# Accounting

posted by .

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 \$950,000 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 \$125,000 with the first payment due immediately.

4. Make one lump-sum payment of \$1,580,000, 3 years from date of purchase.

Required:
Determine the best alternative for Harding, assuming that Harding can borrow funds at a(n) 4% interest rate.
Round all PV factors to 5 decimal places if you use the PV tables, and final answers to the nearest whole dollar.
Choose the best alternative by entering the option number in the answer box.
1 PV = \$ ____________
2 PV = \$420,000 +(\$ ____________ x ____________)= \$ ____________
3 PV = \$ ____________ x ____________ = \$ ____________
4 PV = \$ ____________ x ____________ = \$ ____________

Harding should choose option ____________ .

• Accounting -

1. 950000

• Accounting -

These were the present values I had obtained.

1. PV = 1,180,000
2. PV = 671476
3. PV = 1,087,033
4. PV = 1,204,627

4 is the one I had trusted myself least on.

## Similar Questions

Nancy Sly wishes to sell her business and receives the following three offers:?
2. ### Accounting

Partial balance sheets for ABC Company and additional information are provided below. ABC Company, Partial Balance Sheets, As of December 31 2009 2008 Equipment \$100,000 \$75,000 Accumulated depreciation (25,000) (20,000) Common stock, …
3. ### accounting

Jackson Company invests in a new piece of equipment costing \$40,000. The equipment is expected to yield the following amounts per year for the equipment's four-year useful life: Cash revenues \$ 60,000 Cash expenses (32,000) Depreciation …
4. ### accounting

When Collum Corporation was organized in January 2011, it immediately issued 10,000 shares of \$60 par, 5 percent, cumulative preferred stock and 20,000 shares of \$10 par common stock. The company's earnings history is as follows: 2011, …
5. ### accounting

(TCO 8) Partial balance sheets for ABC Company and additional information are provided below. ABC Company, Partial Balance Sheets, As of December 31 2009 2008 Equipment \$100,000 \$75,000 Accumulated depreciation (25,000) (20,000) Common …
6. ### accounting

Partial balance sheets for ABC Company and additional information are provided below. ABC Company, Partial Balance Sheets, As of December 31 2009 2008 Equipment \$100,000 \$75,000 Accumulated depreciation (25,000) (20,000) Common stock, …
7. ### accounting

You trade equipment in 2010 and pay a \$10,000 cash boot for similar equipment with a fair market value of \$20,000. The transaction cost is \$100. You paid \$25,000 for your old equipment. The depreciation deduction allowed for tax purposes …
8. ### Accounting

Presented below are selected financial statement items for Rowe Corporation for December 31, 2012. Inventory \$55,000 Cash paid to purchase equipment \$30,000 Cash paid to suppliers 154,000 Equipment 40,000 Buildings 400,000 Revenues …
9. ### accounting

A company was recently formed with \$ 50,000 cash contributed to the company by stock-holders. The company then borrowed \$ 20,000 from a bank and bought \$ 10,000 of supplies on account. The company also purchased \$ 50,000 of equipment …
10. ### Accounting, TAX

Which of the following entities may not use the cash method of accounting?

More Similar Questions