Please ignore the values under column Year, and Tell the correct values for each box.

Problem 10-11 Performing an NPV Analysis of a Lease or Buy Decision (LO2 - CC8) The 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 fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives as follows: 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 $20,400 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, year 1 Repairs, year 2 Repairs, year 3 $7,050 2.100 4,100 6,025 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 $64,000 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 $34,000 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. 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. Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Required: (Ignore income taxes.) 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 factor(s) to 3 decimal places. Round other intermediate calculations and final answers to the nearest whole dollar amounts.) Amount of 18% Cash Factor Flows Present Value of Cash Flows Item Year(s) 00:26:34 Now V book 1-3 V Purchase of fleet Initial payment- cars Annual cost of servicing. taxes and licensing Repairs - Year 1 Repairs - Year 2 Repairs Year 3 Resale value of the fleet 1 2 3 3 Presentative cash $ Now Lease payments Return of deposit 13 Present value of cash outflows EXHIBIT 10-1 Present Value of $1 FR P= (1 + r)" Period 45 SSE 35 10% 125 14% 16% 18% 205 225 245 26% 28% 30% 40% 1 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.362 0.847 0.833 0.820 0.506 0.794 0.751 0.769 0.714 2 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 0.672 0.650 0.630 0.610 0.592 0.510 0.859 0.564 0.840 0.794 0.751 0.712 0.675 0.6+1 0.609 0.579 0.551 0.524 0.500 0.477 0.455 0.367 + 0.693 0.636 0.592 0.552 0.5 16 0.+52 0.51 0.423 0.397 0.373 0.350 0.260 0.621 0.567 0.519 0.476 0.437 0.402 0.269 0.196 5 6 0.855 0.823 0.792 0.735 0.822 0.784 0.747 0.651 0.790 0.746 0.705 0.630 0.760 0.711 0.665 0.583 0.56+ 0.507 0.456 0.410 0.370 0.335 0.207 0.133 7 0.513 0.452 0.400 0.354 0.31+ 0.279 0.159 0.095 09 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 0.123 0.068 0.370 0.341 0.315 0.291 0.303 0.275 0.250 0.227 0.249 0.222 0.198 0.178 0.204 0.179 0.157 0.139 0.167 0.144 0.125 0.108 0.137 0.116 0.099 0.085 0.112 0.094 0.079 0.066 0.092 0.076 0.062 0.052 9 0.703 0.645 0.592 0.500 0.424 0.361 0.305 0.263 0.225 0.194 0.094 0.045 0.676 0.614 0.555 0.463 0.356 0.322 0.270 0.227 0.191 0.162 0.073 0.035 10 1 0.650 0.555 0.527 0.429 0.350 0.257 0.237 0.195 0.162 0.135 0.056 0.025 12 0.625 0.553 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 0.043 0.015 13 0.601 0.530 0.145 0.116 0.093 0.075 0.061 0.050 0.040 0.033 0.013 14 0.573 0.505 0.125 0.099 0.078 0.062 0.049 0.039 0.032 0.025 0.009 15 0.355 0.461 0.105 0.05+ 0.065 0.051 0.040 0.031 0.025 0.020 0.006 0.469 0.368 0.290 0.229 0.182 0.142 0.340 0.263 0.205 0.160 0.417 0.315 0.239 0.163 0.140 0.394 0.292 0.215 0.163 0.123 0.371 0.270 0.198 0.146 0.10S 0.350 0.250 0.150 0.130 0.095 16 0.534 0.458 0.093 0.071 0.054 0.042 0.032 0.025 0.019 0.015 0.005 0.012 0.003 17 0.513 0.436 0.000 0.060 0.045 0.034 0.026 0.020 0.015 IS 0.494 0.416 0.069 0.051 0.03S 0.025 0.021 0.016 0.012 0.009 0.002 19 0.475 0.396 0.331 0.232 0.164 0.116 0.083 0.060 0.043 0.031 0.009 0.007 0.002 0.023 0.019 0.017 0.012 0.014 0.010 20 0.456 0.377 0.312 0.215 0.149 0.104 0.051 0.037 0.026 0.007 0.005 0.001 0.073 0.064 21 0.439 0.359 0.294 0.199 0.135 0.093 0.044 0.031 0.022 0.015 0.011 0.005 0.006 0.004 0.001 ST 0.422 0.342 0.278 0.15+ 0.123 0.083 0.056 0.035 0.026 0.018 0.013 0.009 0.006 0.004 0.003 0.001 23 0.406 0.320 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 0.002 24 0.390 0.310 0.247 0.158 0.102 0.066 0.043 0.028 0.019 0.013 0.005 0.006 0.004 0.003 25 0.092 0.059 0.038 0.024 0.016 