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( 5 points ) Hard Hat Company is in the process of purchasing several large pieces of equipment from Machine Corporation. Several financing alternatives have

(5 points)
Hard Hat Company is in the process of purchasing several large pieces of equipment from Machine
Corporation. Several financing alternatives have been offered by Machine:
Pay $1,000,000 in cash immediately.
Pay $420,000 immediately and the remainder in 10 annual installments of $82,000, with the first
installment due in one year.
Make 10 annual installments of $138,000 with the first payment due immediately.
Make one lump-sum payment of $1,520,000 five years from date of purchase.
Required:
Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at an 7.75% interest
rate. Show inputs you used on your financial calculator for possible partial credit if you answer is wrong.
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