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:

1. Pay $1,030,000 in cash immediately.

2. Pay $470,000 immediately and the remainder in 10 annual installments of $85,000, with the first installment due in one year.

3. Make 10 annual installments of $147,000 with the first payment due immediately.

4. Make one lump-sum payment of $1,640,000 five years from date of purchase.

Required:

Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 9% interest rate.

Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

\begin{tabular}{|l|l|} \hline & \\ \hline Option 1 & PV \\ \hline Option 2 & \\ \hline Option 3 & \\ \hline Option 4 & \\ \hline The best alternative for Hard Hat & \\ \hline \end{tabular}