 01080 0.009.god 051 0.035 1039 03000026 0.023 941 005002960.250 0.212 0.180 0.153 0.130 0.0950081 61069 2500 19.00 01270 01202 10,194 0.138 0.116 0.098 0.083 0010 0.1060 O 0.03 DOSTOSO 0456 OFT 012 0258 0.215 0.178 0 149 0.124 0.104 0.087 0.073 00510AS 07 : 20:43 03690294 01242 0/1991 0,164 0.135 0.112 0.093 0.077 0.06101053 01044, 0.067 0.031 0.02 022 42 TO20 0.226 One 0.150 0.123 0.101 0.083 0.0G80055048 DORO 002 0010 0.0221 Dass 016 200211 1070 0.139 01112 0.091 0.060 0.0492 0.6:10 0133 DD 2.0180.00 0.00 0.007 0.006 ODOBNO NEO247 192 10/15 0.116 0102 0.0820.066 0.053 0.035 026 50 19 UUS 2013 0.008 0.0070006 0.005 HAS 10295 284 CG 016 01092 0.074 0059 0.047 10.038 0,031 0102 1:15 ME 10010 10.361 0.28022072 0.165 0.084 107066 0.053 0.042 0.0330 ORO ELCO 210.0 171 0024 01011 0.009 0.007 0.006 0.005 0004 0.003 TOATE 292 0.00TL 20 10.09 0075 0442 G037 UCZTIENDO 23 lo 18 0101 0.0090.007 0.006 0.005 0.00 0.003 0.002 02:33 0 2600196 50 116 09052069 0.054 0.042 30.026 01010 2016 DER DOND 0008 0.006 0.005 0.004 0.003 0.002 0.002 ONS HOTI 0.049 037 TOOL 0017 2014 GOSH 1006 0.005 0.0040.003 0.002 0.002 0.002 BI OB 09096 10.067 010 za 105 012 10:0:19 210 007 0005 0.000 0.003 0003 0.002 0.002 0.001 SON 2013 22 LOAD 0.2014 10:42 10.001 2008 000040.003 0.002 0.001 0.001 Q 000 0000 0000 0000 0000 16 21 ol 19 20 21 26 22 29 80