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Determine the best alternative for Harding

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Question - 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 $1,120,000 in cash immediately.

2. Pay $400,000 immediately and the remainder in 12 annual installments of $86,000, with the first installment due in one year.

3. Make 12 annual installments of $130,000 with the first payment due immediately.

4. Make one lump-sum payment of $1,700,000 six years from date of purchase.

Required - Determine the best alternative for Harding, assuming that Harding can borrow funds at a 7% interest rate.

Reference no: EM132513244

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