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please help! I have gotten this wrong three times now and I only have one more shot. the first number for the npv of the
please help! I have gotten this wrong three times now and I only have one more shot. the first number for the npv of the purchase option is correct, but I cannot figure out the npv of the lease option?
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 wi'll be sold very shortly To provide a replacement fleet, the company is considering two alternatives Purchase at ternative: 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 $16,800 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 3,200 1,180 s 3,600 5 5,600 de At the end of three years, the fieet could be sold for one-half of the original purchase price. The company can lease the cars under a three-year lease contract. The lease cost would be $51,008 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 p Riteway would be required to make a S11,000 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 leese contract Lease al ternative: Riteway Ad Agency's required rate of return is 14%. here to view Exhibit 13B-1 and Exhibit 13E:2 to determine the eppropriate discount factoris) using tables. Prey 1 of Next PeturRed to the owner at the end of the lease contract. Riteway Ad Agency's required rate of return is 14% Click here to view Exhibit 138-1 and Exhibit 13B 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? 3 Answer is complete but not entirely correct 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? (Round your final answer to a whole dollar amount. Enter negative amount with a minus sign.) s (120,940) Required 2 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 14%. Click here to view Exbibit 138-1 and Exhibit 1382, to determine the appropriate discount factorts) using tables. Required: 1. What is the net present value of the cash flows associated with the purchase alh 2. What is the net present value of the cash flows associated with the lease alternative? 3. Which alternative should the company accept? 3 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2Required 3 What is the net present value of the cash flows associated with the lease alternative? (Round your f dollar amount. Enter negative amount with a minus sign.) nal answer to a whole s (172,946) Required! Required 3> Prev 1of 1 Next Riteway Ad Agency's required rate of return is 14%. Click here to view Exhibit 13B-1 and Exhibit 138-2, 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? 3 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Which alternative should the company accept? Purchase alternativ alternative Required 2Step by Step Solution
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