Nathan Company has completed its capital budgeting analysis that indicated a positive net present value . Accordingly

Question:

Nathan Company has completed its analysis that indicated a positive . Accordingly it has decided to purchase new equipment with a list price of $ 800,000 and a setup cost of $ 50,000. Now the question is how to finance the purchase. Nathan believes it can issue 10,000 shares of for $ 30 per share but the rest of the money must be borrowed. The market rate of interest is predicted to be 5 percent when this deal is completed.
Required:
A. If Nathan finances this purchase with a 10- year quarterly installment note, how will the company’s budgeted income statement, statement of cash flows, and be impacted?
B. If Nathan finances this purchase with a 10- year noninterest- bearing note of $ 550,000, how will the company’s budgeted income statement, statement of cash flows, and be impacted?
C. If Nathan finances this purchase with a 10- year bond issue of $ 550,000 paying 6 percent semi-annually, how will the company’s budgeted income statement, statement of cash flows, and be impacted?
Common Stock
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Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the...