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 (5 points) and prepare the resulting
journal entry (5 points).

Compute the payment on the loan (5 points) and prepare the repayment schedule (10 points).

Prepare a written analysis of the two financing options (at least 100 words), discussing the advantages (5 points) and
disadvantages ( 5 points) of each (for a total of 20 points).

Finally, provide your recommendation (5 points), based on the advantages and disadvantages mentioned in your
analysis. Be specific, and be sure to show all work.