Please show the method Harding Company is in the process of purchasing several l

Question

Please show the method

Harding Company is in the process of purchasing several large pieces of equipment from Danning Machine Corporation. Severa 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.) PV Option 1 Option 2 Option 3 Option 4 The best alternative for Harding $ 1,130,000

Explanation / Answer

PV Option 1 1130000 Option 2 1101051 =490000+(87000*7.02358) Option 3 1119769 =149000*7.51523 Option 4 1183563 =1660000*0.71299 The best alternative for Harding is Option 2

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