The Riteway Ad Agency provides cars for its sales staft. 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 altematives: Purchase alternative: The conpany 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 $28,000 each. If this alternative is sccepted, the following costs will be incurred on the fleet as a whole: At the end of three years, the fleet could be sold for one-half of the original purchase price. Lease atternative? The coepany can lease the cars under a three-year lease contract. The lease cost would be $63,009 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 taces. Riteway would be required to make a $11,500 security deposit at the beetinning 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 16% Click here to view Exhibit 148-4 and Exhihit 14R.2, to determine the appropriate discount factor(5) 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? r11(1+r)1 Eximur 14b-1 Presui Valne afsi