Question

XYZ Corporation plans to acquire a building (with a useful life of 10 years) by issuing a $ 5,000,000, 10-year, 3 percent note to the former owner of the building. XYZ will value the building and the note using the market interest rate of 10 percent. What impact will this decision have on XYZ’s budgeted income in the first year of the note? If XYZ bases its upper- managers’ bonuses on income, what is the impact of this action? Is this practice unethical? Be sure to consider all the stakeholders.


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  • CreatedMarch 25, 2015
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