Question: Harding Company is in the process of purchasing several large

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 $1,000,000 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 Harding, assuming that Harding can borrow funds at an 8% interest rate.



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  • CreatedJune 24, 2013
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