The Riteway Ad Agency provides cars for its sales staff. Its 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 atternative: The conpany can purchase the cars and sell them in three years. Ten cars would be purchased for $14, eee each. If this alternative is chosen, the entire fleet will incur the following costs: 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 costing \$73, eeo per year (the first payment due at the end of Year 1). As part of this lease agreement, the owner would provide all servicing and repairs, license the cars, and pay the taxes. Riteway would nake a $16, seo security deposit at the beginning of the lease period, which would be refunded 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 purchase alternative's net present value. 2. What is the lease alternative's net present value. 3. Which alternative should the company accept? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. What is the purchase alternative's net present value. Note: Enter negative amount with a minus sign. Round your intermediate calculabions and finat answer to the nearest whole dollar amount. doliar amount. The Riteway Ad Agency provides cars for its sales staft its 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 alternative: The conpany can purchase the cars and sell then in three years. Ten cars would be purchased for $14,000 each. If this alternative is chosen, the entire fleet will incur the following costs: At the end of three years, the fleet could be sold for one-half of the original purchase price. Lease atternative: The company can tease the cars under a three-year lease contract costing $73,000 per year (the first payment due at the end of Year 1). As part of this lease agreenent, the owner would provide all servicing and repairs, license the cars, and pay the taxes. Riteway would make a $16,500 security deposit at the beginning of the lease period, which would be refunded 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 purchase alternative's net present value. 2. What is the lease alternative's net present value. 3. Which alternative should the company accept? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. What is the lease alternative's net present value. Note: Enter negative amount with a minus sion. Round your intermed late calculations and final answer to the nearest whole doliar amount