0.010 0.007 0.005 0.003 0.002 0.001 0.054 0.000 0.002 0.001 0.375 0.295 0.233 0.146 0.361 0.251 0.220 0.135 0.347 0.265 0.207 0.125 0.333 0.255 0.196 0.116 27 0.076 0.005 0.004 0.002 0.003 0.002 0.002 0.002 0.001 0.001 0.053 0.033 0.021 0.014 0.009 0.047 0.029 0.018 0.01 0.007 0.042 0.026 0.016 0.010 0.006 0.037 0.022 0.014 0.005 0.005 0.069 0.004 0.001 0.001 $ 8 8 8 8 0.321 0.243 0.135 0.107 0.063 0.003 0.002 0.001 0.001 0.305 0.231 0.174 0.099 0.057 0.033 0.020 0.012 0.007 0.004 0.003 0.002 0.001 0.001 0.208 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 EXHIBIT 10-2 Present Value of an Annuity of $1 1 P. 12 + Period 4% 5% 6% S% 10% 22% 24% 26% 28% 30% 405 1 0.962 0.952 0.943 0.926 0.909 0.820 0.506 0.794 0.781 0.769 0.714 2 1.SS6 1.359 1.833 1.783 1.736 1.492 1.457 1.424 1.392 1.361 1.224 3 2.775 2.723 2.673 2.577 2.487 12% 14% 16% 18% 20% 0.893 0.877 0.862 0.847 0.833 1.690 1.647 1.605 1.566 1.528 2.402 2.322 2.246 2.174 2.106 3.037 2914 2.795 2.690 2.589 3.605 3.433 3.274 3.127 2.991 4.111 3.889 3.655 3.498 3.326 2.042 1.981 1.516 1.569 1.923 1.565 2.320 2.241 4 3.630 3.546 3.465 3.312 3.170 2.494 2.404 2.166 1.579 5 4.432 4.330 4.212 3.993 3.791 2.864 2.745 2.635 2.532 2.436 2.035 6 5.242 5.076 4917 4.623 7.355 3.167 3.020 2.535 2.759 2.643 2.168 7 6.002 5.756 5.582 5.206 4.56S 4.564 4.255 4.039 3.812 3.605 3.416 3.242 3.053 2.937 2.502 2.263 8 6.733 6.463 6.210 5.747 5.335 4.965 4.639 4.344 4.078 3.537 3.619 3.421 3.241 3.076 2.925 2.331 9 7.435 7.10S 6.S02 6.247 5.759 5.328 4.946 4,607 4.303 4.031 3.756 3.566 3.366 3.184 3.019 2.379 10 S.111 7.722 7.360 6.710 6.145 5.650 5.216 4.333 4.494 4.192 3.923 3.662 3.465 3.269 3.092 2.414 Il 8.760 5.306 7.587 7.139 6.495 5.938 4.656 4.327 4.035 3.776 3.544 3.335 3.147 2.435 5.453 5.029 5.660 5.197 12 9.335 S.363 8.354 7.536 6.814 6.194 4.793 4.439 4.127 3.551 3.606 3.387 3.190 2.456 13 9.986 9.394 S.553 7.904 7.103 6.424 5.5+2 5.342 4.910 4.533 4.203 3.912 3.656 3.427 3.223 2.469 14 10.563 9.999 9.295 8.244 7.367 6.628 6.002 5.465 5.00S 4.611 4.265 3.962 3.695 3.459 3.249 2.477 15 11.11S 10.350 9.712 8.559 7.606 6.511 6.142 5.575 5.092 4.675 4.315 4.001 3.726 3.453 3.268 2.464 16 11.652 10.838 10.106 8.551 7.524 6.974 6.265 5.669 5.162 4.730 4.357 4.033 3.751 3.503 3.283 2.489 17 12.166 11 274 10.477 9.122 S.022 7.120 6.373 5.749 5.222 4.775 4.391 4.059 3.771 3.515 3.295 2.492 IS 12.659 11.690 10.528 9.372 3.201 7.250 6.467 5.815 5.273 4.312 4.419 4.050 3.786 3.529 3.304 2.494 19 13.134 12.055 11.155 9.604 S.365 7.366 6.550 5.877 5.316 4.344 4.442 4.097 3.799 3.539 3.311 2.196 20 13.590 12.462 11.470 9.518 8.514 7.469 6.623 5.929 5.353 4.370 4.+60 4.110 3.305 3.546 3.316 2.497 21 14.029 12.821 11.76+ 10.017 5.619 7.562 6.687 5.973 5.354 4.391 4.476 4.121 3.816 3.551 22 14.451 13.163 12.042 10.201 3.320 2.495 3.323 2.495 3.325 2.499 23 14.557 13.459 12.303 10.371 24 15.247 13.799 12.550 10.529 3.327 2.499 25 15.622 14.094 12.783 10.675 4.909 4.455 +.130 3.522 3.556 4.925 4.499 4.137 3.527 3.559 4.937 4.507 +.143 3.531 3.562 4.945 +514 +.147 3.534 3.567 4.956 4520 4.151 3.537 3.566 4.964 4.525 +.154 3.539 3.567 4.970 4.528 4.157 3.840 3.565 3.329 2.199 26 15.983 14.375 13.003 10.SIO 3.330 3.772 7.645 6.743 6.011 5.410 S.SS3 7.718 6.792 6.044 5.432 8.955 7.754 6.535 6.073 5.451 9.077 7.543 6.873 6.097 5.467 9.161 7.896 6.906 6.115 5.450 9.237 7.943 6.935 6.136 5.492 9.307 7.984 6.961 6.152 5.502 9.370 S.022 6.953 6.166 5.510 9.427 5.055 7.003 6.177 5.517 9.779 5.244 7.105 6.234 5.545 2.500 27 16.330 14.643 13.211 10.935 3.331 2.500 2S 16.663 14.39S 13.406 11.051 3.331 2.500 29 16.934 15.1+1 13.591 11.158 4.975 4.531 4.159 3.841 3.569 3.332 2.500 30 17.292 15.373 13.765 11.255 4.979 4.534 4.160 3.842 3.569 3.332 2.500 40 19.793 17.159 15.046 11.923 4.997 4.544 4.166 3.846 3.571 3.333 2.500