The Rotewoy Ad Agency provides cars for its sales statt In the past, the company has always purchased its cars from a dealer and then sold the cars afer thee yoars of use. The compony's peesent fleet of ears is three years old and will be sold very shorts. To provide a replacement fleet, the company is considering two aiternatives: Purchase atterative; The conpany can purchase the cars, as in the past, and sell the cars ofter three years of use. Ten cars will be needed, which can be purchased at a discechted price of $17, eae each. If this alternative is accepted, the following costs w1li be incurred on the fleet as a whele: At the end of three years, the fieet could be sold for one-thalf of the original purchase price. Lease alteraativel The cospany can lease the cars inder a three-year lease contract. The lease cost wosld be 552 , 0ee per year lthe first paysent duo at the end of Year 11 . As part of this tease cost, the owner would provide all servicing and repairs, license the cars, and pay atl the taxes. Riteway would be required to nake a $12, see seceraty deposit at the beginaing of the tease period, which woutd be refunded when the cars were returned to the owher at the end of the lease contract. Reteway Ad Agency's required rate of return is 17%. Cllck here to ver and Extibit 14 B.2, to devermine the appropriate discount factoris) using tables. Reculred: 1. What is the net present value of the cash flows assoclased with the purchase alternathe? 2. What is the net present value of the cash flows assoclated with the lease alternstive? 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 aliemative should the company accept? Complete this question by entering your answers in the tabs below. What is the net present value of the cash fow5 assoclated with the purchase altemative? (Enter negative amount with a minus sign, Round your intermediate cakulations and final answer to the nearest whole doltar amount.) The Rotewoy Ad Agency provides cars for its sales statt In the past, the company has always purchased its cars from a dealer and then sold the cars afer thee yoars of use. The compony's peesent fleet of ears is three years old and will be sold very shorts. To provide a replacement fleet, the company is considering two aiternatives: Purchase atterative; The conpany can purchase the cars, as in the past, and sell the cars ofter three years of use. Ten cars will be needed, which can be purchased at a discechted price of $17, eae each. If this alternative is accepted, the following costs w1li be incurred on the fleet as a whele: At the end of three years, the fieet could be sold for one-thalf of the original purchase price. Lease alteraativel The cospany can lease the cars inder a three-year lease contract. The lease cost wosld be 552 , 0ee per year lthe first paysent duo at the end of Year 11 . As part of this tease cost, the owner would provide all servicing and repairs, license the cars, and pay atl the taxes. Riteway would be required to nake a $12, see seceraty deposit at the beginaing of the tease period, which woutd be refunded when the cars were returned to the owher at the end of the lease contract. Reteway Ad Agency's required rate of return is 17%. Cllck here to ver and Extibit 14 B.2, to devermine the appropriate discount factoris) using tables. Reculred: 1. What is the net present value of the cash flows assoclased with the purchase alternathe? 2. What is the net present value of the cash flows assoclated with the lease alternstive? 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 aliemative should the company accept? Complete this question by entering your answers in the tabs below. What is the net present value of the cash fow5 assoclated with the purchase altemative? (Enter negative amount with a minus sign, Round your intermediate cakulations and final answer to the nearest whole doltar amount.)
