Spoiled Baby Corp sells baby buggies and has decided to enlarge its operations. It requires borrowing $500,000 for 18 months and has sent you to negotiate with the bank.
The bank is more than willing to lend the money to the company and is offering the company a discounted note at 6 percent. Mr. Moneybags, the banker, has indicated that this is quite a deal and non-discounted notes are presently being charged 6.2% APR
Since the company accountant you should provide the essential information to support your recommendation to the Board of Directors.