Hard Hat Company is in the process of purchasing several large pieces of equipment from Machine Corporation. Several financing alternatives have been offered by Machine: 1. Pay $1,130,000 in cash immediately. 2. Pay $402,000 immediately and the remainder in 12 annual installments of $90,000, with the first installment due in one year. 3. Make 12 annual installments of $132,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,720,000 six years from date of purchase. Required: Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 7% interest rate. Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) Option 1 Option 2 Option 3 Option 4 ces The best alterative for Hard Hat PV I
Hard Hat Company is in the process of purchasing several large pieces of equipment from Machine Corporation. Several financing alternatives have been offered by Machine: 1. Pay $1,130,000 in cash immediately. 2. Pay $402,000 immediately and the remainder in 12 annual installments of $90,000, with the first installment due in one year. 3. Make 12 annual installments of $132,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,720,000 six years from date of purchase. Required: Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 7% interest rate. Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) Option 1 Option 2 Option 3 Option 4 ces The best alterative for Hard Hat PV I
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 34P
Related questions
Question
![Hard Hat Company is in the process of purchasing several large pieces of equipment from Machine Corporation. Several financing
alternatives have been offered by Machine:
1. Pay $1,130,000 in cash immediately.
2. Pay $402,000 immediately and the remainder in 12 annual installments of $90,000, with the first installment due in one year.
3. Make 12 annual installments of $132,000 with the first payment due immediately.
4. Make one lump-sum payment of $1,720,000 six years from date of purchase.
Required:
Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 7% interest rate.
Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA
of $1, PVA of $1. FVAD of $1 and PVAD of $1)
Option 1
Option 2
Option 3
Option 4
ces
The best alterative for Hard Hat
PV
I](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdfc83744-9919-48ee-bef3-7208e3d72a11%2F2324c672-7f21-49f7-9885-cb275b8f23f6%2Fg3622n6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Hard Hat Company is in the process of purchasing several large pieces of equipment from Machine Corporation. Several financing
alternatives have been offered by Machine:
1. Pay $1,130,000 in cash immediately.
2. Pay $402,000 immediately and the remainder in 12 annual installments of $90,000, with the first installment due in one year.
3. Make 12 annual installments of $132,000 with the first payment due immediately.
4. Make one lump-sum payment of $1,720,000 six years from date of purchase.
Required:
Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 7% interest rate.
Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA
of $1, PVA of $1. FVAD of $1 and PVAD of $1)
Option 1
Option 2
Option 3
Option 4
ces
The best alterative for Hard Hat
PV
I
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