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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
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.
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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...
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