Assume that you recently applied for a student loan to go to graduate school. As part of the appli-cation process, your bank requested a list of your assets. Aside from an extensive CD collection, your only other asset is a pickup truck. You purchased the truck six years ago for $15,000. Its cur-rent fair value is approximately $5,000. a. What factors caused your pickup truck to depreciate $10,000 in value?b. Assume that the bank is willing to lend you money for graduate school. Even with the loan,however, you still need to raise an additional $5,000. Do you think that the bank will lend you$5,000 more for graduate school if you agree to use your truck as collateral? Explain.c. Assume that the truck has been used solely in a delivery service business that you operated while in college. Would your balance sheet necessarily show $10,000 in accumulated depre-ciation related to the truck? Explain.
Assume that you recently applied for a student loan to go to graduate school. As part of the appli-
cation process, your bank requested a list of your assets. Aside from an extensive CD collection,
your only other asset is a pickup truck. You purchased the truck six years ago for $15,000. Its cur-
rent fair value is approximately $5,000.
a. What factors caused your pickup truck to
b. Assume that the bank is willing to lend you money for graduate school. Even with the loan,
however, you still need to raise an additional $5,000. Do you think that the bank will lend you
$5,000 more for graduate school if you agree to use your truck as collateral? Explain.
c. Assume that the truck has been used solely in a delivery service business that you operated
while in college. Would your balance sheet necessarily show $10,000 in accumulated depre-
ciation related to the truck? Explain.
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