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EXHIBIT 10-2 Present Value of an Annuity of $1 1 - ( 1 + 7)" Period 4% 6%% 8% 10% 12% 14% 16% 18%% 20% 22% 24% 26% 28% 30% 40% 0.962 0.952 0.943 0.926 0.909 0.093 0.877 0.862 0.847 0.833 0.320 0.306 0.794 0.781 0.769 0.714 2 1.836 1.359 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.520 1.492 1.457 1.424 1.392 1.361 1.224 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.246 2.174 2.106 2 042 1.901 1.923 1.060 1816 1.589 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.509 2.494 2.404 2.320 2.241 2.166 1.879 5 4.452 4.330 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 2.864 2.745 2.635 2.532 2.436 2.035 6 5.242 5.076 4.917 4.623 4.355 4.111 3.309 3.635 3.493 3.326 3.167 3.020 2.085 2.759 2.643 2.168 6.002 5.756 5.582 5.206 4.863 4.564 4.203 4.039 3.012 3.605 3.416 3.242 3.083 2.937 2.802 2.263 6.733 6.463 6.210 5.747 5.335 4.960 4.639 4.344 4.078 3.837 3.619 3.421 3.076 2.925 2.331 7.435 7.100 6.302 6.247 5.759 5.320 4.946 4.607 4.303 4.031 3.736 3.566 3.366 3.134 3.019 2.379 10 7.722 7.360 6.710 5.650 5.216 4.833 4.494 4.192 3.923 3.662 3.269 3.092 2.414 II 8.760 3.306 7.807 7.139 6.495 5.938 5.453 5.029 4.656 4.327 4.035 3.776 3.544 3.335 3.147 2.430 12 9 385 3.063 8.304 7.536 6.014 6.194 5.660 5.197 4.793 4.439 4127 3.851 3.606 3.387 3.190 2.456 13 9 936 9.394 8.353 7.904 7.103 5.842 5.342 4.910 4.533 4.203 3.912 3.656 3.427 3.223 2.468 14 10.563 295 3.244 7.367 6.628 6.002 5.463 5.003 4.611 4.265 3 3.962 3.459 3.249 2.477 15 11.110 10.380 9.712 8.559 7.606 6.011 6.142 5.575 5.092 4.675 4.315 4.001 3.726 3.483 3.260 2.484 16 11.652 10.030 10.106 3.851 7.824 6.974 6.265 5.669 5.162 4.730 4.357 7 4.033 3.751 3.503 3.203 2.489 17 12.166 11.274 10.477 9.122 8.022 7.120 6.373 5.749 5.222 4.775 4.391 4.059 3.771 3.518 3.295 2.492 IS 12.659 11.690 10.320 9.372 8.201 7.250 6.467 5.010 5.273 4.812 4.419 4.080 3.786 3.529 3.304 2.494 19 13.134 12.085 11.158 9.604 8.365 7.366 6.550 5.077 5.316 4.344 4.442 4.097 3.799 3.539 3.311 2.496 20 13.590 12.462 11.470 9.810 8.514 7.469 6.623 5.929 5.353 4.070 4.460 4.110 3.803 3.546 3.316 2.497 21 14.029 12.821 11.764 10.017 8.649 7.562 6.637 5.973 5.304 4.091 4.476 4.121 3.316 3.551 3.320 2.498 22 14.451 13.163 12.042 10.201 8.772 7.645 6.743 6.011 5.410 4.909 4.408 4.130 3.822 3.556 3.323 2.498 23 14.857 13.439 12.303 10.371 8.803 7.710 6.792 6.044 5.432 4.925 4.499 4.137 3.027 3.559 3.325 2.499 24 15.247 13.799 12.550 10.529 8.985 7.784 6.835 6.073 5.451 4.937 4.507 4.143 3.031 3.562 3.327 2.499 25 15.622 14 094 12.783 10.675 9.077 7.843 6.873 6.097 5.467 4.940 4.514 4147 3.034 3.564 3.329 2.499 26 15.983 14.375 13.003 10.310 9.161 7.096 6.906 6.118 5.480 4.956 4.520 4.151 3.037 3.566 3.330 2.500 27 16.330 14.643 13.211 10.935 9.237 7.943 6.935 6.136 5.492 4.964 4.525 3.039 3.567 3.331 2.500 16.663 14.893 13.406 11.051 9.307 7.984 6.961 6.152 5.502 4.970 4.520 4.157 3.340 3.560 3.331 2.500 16.984 15.141 13.591 11.158 9.370 8.022 6.933 6.166 5.510 4.975 4.531 4.159 3.841 3.569 3.332 2.500 30 17.292 15.373 13.765 11.250 9.427 3.055 7.003 6.177 5.517 4.979 4.534 4.160 3.342 3.569 3.332 2.500 40 19.793 17.159 15.046 11.925 9.779 8.244 7.105 6.234 5.540 4.997 4.544 4.166 3.846 3.571 3.333 2.500EXHIBIT 10-1 Present Value of $1 P = (1 +7) " Period 5% 6% 14% 16% 18% 20% 2256 24% 26% 23% 30% 40%% 0.962 0.952 0.943 0.926 0.909 0.093 0.877 0.362 0.847 0.833 0.620 0.506 0.794 0.751 0.769 0.714 2 0.925 0.907 0.390 0.857 0.526 0.797 0.769 0.743 0.716 0.694 0.672 0.650 0.630 0.610 0.592 0.510 0.859 0.864 0.840 0.794 4 0.751 0.712 0.675 0.641 0.609 0.579 0.551 0.524 0.500 0.477 0.455 0.364 0.855 0.323 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.462 0.451 0.423 0.397 0.373 0.350 0.26 5 0.622 0.784 0.747 0.651 0.621 0.567 0.519 0.476 0 0.437 0.402 0.370 0.341 0.315 0.291 0.269 0.186 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.303 0.275 0.250 0.227 0.207 0.133 0.760 0.711 0.665 0.583 0.513 0.4520 0.354 0.314 0.279 0.249 0.222 0.198 0.175 0.159 0.095 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 0.204 0.179 0.157 