Chapter 6, Problem 3.2C

Using Banking Law Jargon, please answer the following scenario:  Donald has a bank account at Republic Live Bank which is heavily overdrawn. The bank sent out numerous correspondences to Donald about the overdraft limit and the need for Donald to meet with them and discuss repayment. Donald in his usual way ignored the bank’s request. Mr Big, Manager of Republic Live Bank is expected to meet with Donald and negotiate how they will reduce the overdraft amounts. During his review of Donald’s drawdowns over the last few months, he noticed that a cheque was drawn and the sums paid to a known drug dealer. He telephoned Donald’s home to set up a meeting and his maid answered the phone. Mr Big proceeded to explain to the maid that Donald’s account is heavily overdrawn and during the conversation, pointed out that he saw a transaction whereby Donald paid a known Drug dealer. Donald’s maid became extremely interested in this new revelation, because she had it in for Donald for cutting her…

Emily works for a small software company and oversees software quality assurance. The company recently developed an inventory control system for a national clothing manufacturer. The system gathers sales information on an hourly basis from clothing retailers nationwide. This information is then used by all departments (including the accounting, shipping, and ordering departments) to control the functions of the clothing manufacturer.   Emily suspects that the inventory functions of the system are not sufficiently tested, although they have passed all their contracted (legal) tests. However, she is pressured by her employers to sign off on the software. Whilst she is only required to perform tests which have been agreed to in the original contract, her considerable experience in software testing has led her to be concerned over the quality of the system. Her employers say that they will go out of business if they do not deliver the software on time.   Emily knows that if any section of…

Bruin Properties is in escrow to buy a 175,000 square foot shopping center in Camarillo, California for $35,000,000. Bruin Properties can borrow $24,000,000 fixed rate fully amortizing over 30 years at a 6.0% annual interest rate with equal monthly payments of principal and interest or it can borrow $28,000,000 fixed rate fully amortizing over 30 years at a 7.0% annual interest rate with equal monthly payments of principal and interest. What is the incremental annual borrowing cost for the additional $4,000,000 loan amount if each loan would be outstanding for the full 30 year term? a.13.0% b.12.4% c.11.5% d. 7.0%