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vfiekz [6]
2 years ago
14

Harding Company is in the process of purchasing several large pieces of equipment from Danning Machine Corporation. Several fina

ncing 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 $1,160,000 in cash immediately. 2. Pay $461,000 immediately and the remainder in 10 annual installments of $94,000, with the first installment due in one year. 3. Make 10 annual installments of $156,000 with the first payment due immediately. 4. Make one lump-sum payment of $1,730,000 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.)
Business
1 answer:
sattari [20]2 years ago
6 0

Answer:

Option-2 is best alternative

Explanation:

Option-1

Present value of lumpsum amount -1160000

Option-2

Annual paymentt for 10 yrs -94000

Annuity for 10 yrs at 8% 6.7101

Present value of outflowws -630749

Add: Initial amount paid -461000

Present value of outflowws -1091749

Option-3

Annual paymentt for 9 yrs -156000

Annuity for 10 yrs at 8% 6.24689

Present value of outflowws -974515

Add: Initial amount paid -156000

Present value of outflowws -1130515

Option-4

Amount paid after 5 yrs -1730000

PVF at 5 yrs at 8% 0.680583

Present value -1177409

Option-2 is best alternative

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On December 1, 2021, the company received $9,000 in cash from another company that is renting office space in Falwell’s building
MrMuchimi

Answer:

From all indications,the two rents received have been posted wrongly, I want to believe that you are required to post the adjusting entries,hence my answer below:

The first $9000 was posted to deferred revenue,whereas only two months should have been

First rent:

DR Deferred revenue $3000

CR Revenue                 $3000

Second Rent

DR Revenue                  $6000

CR Deferred revenue    $6000

Explanation:

The first $9000 was posted to deferred revenue,whereas only two months should have been deferred and December rent recognized as rent.

As far as the second rent is concerned only one month has been earned,as a result the revenue should be credited with just $3000  for December.

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8 0
3 years ago
Seattle Inc. identifies an investment opportunity, which will yield cash flows of $30,000 per year in Years 1 through 4, $35,000
vladimir2022 [97]

Answer:

the payback period = 4.86 years

Explanation:

Seattle's cash flows are as following:

Year                Cash flow                         Accumulated cash flows

0                     -$150,000                                -$150,000

1                         $30,000                                -$120,000

2                        $30,000                                 -$90,000

3                        $30,000                                 -$60,000

4                        $30,000                                 -$30,000

5                        $35,000                                    $5,000

6                        $35,000                                  $40,000

etc.

The payback period is between year 4 and 5:

  • 4 years + ($30,000 / $35,000) = 4.86 years or
  • year 4 + [($30,000 / $35,000) x 365 days] = 4 years and 313 days
6 0
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