Compute the payment on the loan

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Reference no: EM13342477

Project

Your company has negotiated the purchase of some land, a building, equipment, and vehicles for $2,000,000. The appraised values of these assets is as follows:

Land	1,000,000
Building	550,000
Equipment	630,000
Vehicles	120,000
total	2,300,000

There are two choices to finance the acquisition of these assets: one, would be to obtain an installment loan from City National Bank at 9.0% for 6 years (compounded annually). The other choice would be to issue non-cumulative, $125 par value, 10% preferred stock.

Required:

Compute the values of the acquired assets based on the appraised values and prepare the resulting journal entry.

Compute the payment on the loan and prepare the repayment schedule.

Prepare a written analysis of the two financing options (at least 100 words), discussing the advantages and disadvantages of each.

Finally, provide your recommendation, based on the advantages and disadvantages mentioned in your analysis. Be specific, and be sure to show all work.

Reference no: EM13342477

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