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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: (As needed, use appropriate factors from the tables provided on pages P1 through P6 at the end of the textbook). 1.Pay $1,000,000 in cash immediately. 2.Pay $420,000 immediately and the remainder in 10 annual installments of $80,000, with the first installment due in one year. 3.Make 10 annual installments of $145,000 with the first payment due in a year. 4.Make one lump-sum payment of $1,500,000 five years from date of purchase. Required: Determine the best alternative for Harding, assuming Harding can borrow funds at an 8% interest rate. (Show all of your calculations and round your final answers to nearest whole dollar amount.) Car Loan Problem (show all calculations) a) A person is interested in buying a new car. They believe they could afford to make monthly loan payments, at the end of each month, of no more than $650 / month for 40 months at a monthly interest rate 1% per month. What would be the amount of the loan (hint: Present Value) that the bank would be willing to make to that person? b) What would be the total amount paid to the bank over the 40 months? d) In addition to the amount that this person can borrow from the bank, they believe they can also afford to make a down payment of $5,000 from their savings account at the time the car is purchased. What would be the maximum price for a new car that this person could plan on buying
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