XYZ Corporation plans to acquire a building (with a useful life of 10 years) by issuing a

Question:

XYZ Corporation plans to acquire a building (with a useful life of 10 years) by issuing a $ 5,000,000, 10-year, 3 percent note to the former owner of the building. XYZ will value the building and the note using the market interest rate of 10 percent. What impact will this decision have on XYZ’s budgeted income in the first year of the note? If XYZ bases its upper- managers’ bonuses on income, what is the impact of this action? Is this practice unethical? Be sure to consider all the stakeholders.

Stakeholders
A person, group or organization that has interest or concern in an organization. Stakeholders can affect or be affected by the organization's actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees,... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...