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Required: Determine the best alternative for Harding, assuming that Harding can borrow funds at a 7% interest rate. (Round your final answers to nearest whole dollar amount.)

Required: Determine the best alternative for Harding, assuming that Harding can borrow funds at a 7% interest rate. (Round your final answers to nearest whole dollar amount.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Harding Company is in the process of purchasing several large pieces of equipment from Danning Machine Corporation. Several financing alternatives have been offered by Danning: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Pay $1,130,000 in cash immediately. 2. Pay $490,000 immediately and the remainder in 10 annual installments of $87,000, with the first installment due in one year. 3. Make 10 annual installments of $149,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,660,000 five years from date of purchase. Required: Determine the best alternative for Harding, assuming that Harding can borrow funds at a 7% interest rate. (Round your final answers to nearest whole dollar amount.) Option 1 Option 2 Option 3 Option 4 The best alternative for Harding PV
Transcribed Image Text:Harding Company is in the process of purchasing several large pieces of equipment from Danning Machine Corporation. Several financing alternatives have been offered by Danning: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Pay $1,130,000 in cash immediately. 2. Pay $490,000 immediately and the remainder in 10 annual installments of $87,000, with the first installment due in one year. 3. Make 10 annual installments of $149,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,660,000 five years from date of purchase. Required: Determine the best alternative for Harding, assuming that Harding can borrow funds at a 7% interest rate. (Round your final answers to nearest whole dollar amount.) Option 1 Option 2 Option 3 Option 4 The best alternative for Harding PV
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