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:
| 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) (Use appropriate factor(s) from the tables provided.) |
| 1. | Pay $1,060,000 in cash immediately. |
| 2. | Pay $466,000 immediately and the remainder in 10 annual installments of $81,000, with the first installment due in one year. |
| 3. | Make 10 annual installments of $150,000 with the first payment due immediately. |
| 4. | Make one lump-sum payment of $1,790,000 five years from date of purchase. |
| Required: | |
| Determine the present value, assuming that Harding can borrow funds at an 11% interest rate. | |
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Cima Official Exam Practice Kit Fundamentals Of Ethics Corporate Governance And Business Law Certificate In Business Accounting
Authors: Larry Mead
4th Edition
1856177092, 978-1856177092
