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 $1,120,000 in cash immediately. 2. Pay $400,000 immediately and the remainder in 12 annual installments of $86,000, with the first installment due in one year. 3. Make 12 annual installments of $130,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,700,000 six years from date of purchase. Required: Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 7% 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. EV of $1, PVA of $1. FVAD of $1 and PVAD of $1) Option 1 Option 2 Option 3 Option 4 PV

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 $1,120,000 in cash immediately. 2. Pay $400,000 immediately and the remainder in 12 annual installments of $86,000, with the first installment due in one year. 3. Make 12 annual installments of $130,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,700,000 six years from date of purchase. Required: Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at a(n) 7% 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. EV of $1, PVA of $1. FVAD of $1 and PVAD of $1) Option 1 Option 2 Option 3 Option 4 PV

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 34P

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