Fact Pattern 41-1B (Questions B5-B7 Apply)

question 35

Multiple Choice

Fact Pattern 41-1B (Questions B5-B7 apply)
DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc., to form Fit-Rite Bolts & Screws Inc.
-Refer to Fact Pattern 41-1B. Evergrip owed money to Guaranty Bank and other creditors. After the consolidation, Fit-Rite must pay

• A) all of Evergrip's debts.
• B) half of Evergrip's debts.
• C) none of Evergrip's debts.
• D) only debts that Evergrip incurred after consolidation was proposed.

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Definitions:

Compounded Monthly

Interest on an investment or loan is calculated monthly, adding the interest from each month to the principal amount for the calculation of the next month's interest.

Compounded Semi-annually

A method of calculating interest where the interest is added to the principal amount twice a year, resulting in the accumulation of interest on interest over the period.

Business Bank Loan

A specific type of loan intended for business expenditures, provided by a bank to a company, with agreed repayment terms and interest rates.

Compounded Semi-annually

A method where interest earnings are calculated and added to an account's balance every six months, contributing to the compounded growth of an investment.