Corp10 is buying custom-built machinery with a contract purchase price of $943,420. The manufacturer has offered the company a payment plan that would require five annual beginning-of-year payments of $200,000 each.

a. If the company accepts the offer, what will be the total amount of interest expense it will incur over the five-year life of the loan?

b. If the company can buy the machinery outright by obtaining outside financing elsewhere at 2%, should it do or should it accept the manufacturers offer instead? Explain briefly?