Thomas Borrowed $100,000 from First Bank,which Asked That He Both

question 7

Essay

Thomas borrowed $100,000 from First Bank,which asked that he both put up collateral and provide a surety.Consequently,Thomas provided the bank with a security interest in his antique car collection and asked Victor to act as a surety.Victor agreed to do so and signed a surety agreement with the bank.Thomas made several payments on the loan and then asked First Bank for permission to sell three of his cars.First Bank agreed,but it never notified Victor of the sale of the collateral.Thomas then defaults on the loan.First Bank now wants Victor to pay the remainder of the loan.Must Victor pay? Explain.

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Definitions:

Operating Cash Flow

Operating cash flow refers to the cash generated from the normal operating activities of a business within a specific time period.

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not expected to be converted into cash in the upcoming year.

Retained Earnings

The amount of net income left over for the business after it has paid out dividends to its shareholders, often reinvested in the business or used to pay down debt.

Cash Flow from Assets

This is the total amount of money being transferred in and out of a company's assets, including operations, investments, and financing activities.