Do not give answer in image 5Hard Hat Company is in the process of purchasing several large pieces of equipment from Machine Corporation. Several financingalternatives have been offered by Machine: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 $135,000 with the first payment due immediately.4. Make one lump-sum payment of $1,500,000 five years from date of purchase.Required:Determine the best alternative for Hard Hat, assuming that Hard Hat can borrow funds at an 8% 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, FVAof $1, PVA of $1, FVAD of $1 and PVAD of $1)Option 1Option 2Option 3Option 4The best alternative for Hard Hat$$$$Option 2PV1,000,000956,806978,3301,054,899

The question is based on the concept of annuities and present value in financial…

Answered: Hard Hat Company is in the process of…

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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Dave Krug finances a new automobile by paying $7,100 cash and agreeing to make 20 monthly payments of $480 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.)
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Goliath Banking Corporation (GBC) offers an "Income Investment Product" (IIP) for customers. The details for this product is as follows: Customers pay $941.29024136888 to buy an IIP. The IIP will pay out $49 at the end of each year for 13 years The IIP will pay out a further single payment of $1,000 after 13 years There are no further payments after this single payment at time 13. (a) Calculate the return GBC promised to investors that buy this product, expressed an effective annual rate. Give your answer as a percentage to 4 decimal places. (b) If instead GBC were to offer investors an effective annual return of 3.4571%, what price should they charge for this product? Give your answer in dollars, to the nearest cent. (c) Suppose that GBC decides to delay the final single payment of $1,000 by one year (assume this is permitted in the fine print of the IIP). Assuming no other changes are made, which ONE of the following statements is true for investors that have already purchased…

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