Purchase of office tables by issuing an interest-
bearing promissory note will result in?
Answer:
Issuing an interest-bearing promissory note to purchase office tables means that the buyer is taking on debt. The buyer is essentially borrowing money and agreeing to pay it back with interest over a set period of time. This can have both positive and negative effects on the buyer’s financial situation, depending on their ability to make payments and the terms of the promissory note.
Positive effects:
1. Immediate acquisition of office tables: The buyer will be able to acquire the office tables immediately and pay for the purchase over a period of time instead of paying the full amount upfront.
2. Helps to build credit: The buyer can use this opportunity to build a positive credit history if they make payments on time, which can help them in future financial transactions.
Negative effects:
1. Debt liability: The buyer takes on debt, which means that they will have to pay back the amount borrowed along with interest. This can affect the buyer’s financial situation and ability to take on additional debt.
2. Interest cost: The buyer will have to pay interest on the borrowed amount, which increases the cost of the office tables.
3. Risk of default: If the buyer cannot make payments on time or defaults, it will negatively impact their credit score and can result in the loss of the office tables.
In summary, purchasing office tables by issuing an interest-bearing promissory note can have both positive and negative effects on the buyer’s financial situation. It is important to carefully consider these effects before taking on debt and to ensure that the buyer can make payments on time and in full to avoid negative consequences.
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