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 $1,180,000 in cash immediately.
2.Pay $481,000 immediately and the remainder in 10 annual installments of $98,000, with the first installment due in one year.
3.Make 10 annual installments of $162,000 with the first payment due immediately.
4. Make one lump-sum payment of $1,770,000 five years from date of purchase.
Required:
a.Assuming that Harding can borrow funds at an 8% 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.)
PV 1 $
PV 2 $
PV 3 $
PV 4 $