Mike deposited $100,000 in a bank and procured a certificate of deposit on it, payable to himself, for repayment in five years with a five percent interest rate
A year after that, Mike borrowed $25,000 from Jill, and gave her a promissory note to repay it in one year. As collateral, Mike gave Jill the certificate of deposit and asked to put in a prepayment clause, to which Jill agreed. They agreed that Mike could repay in monthly payments, as mentioned in the note.
If Mike defaults on the payment even after one year, which of the following is true of the foreclosure options Jill has with the certificate of deposit Mike gave her?
A) The bank has to pay her only after the five-year period mentioned in the CD.
B) The bank does not have to pay her for the CD.
C) The bank has to pay her the difference of $75,000.
D) The bank has to pay her $25,000 with one year interest of 5 percent on demand.
B
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Prototypes are a research tool that allows selected customers to experience in a rough form the functionality or performance of a new offering and give feedback to the project team
Indicate whether the statement is true or false
Fiber Tech uses process costing to calculate the cost of manufacturing "Widgets." Beginning work in process included 4,000 units that were 60 percent complete. During the month 22,000 units were completed, 4,500 units remained in work in process at two-fifths complete. Using the average cost method, the equivalent units are:
a. 25,200 b. 23,800 c. 23,400 d. 21,000
A firm is evaluating a new machine to replace an existing, older machine. The change in depreciation is $3,000. The firm's marginal tax rate is 30 percent. Which of the following statements is true?
A. Depreciation does not affect the calculation of the supplemental operating cash flow. B. Depreciation is added to the after-tax net operating income to calculate the supplemental operating cash flow. C. Depreciation expense is added to the initial outlay incurred to purchase an asset. D. Depreciation is deducted from the terminal cash flows from an asset. E. Depreciation is included in capital budgeting only if it exceeds the tax expense of an asset.