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 replacement fleet, the company is considering two alternatives 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 $21,000 each. If this alternative is accepted, the following costs will be incurred on the feet as a whole: Annual cost of servicing, taxes, and 1.canning $ 3,700 Repairs, first year $ 1,600 Repairs, second year $ 4,100 Repairs, third year $ 6,100 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 $56.000 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 pay all the taxes. Riteway would be required to make a $13,500 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 Riteway Ad Agency's required rate of return is 15% Click here to view Exhibit 128.1 and Exhibit:128:2, to determine the appropriate discount factor(s) using tobles. Required: 1. What is the not 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? EXTRIT 120-1 Present Value of $1,1(1+r) 59 SIE 0680 6990 ERVO SOLO SELO 5 9 LOSO ANTOLICO OSSO SETO OZOSZE OWO I SIVO 690 OLSO Periods 45 SS 79 89 99 10 115 125 139 145 159 175 18' 195 2015 225 25 344 25 1 0.962 0.9520943 0.935 0.926 0917 0.9090901 0.8930.885 0.877 0.870 08620855027084008330.8.26 0.820 0813 0.806 0.800 2 0.925 0.907 0.875 0708420826 0812 0.797 0.78 0.769 0.756 0.7439 0.731 0.7180.7060694 3 0483 0/672 0661 0.650 06:00 DARROIO 5-6 0840DSI60.7940.772 0.750 0.731 0.7120693 0,675 065 0641 06240609 0.593 0.579 0.5660551059705240312 4 URSS D20 0.792 0.76 0.636 0613059205720552 0534 031604990482 0.467045 0.437 04230410 08220.784 0.74710,71306810X5006216_5990567 0.543 0519. 0.497 0.4760456 DA370:41 0:40220386 03702 10:155 0.3410325 0.790 0.746 0.705 0.6660.6300 59605640335 0.4800456 0:4320-410 0.390 0370015203350319 0.0 0.29 0.275 0.162 7 0.700.711 0665 0.622 OS 1054703042 04520425 0.400 0.376 0354 03330.31402960279 02630249023500210 8 0.731 06770627058205000 502 04670434 0406 0376 035 0327 0.105 0.255 0.266 0.2490330218 02000 1910.179.10.168 9 0.703 0.6450.592 0.5440.500 0.460 04240391 0.361030 0.30 0.284 0.23 0.243 0.22 0.2090.1990.10 0.167 0.155 0.16 0.134 10 06760614 0.5550 508 0463 0.42230386035210.322 0.29502200.247 0.227 0.20 0.19 0.1760162 0.149 0.17 0.126 0.116 0.107 11 0.650 0 5850527047504290388 0.261102370215 0.1950.178 0.162 0.145 0.1230112010009 ODS 12 0625 0.587 0.4970444 0.397 0.356 0319 02860257 0231 02000.1870.10 O 0137 0.1240112 0.1020092 0.03 0.0762 0.069 13 0.001 050 0.25% 02290 2040 20.163 0.145 0.100.116 0 1040093 0.04 0.075 006 0001 0.055 14 0.527 Oss 0442 0388 0.340 0.299 026 02020205 0.181 0.100.141 0.125.11 0.000 007 OW0063 0.0SS0049 0.044 15 035504 0.412 0.36203130270:2090 2090,133 0.1600,10001230. 108 ODOO 00740065 0057 ODST OM 00-400035 16 0534 0458 0.1940390 29203520.218 0.18 0.16 0.141 0.1210.1070093OORI 007100620050047 000200360032002 17 0513043607110.317 0270 0.231 10.1980.1700.146 0.125 0.105 0093 DONOODOO 0082 0.045 0.019000030 0.025 0.025 IN 0491 0 416 050 2060 0212 0 INO 0.151010111 0005 0081 10.0600059 051 00-14 003 00320028 0.0040021 0.018 19 0475 0.39603010277023200164 0.13 0.116 0.098 0.00070 0.000 0.051 20 0 149 0124 0.104008200730061 0051 0.043 0.037 0.031 100000220 019 0.01600140012 21 04390159 0.294 0242 0.19 0.1640.13 0.112009300726001300700310.0260022 ODR00150010011 0.00% 22 0.422 0.12 02780226 011010012 0.101 OO 006 005600460018 0.032002600220000150011001100 2007 23 0406 0.3260262 0.211 0.170 0.13 0.1120091 0074 0.060 0049 ODIO 0000220022ODIN 0015 OD1200100000000000 24 0247 0.1970.158 0126 0.1020.0200000043 ODIS 0.02 0.0230019 00150013 ODIO 0.008 0.007 0.005 25 033750295 02018401460 1160092 0.074009900173 000 002400200016001 010 0000 0.000000 0.001 26 0101 0 281 0220 0.17 0.15 0.10600N400660053001239200020017010 0000 000 0.00000050004 0.000 27 0.17 02 0.202 0.161 