0.139 0.123 0.065 0.703 0.645 0.592 0.500 0.424 0.361 0.306 0.263 0.225 0.194 0.167 0.144 0.125 0.105 0.094 0.045 0.676 0.614 0.558 0.463 0.356 0.322 0.270 0.227 0.191 0.162 0.137 0.116 0.099 0.085 0.073 0.035 0.650 0.565 0.527 0.429 0.350 0.257 0.237 0.195 0.162 0.135 0.112 0.094 0.079 0.066 0.056 0.025 12 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.165 0.137 0.112 0.092 0.076 0.062 0.043 0.015 13 0.601 0.530 0.469 0.365 0.290 0.229 0.162 0.145 0.116 0.093 0.075 0.061 0.050 0.040 0.033 0.013 14 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.075 0.062 0.049 0.039 0.032 0.025 0.009 15 0.555 0.461 0.417 0.315 0.239 0.163 0.140 0.106 0.084 0.065 5 0.051 0.040 0.031 0.025 0.020 0.006 16 0.534 0.456 0.394 0.292 2 0.216 0.163 0.123 0.093 0.071 0.054 0.042 0.032 0.025 0.019 0.015 0.005 17 0.513 0.436 0.371 0.270 0.195 0.146 0.106 0.050 0.060 0.045 0.034 0.026 0 0.015 0.012 0.003 16 0.494 0.416 0.350 0.250 0.150 0.130 0.095 0.069 0.051 0.035 0.026 0.021 0.016 0.012 0.009 0.002 19 0.475 0.396 0.331 0.232 0.164 0.116 0.063 0.060 0 0.043 0.031 0.023 3 0.017 0.012 0.009 0.007 0.002 20 0.456 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.026 0.019 0.014 0.010 0.007 0.005 0.001 21 0.439 0.359 0.294 0.199 0.135 0.093 0.064 0.044 0 0.031 0.022 0.015 0.011 0.005 0.006 0.004 0.001 22 2 0.342 0.276 0.164 0.123 0.063 0.056 0.035 0.026 0.016 0.013 0.009 0.006 0.003 0.001 23 0.406 0.326 0.262 0.170 0.112 0.074 0.049 0.033 0.022 0.015 0.010 0.007 0.005 0.003 0.002 24 0.390 0.310 0.247 0.156 0.102 2 0.066 0.043 0.026 0.019 0.013 0.006 0.006 0.004 0.003 0.002 25 0.375 0.295 0.233 0.146 0.092 0.059 0 0.035 0.024 0.016 0.010 0.007 0.005 0.003 0.001 26 0.361 0.261 0.220 0.135 0.053 0.033 0.021 0.014 0.009 0.006 0.004 0.002 0.002 0.001 27 0.347 0.265 0.207 0.125 0.076 0.047 0.029 0.016 0.011 0.007 0.005 0.003 0.002 0.001 0.001 0.333 0.255 0.196 0.116 0.069 0.042 0.026 0.016 0.010 0.006 0.004 0.002 0.002 0.001 0.001 0.321 0.243 0.165 0.107 0.063 0.037 0.022 0.014 0.006 0.005 0.003 0.002 0.001 0.001 0.306 0.231 0.174 0 0.099 0.057 0.033 0.020 0 0.012 0.007 0.004 0.003 0.002 0.001 0.001 0.206 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001The Wrongway 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 eet of cars is three years old and will be sold very shortly. To provide a replacement eet, the company is considering two alternatives as follows: Purchase Afternati've. 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 $18,800 each. If this alternative is accepted, the following costs will be incurred on the eet as a whole: Annual cost of servicing, taxes, and . . $ 7,600 licensing Repairs, yea r1 2,220 Repairs, yea r 2 5,050 Repairs, year 3 8,075 At the end ofthree years, the eet could be sold for onehalf of the original purchase price. Lease Alternative. The company can lease the cars under a three-year lease contract. The lease cost would be $59,500 per year (with 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. Wrongway would be required to make a $19,750 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 Wrongway's required rate of return is 18%. Click here to View Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor[s) using tables. 1. Use the total cost approach to determine the present value of the cash flows associated with each alternative. {Negative amounts should be indicated with a minus sign. Round discount factorls) to 3 decimal places. Round other intermediate calculations and final answers to the nearest whole dollar amounts.) Present Amount of 18% Value of Item Year{s) Cash Flows Factor Cash Flows Purchase of fleet: Initial pavment cars Now v $ 488000 1$ 488000 Annual post of servICIng, 1_3 v 7600 2174' I 16522| taxes and licensmg Repairs Year 1 1 v -2220 0.847 Repairs Year 2 2 v -5050 0.718 3626 Repairs Year 3 3 v 8075 0.609 4918 Resale value of the fleet 3 v 94000 0.609| | 57246| Present value of cash $ 457700 outflows Lease of cars: Initial deposit Now v $_19750 -$-19750 Lease payments 13 v _59500 2.17:5r _129353 Return of deposit 3 v 1-9750 0-.609 1-20|2|8 Present value of cash $ 437075 outflows