Student Question

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Jeffrey Vaughn, president of Frame

$-$

It Company, was just concluding a budget meeting with his senior staff. It was

November of

$2$

$0$

x

$0$

$,$

and the group was discussing preparation of the firm's master budget for

$2$

$0$

x

$1$

$.$

"I've decided to go

ahead and purchase the industrial robot we've been talking about. We'll make the acquisition on January

$2$

of next year,

and I expect it will take most of the year to train the personnel and reorganize the production process to take full

advantage of the new equipment."

In response to a question about financing the acquisition, Vaughn replied as follows: "The robot will cost $

$1$

$,$

$0$

$8$

$0$

$,$

$0$

$0$

$0$

$.$

We'll

finance it with a one

$-$

year $