Assume You Are the Creditor in Each of the Following

question 35

Essay

Assume you are the creditor in each of the following situations. Identify the kind of security agreement that is involved in each transaction and explain how you would perfect that agreement.
a. You are the creditor (Everby Bank), and you lend Brisco Gaines $5,000 for a sound system.
b. First Bank loans Doris $10,000 to purchase inventory for her store.
c. First Bank loans Brad $5,000 to purchase a computer network for use in his store office.
d. Kevin needs cash for gambling debts. He brings in his high-definition TV to secure a $500 loan.

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Definitions:

Depreciation

The accounting method of allocating the cost of a physical or tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

EBIT

A financial metric that calculates a company's profit by including all costs except for interest and income tax expenses, known as Earnings Before Interest and Taxes.

Free Cash Flow

The amount of cash a company generates after accounting for capital expenditures needed for operations. It is an important measure of financial performance and liquidity.

Capital Expenditures

Long-term investments made by a company in buildings, equipment, or other assets to improve or maintain its business operations.