Answer to Question #306112 in Accounting for Shan

Question

1. You own a farm and grow seasonal products such as pumpkins, squash, and pears. Most of your business revenues are earned during the months of October to December. The rest of your year supports the growing process, where revenues are minimal, and expenses are high. In order to cover the expenses from January to September, you consider borrowing a short-term note from a bank for $300,000. Based on this scenario, please complete the following:

Research the lending practices of a local bank.

Determine the interest rate charged for a $300,000 loan.

Determine the collateral the bank requires to secure the loan?

Determine your overall payback amount if you were to repay the loan in less than one year.

conducting your research, would you consider borrowing the money?

What positive and negative outcomes accompany borrowing the money?

2. How much did you know about interest and borrowing money before starting Unit 6?

3. What have you learned about interest and borrowing money in this unit that may help you?

Answer 1

interest rate 0.25%

Collateral can be property, money.

Positive results: that there will be money for business growth. Negative: mowing will be in debt, also property will be confiscated in case of non-compliance