Question
Discussion Question 16-14 (LO. 4, 7) Irene has made Sari an offer on the purchase of a capital asset. Irene will pay (1) $200,000 cash
Discussion Question 16-14 (LO. 4, 7)
Irene has made Sari an offer on the purchase of a capital asset. Irene will pay (1) $200,000 cash or (2) $50,000 cash and a 6% installment note for $150,000 guaranteed by City Bank of New York. If Sari sells the asset for $200,000 cash, she will invest the after-tax proceeds in certificates of deposit yielding 6% interest. Sari's cost of the asset is $25,000.
Complete the statement below regarding why Sari would prefer the installment sale.
The installment method applies to ______________ from the sale or other disposition of the property. With an installment sale, Sari can _________ on the $________. In addition, Sari is __________________.
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