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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: FV of$1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1.

1. Pay $112,000 in cash immediately.

2. Pay $430,000 immediately and the remainder in 12 annual installments of $81,000 , 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 $1,600,000 five years from date of purchase.

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

Reference no: EM132819032

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