XYZ, Co. is considering the purchase of a new building that will allow them to expand their market. They plan to pay for the investment with a bank loan. The interest payments on the loan will be $140,000 per year. How will this be treated in the cash flows for capital budgeting?

 Compare the tax treatment of the purchase of a capital asset, such as a machine, with the tax treatment of an expense such as labor costs.

Answer rating: 100% (QA)

Treatment of Loan Interest in Capital Budgeting Cash Flows The interest payments on the loan for the new building purchase will be treated as operatin... View the full answer