Problem 5-3 (Algo) Analysis of alternatives [LO5-3, 5-8] 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 $1,000,000 in cash immediately. 2. Pay $450,000 immediately and the remainder in 10 annual installments of $83,000, with the first installment due in one year. 3. Make 10 annual installments of $145,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,620,000 five years from date of purchase. Required: Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 10% 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 The best alternative for Hard Hat PV
Problem 5-3 (Algo) Analysis of alternatives [LO5-3, 5-8] 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 $1,000,000 in cash immediately. 2. Pay $450,000 immediately and the remainder in 10 annual installments of $83,000, with the first installment due in one year. 3. Make 10 annual installments of $145,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,620,000 five years from date of purchase. Required: Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 10% 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 The best alternative for Hard Hat PV
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Problem 5-3 (Algo) Analysis of alternatives [LO5-3, 5-8]
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 $1,000,000 in cash immediately.
2. Pay $450,000 immediately and the remainder in 10 annual installments of $83,000, with the first installment due in one year.
3. Make 10 annual installments of $145,000 with the first payment due immediately.
4. Make one lump-sum payment of $1,620,000 five years from date of purchase.
Required:
Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 10% 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
The best alternative for Hard Hat
PV](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa3d57715-1a2a-4517-8fc7-7ae15ead05aa%2Fc3b0f9a6-6fe4-465a-8971-5d8966cc5df6%2Fjiu2uja_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 5-3 (Algo) Analysis of alternatives [LO5-3, 5-8]
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 $1,000,000 in cash immediately.
2. Pay $450,000 immediately and the remainder in 10 annual installments of $83,000, with the first installment due in one year.
3. Make 10 annual installments of $145,000 with the first payment due immediately.
4. Make one lump-sum payment of $1,620,000 five years from date of purchase.
Required:
Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 10% 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
The best alternative for Hard Hat
PV
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