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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:

1.Pay $1,180,000 in cash immediately.

2.Pay $481,000 immediately and the remainder in 10 annual installments of $98,000, with the first installment due in one year.

3.Make 10 annual installments of $162,000 with the first payment due immediately.

4. Make one lump-sum payment of $1,770,000 five years from date of purchase.

Required:

a.Assuming that Harding can borrow funds at an 8% interest rate, determine the present value. (Use PV of $1, PVA of $1, and PVAD of $1) (Round "PV Factors" to 5 decimal places and final answers to the nearest dollar amount.)

PV 1 $

PV 2 $

PV 3 $

PV 4 $

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9966055

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