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: Purchase alternatives The company can parchase the cars, as in the past, and aell the cars after thren years of use. Ten cara W111 be needed, ubich can be purchased at a diacounted price of $14,000 each. If thin alternative is accepted, the following costa will be ineurred on the fleet as a wholer At the end of three years, the fleet could be sold for one-haif of the original purchase price. Lease alternativez The coepany can lease the ears under a three-year leane contract. The lease cost would be $73,000 per year (the firat payment due at the end of Year 1). As part of this lease cost, the owner would provide al1 servieing and repairn, license the cars, and pay all the taxes. Riteway would be required to make a $16,500 neeurity deposit at the beginning of the leane period, which would be refunded when the cars were returned to the ovner at the end of the lease contract. Riteway Ad Agency's required rate of return is 17%. Click here to view Exhibit 148-1 and Exhibit 148-2, 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. 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.) Complete this question by entering your answers in the tabs below. What is the net present value of the cash flows associated with the lease alternative? (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.) Complete this question by entering your answers in the tabs below. Which alternative should the company accept