0.750 0.076 0.000 0.017 0017 0020 0021 ODIS 0.01400 0000007 0.0050 000 000 0001 0002 28 0.1310255 0.1960.15090.116 0000009 0054 004200330 020000100012 OOO ON 0006 00000000002 0.002 29 0120241OS0110.107 OFK20063 ODI 00370029002200170014001100006 ODOS 0000000000002 10 0.21 0.1740.131 070990075057 ODL0010026002000151 002 0.009 0.00 0.004 00000000002 0.002 0.001 40 0.200.142000006700460032 0.022001S TODI 0005 0.005 0004 DDON MOOLLOO 0000OOOOOOOO 100 RLTO SIZORSZO ZICO LLEOSTO OICO OSEO OCTO 650 SOLO COXTO LEXTO 000000000000OOTOL1000LXZOLOVOZOO EXHTRIT 128-2 Present Value of an Annuity of 51 in Arrears, 1/1-4/(1+y)) SIC 23 OLTE 4529 4 ZENE OTEE Periods 49 59 69 75 10 11 129 139 145 155 169 175 185 195 224 234 345 1 096209520943 09159.926 0917 0.909090105930.885 087708700X62085508420.840083008260820 OXI30 60.00 2 1886 1859 180 1809 1.3 1.7991736 1713 160 1668 1 647 1626 1805 1.585156615471378 1509 1.492 147414571.460 2775272025732.62435772331245724442402 2361 222 223 2246 22102.1742140 2100 2.0742042 2011 1981 1.952 4 334634653387312332003.1703.102 3037 2974291422552.79827422690 263925892560 24942/448 2044 2.62 5 42124.100 3.993 3,890 3.791 369636055173115232743.1993.127 BOSN 22091 29262.86420 27252659 6 5242 507649174.767 46234486 4355423141113998 3.389 3.784 365 3.589 3498410 633 245.167 3.09230202.951 7 6002 3.7863582 SER52065013 4.8684.712145644423 4.288 4.1604039 3.9223.8123.70680535083416332732423.161 6.7336.46362103971 5.747 5535 5335 5.1464965 4.7994639 4487434442074078 3954 3.7263619 SIRI 1421 9 74357.100 68026515624759955.759 155375526 5.13249464772 4.607 4451 403 4,16340313205 3.78667335663.463 10 IN 1772273607.0246.710 6418 6.1453.889300342652165.0194.833 4.659 449443394.192405920 3.7993682 3571 11 8.760 81306 78877499 17.13916205 649562075938 365754585 2345029 48364656 4.48641274.1774035 3.902 3.796 3656 12 9.365 886 8.384 79437.5367.161 6814 64926.1945918560 5.4215.197 4 988 4.793 4.6114419427514.1273953851 3.725 13 9.9869.3948.8538.358 7.904 7487171036.750 6.4246.1225842338115342 5.11884910 421545334.3624203 4053 1912 3.750 14 105639999295245382447673676,9826,6286,3026002 5.7245468 3.2295.008 4.50246114432 42654.1083962 3824 15 11.1181039712 9.10 6462 6.14258675 575 53345.0924576467544894015415014001 3859 16 11/52 10.838 110.10692442 8X5183137.82423796.974 66040265395415665 54055.162 493 470 433643574119 4003 3.882 17 1216611274104779.76 9.122334430221734921206.729637360475529 547513922 49077545704.39142194059 1910 18 12.659 1960 103281009993728.756.20102750684064676,125 583554192735033 4:12 4.605 4.419 3.98 19 13.136 12.05 11.15 10.336 9.604 895083652839766691265506.1983877343316 3.0704843654442 426 097 3942 20 13.590 1246211470 10.5049.818 19.1208314129617469702566236.2595.929831535.101 4.870 46574460 4279411013954 21 14.029 12.82111.764101610017929286198 0757.562 7.1026687 6312 397856653836415127439146754470 4.292412196 22 14.451 0.16120121061 10 2019.442327231767445717067019605665410514914694.60 4.488 4103 41303970 23 14.857LVANO 12100 11.272 10.37151326677187230679263006052235732 5.76749259203904311 4.1373976 24 15 247 1279912.550 1469 10.52919.707 BON 7.784 2283 633564446.073574635451318249207134307141403981 25 15.622 14094127311654 10/675982390778422737330673660609257005467 5.1954942143143214147 1.985 26 159814375 001 26101090299161 84836207266685.78520495624520424051 27 16.30 14601211110210.9951002792321100TAN6.9356516611329492 52154.71453441211541 16.66 14 13/40912137110511011094307802 7984741 4.157 3.99 29 16.950 15141011227150010802274706 63516.16653035103249759704531 43 4159 MO 17292154721765124091105 1027494270532400700 0503293312079643101191 40 1993 A9 E502119250X29779976147.1056626323525524990207 4.16 1189 161 2909 1908 6SS8 ONOTECT 09 MORE NE 1969 SICASSOLES COSSOINSESORIS
