I really need some help on this one.

ROBLEM 13-25 Net Present Value Analysis of a Lease or Buy Decision LO13-2 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 a 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 will be needed, which can be purchased at a discounted price of $17.000 each. If this accepted the following costs will be incurred on the fleet as a whole: e Ten curs is Annual cost of servicing taxes, and licensing 53.000 Repairs, first year $1.500 Repairs, second year 54.000 Repairs, third year 56.000 At the end of three years, the feet could be sold for one half of the original purchase price Lease alternative: The company can lease the care under three-year lease contract. The lease cont would be 555.000 por year the first payment does the end of Year Aspart of this the would Cindreplace the cand pay the way to make S10.000 eurity dep t h i ng of the lease period which would be died when the cars Command option ommand At the end of three years, the feet 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 $55.000 per year (the first payment doe 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 SH0.000 security deposit at the beginning of the lease period, which would be refunded when the car were returned to the owner at the end of the lease contact Riteway Ad Arency's required rate of return is 18 Required: What is the present Value of the chi nearest whole doll l led with the purchase a ntive Round all dollar amounts to the PROBLEM 13-26 Simple Rate of Return Payback LOD-13.013-63 LOG O OS @2 1673 option command P13-25 Template 4 TODDODO Problem 13-25 (30 minutes) 1. The present value of the purchase alternative is computed as follows: Purchase Alternative: Purchase of cars......... Annual servicing costs. Repairs......... Resale value of cars.... Total cash flows (a)..... Discount factor (b)...... Present value (a)x(b). Net present value Crea 2. The present value of the lease alternative is computed as follows: Lease Alternative: Now Security deposit insart Table Chart Text Shape Media lo Present value (@x(6). Net present value... 2. The present value of the lease alternative is computed as follows: B Lease Alternative: Heade Now 1 3. Page Nur Format Security deposit.. Annual lease payments Refund of deposit .. Total cash flows (a)..... Discount factor (b)...... Present value (a)x(b) Net present value ....... ng Discount factor (b)...... Present value (a)x(b) Net present value