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: ((fv of $1, pv of $1, fva of $1, pva of $1, fvad of $1 and pvad of $1) (use appropriate factor(s) from the tables provided.) 1. pay $1,080,000 in cash immediately. 2.pay $400,000 immediately and the remainder in 10 annual installments of $82,000, with the first installment due in one year. 3. make 10 annual installments of $140,000 with the first payment due immediately. 4. make one lump-sum payment of $1,610,000 five years from date of purchase. required: determine the best alternative for harding, assuming that harding can borrow funds at a 8% interest rate. (round your final answers to nearest whole dollar amount.)

The best financial option would be the second as his PV is the lowest

Explanation:

we will calcualte each option present value using the annuit formula

second option

PTM 82,000

time 10 years

rate0.08

PV$550,226.6747  + 400,000 = 950,226

third option (annuity-due)

PTM140,000

time10years

rate         0.08

PV$1,014,564.3075

fourth option (lump sum present value)

Nominal: 1,610,000.00

time      5 years

rate  0.08

PV   1,095,738.95

b

explanation:

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: