Simtech Inc Needs $1 Million for Research Related to a New

question 19

True/False

Simtech Inc needs $1 million for research related to a new product it is developing.It has been discussing a loan with Toronto Bank.On January 10, the Bank files a financing statement to register a security interest in all the assets of Simtech.On January 12, Simtech borrows $20 000 from one of its shareholders, secured by a security interest in all the assets of the corporation.The shareholder files a financing statement to register its security interest on the same day.On January 15, the bank and Simtech agree that the bank will lend Simtech $1 million and Simtech agrees to give the bank a security interest in all of its assets.If Simtech defaulted on the loans to both the shareholder and the bank, the shareholder's security interest would have first priority because the shareholder advanced its money first, before the bank advanced money.

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Definitions:

Total Revenue

The entire amount of income generated by the sale of goods or services by a company before any expenses are deducted.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that change in proportion to the level of goods or services that a business produces.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.