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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:

1. Pay $1,080,000 in cash immediately.
2.

Pay $411,000 immediately and the remainder in 10 annual installments of $89,000, with the first installment due in one year.

3. Make 10 annual installments of $151,000 with the first payment due immediately.
4. Make one lump-sum payment of $1,680,000 five years from date of purchase.

Required:
a.

Assuming that Harding can borrow funds at an 9% interest rate, determine the present value. (Use PV of $1, PVA of $1, and PVAD of $1) (Round "PV Factors" to 5 decimal places and final answers to the nearest dollar amount.)

Alternative PV
1 $
2 $
3 $
4 $

b. Which is the best alternative for Harding?
Alternative 1
Alternative 2
Alternative 3
Alternative 4

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