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The Wrongway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a deater and then

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The Wrongway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a deater 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 alternatives as follows: Purchase Altemative. 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 $26,400 each. If this altemative is accepted, 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 Altemative. The company can lease the cars under a three year lease contract. The lease cost would be $84,000 per year (with 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. Wrongway would be required to make a $30,750 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 controct: Wrongway's required rate of return is 18%. Click here to view Exhibit 101 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Use the total cost approach to determine the present value of the cash flows associated with each alternative, (Negutive amounts shoutd be indlicated with a minus skgn. Round discount factor(s) to 3 decimal places. Round other infermediafe caficutations and finat answers to the nearest whole dollar amounts.)

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