Question

Dietz Company’s capital expenditure budget calls for a $ 1,500,000 addition to an existing plant. The company plans to issue a three- year note and is debating whether to use a three- payment, 8 percent annual installment note; a three- year, 8 percent, $ 1,500,000 interest- bearing note ( interest paid annually); or a three-year noninterest- bearing note (interest compounded annually). If the market interest rate is 8 percent, describe the cash inflows and outflows for each year of each note’s life.


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  • CreatedMarch 25, 2015
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