Turner Company is considering acquiring a new plant.The CFO, John Chen, is considering how to finance the new plant.Specifically, John is trying to decide whether to finance the plant by issuing bonds or through a sale and leaseback.Compose a memorandum to John explaining the advantages and disadvantages of these two financing strategies.
　　REMINDER:Your response will be graded for both technical content and writing skills.Technical content will be *uated for information that is helpful to the intended reader and clearly relevant to the issue.Writing skills will be *uated for development, organization, and the appropriate * of ideas in professional correspondence.Use a standard business memo or letter format with a clear beginning, middle, and end.Do not convey information in the form of a table, bullet point list, or other abbreviated presentation.
　　To:Mr. John Chen
　　Turner Company
　　From:CPA Candidate
　　解析：
　　This memorandum provides information to help in deciding whether to finance the proposed new plant by issuing bonds or through a sale and leaseback.Issuing bonds is a common technique used to finance long-term assets, such as a plant.Bonds typically have a 20 year maturity and provide for semiannual interest payments.The bonds become a liability on the balance sheet of the corporation, and the bond agreement typically contains covenants that place restrictions on the flexibility of the company.From an income tax standpoint, the interest on the bonds is tax deductible.
　　A sale and leaseback is a transaction in which the company sells the plant to another party and simultaneously leases it back under a long-term agreement.Such arrangements may provide financing and tax advantages.As an example, the tax benefits of the investment in the plant may be given in the agreement to the party that can best use the tax benefits. In addition, lease financing may be easier to obtain than bond financing, and the lease agreement may contain fewer restrictions than the bond agreement.
　　If you like additional information to make your decision, please contact me.
　　Keywords: bond, leaseback, long-term, assets, maturity, interest, liability covenants, deductible, benefit