Sheffield has been selling auto parts to the general public for over 70 years. It has built a reputation for outstanding customer service. becoming the third largest auto parts retailer in the Southwest. Hoping to expand its sales to other regions, managers have decided to establish an online retail presence. Dan Jennings, CIO of Sheffield, is charged with the task of evaluating how the company should implement this strategy. One of the first things Dan needs to determine is how to acquire the network servers the company will need. He knows the vendor he wants to use, but he is uncertain whether he should buy or lease the servers. If he buys the servers for $3,934,500, Sheffield will incur annual maintenance costs of $45,750 over their five-year life. If he leases the servers for five years, Sheffield will make lease payments of $1,098,000 in each of the first three years and of $915,000 in each of the last two years. Annual maintenance costs under the lease will be $73,200. Click here to view the factor table. (a1) Calculate the present value of the purchase and lease option assuming a 11% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answers to O decimal place, e.g. 58,971. If the amount is negative then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).)) Purchase option Lease Option $ $ Present value APPENDIX 9.1 Present value of $1 received in n periods. Periods 4% 5% 6% 7% 8% 13% 1 0.9615 0.9524 0.9434 2 0.9246 3 0.8890 0.9346 0.9259 0.9070 0.8900 0.8734 0.8573 0.8638 0.8396 0.8163 0.7938 4 0.8548 0.8227 0.7921 0.7629 0.7350 5 0.8219 0.7835 0.7473 0.7130 0.6806 9% 10% 11% 12% 14% 16% 18% 20% 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7432 0.7182 0.6944 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6407 0.6086 0.5787 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5523 0.5158 0.4823 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4761 0.4371 0.4019 6 0.7903 0.7462 0.7050 7 0.7599 8 0.7307 9 0.7026 10 0.6756 0.6663 0.6302 0.5963 0.5645 0.5346 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.5066 0.4803 0.4556 0.4104 0.3704 0.3349 0.4523 0.4251 0.3996 0.3538 0.3139 0.2791 0.4039 0.3762 0.3506 0.3050 0.2660 0.2326 0.3606 0.3329 0.3075 0.2630 0.2255 0.1938 0.3220 0.2946 0.2697 0.2267 0.1911 0.1615 11 12 13 14 15 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 0.1954 0.1619 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1685 0.1372 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1452 0.1163 0.0935 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1252 0.0985 0.0779 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1079 0.0835 0.0649 0.1346 0.1122 20 67228 16 17 18 19 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1883 0.1696 0.1528 0.1631 0.1415 0.1229 0.0930 0.0708 0.0541 0.1456 0.1252 0.1078 0.0802 0.0600 0.0451 0.1300 0.1108 0.0946 0.0691 0.0508 0.0376 0.1377 0.1161 0.0981 0.0829 0.0596 0.0431 0.0313 0.1240 0.1037 0.0868 0.0728 0.0514 0.0365 0.0261 PV= $1 (1+i)" APPENDIX 9.2 Present value of an annuity of $1 per period. 1 2 3 4 in 5 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6052 1.5656 1.5278 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4868 2.4437 2.4018 2.3612 2.3216 2.2459 2.1743 2.1065 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1698 3.1024 3.0373 2.9745 2.9137 2.7982 2.6901 2.5887 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7907 3.6959 3.6048 3.5172 3.4331 3.2743 3.1272 2.9906 20% 68889 7 10 5.2421 5.0757 4.9173 6.0021 5.7864 5.5824 6.7327 6.4632 6.2098 7.4353 7.1078 6.8017 8.1109 7.7217 7.3601 4.7665 4.6229 4.4859 4.3553 5.3893 5.2064 5.0330 4.8684 5.9713 5.7466 5.5348 5.3349 6.5152 6.2469 5.9952 5.7590 7.0236 6.7101 6.4177 6.1446 4.2305 4.1114 4.7122 5.1461 5.5370 5.8892 3.9975 3.8887 3.6847 3.4976 3.3255 4.5638 4.4226 4.2883 4.0386 3.8115 3.6046 4.9676 4.7988 4.6389 4.3436 4.0776 3.8372 5.3282 5.1317 4.9464 4.6065 4.3030 4.0310 5.6502 5.4262 5.2161 4.8332 4.4941 4.1925 #2232 11 12 13 14 15 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.2065 5.9377 5.6869 5.4527 5.0286 4.6560 6.4924 6.1944 5.9176 5.6603 5.1971 4.7932 6.7499 6.4235 6.1218 5.8424 5.3423 4.9095 4.5327 6.9819 6.6282 6.3025 6.0021 5.4675 5.0081 4.6106 7.1909 6.8109 6.4624 6.1422 5.5755 5.0916 4.6755 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.6685 5.1624 4.7296 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 7.1196 6.7291 6.3729 5.7487 5.2223 4.7746 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497 6.8399 6.4674 5.8178 5.2732 4.8122 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 7.3658 6.9380 6.5504 5.8775 5.3162 4.8435 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 5.9288 5.3527 4.8696 16 17 18 19 20 1 $1- (1+i)" PVA= i 4.3271 4.4392