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Imagine that you are Beth's current banker. You have reviewed her request for a $1 million expansion loan with a ten-year term. If you don't offer the loan, she takes her business elsewhere. What will you tell her?

http://www.lem.ep.usp.br/0300021/Nancys_Coffee.pdf

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Yusra Anees
Yusra AneesLv10
28 Sep 2019

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Related questions

This is my debate topic from my foundation of business law class. 

My group is talking about deontology and contracts:

Suppose Allison, a house painter, and Beth, a homeowner, enter into an agreement whereby Allison will paint Beth's house in exchange for Beth's payment of $5,000 upon satisfactory completion of the paint job. In the contract, the parties agree that "satisfactory completion" is to be determined solely by Beth. Allison completes the paint job according to objective industry standards. Beth is satisfied with the paint job but decides to tell Allison that she is not satisfied with the paint job. Beth wants to take a trip to Costa Rica, and she must pay in full for the trip in advance; she does not have enough money to pay Allison and to pay for the trip. Beth tells Allison that she will pay Allison $3,000 since she did paint the entire house, even though she is not satisfied with how it turned out.

Follow deontological theory to analyze Beth's approach.

Team 1- Argue in support of Beth's approach

Team 2- Argue in opposition to Beth's approach

My team is team 1. Could you give me some convincing reasons to support Beth's approach, which are strong enough to go against the other team?

Thank you very much!

A. Mary Graham has worked as a real estate agent for Piedmont Properties for 15 years. Her annual income is approximately $100,000 per year. Mary is considering establishing her own real estate agency. She expects to generate revenues during the first year of $2 million. Salaries paid to her employees are expected to total $1.5 million. Operating expenses (i.e. rent, supplies, and utility services) are expected to total $250,000. To begin the business, Mary must borrow $500,000 from her bank at an interest rate of 15%. Capital equipment will cost Mary $50,000. At the end of one year, the value of this equipment will be $30,000, even though the depreciation for tax purposes is only $5,000 during the first year.

(a) Determine the accounting profit for this venture. Show your calculations.

(b) Determine the economic profit for this venture. Show your calculations.

(c) Which of the costs of this firm are explicit, and which are implicit costs. 

B. A local restaurant owner recently purchased a liquor license issued by the state for $90,000. This license can be transferred or sold to another party. If the owner returns the license to the state only $75,000 is refundable. After selling alcoholic beverages for about one year, the restaurant owner realized that she was losing dinner customers and that her profitable restaurant business was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements, in various newspapers and restaurant magazines, across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000. Carefully identifying the sunk costs, would you recommend that she accept the $77,000 offer?

QUESTION 16

Which of the following statements is true?

The administrative costs per dollar are greater for a large loan than a small loan.

The risk on a long-term loan is likely to be less than on a short-term loan, ceteris paribus.

a and b

none of the above

1 points

QUESTION 17

If the price for loanable funds is less than the return on capital, then firms will

borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital decreases and its return rises.

borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital increases and its return falls.

not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will fall.

not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will rise.

1 points

QUESTION 18

Economic rent is

the payment a renter pays his or her landlord.

payment in excess of fixed costs.

payment in excess of opportunity costs.

the same as interest if we are discussing a capital good purchase.

none of the above

1 points

QUESTION 19

Suppose a bank makes a $1,000 loan to you at 5 percent interest when the expected and actual inflation rate are zero percent. Before you pay back the $1,000 principal and $50 interest, the inflation rate increases to 10 percent. Does anyone lose from this situation?

Nobody loses, because the terms were set before the inflation rate increased, and once the terms are set, inflation does not affect the situation.

You lose, because the dollars that you have borrowed are worth more the higher the inflation rate.

The banker loses, because you will be paying back the loan with dollars that are worth less than the dollars you borrowed.

Both the banker and you lose, for the reasons in answers b and c.

There is not enough information to answer the question.

1 points

QUESTION 20

A change in the expected rate of inflation from 5 percent to 3 percent will

decrease the real interest rate by 2 percentage points.

decrease the real interest rate by 3 percentage points.

increase the nominal interest rate by 2 percentage points.

decrease the nominal interest rate by 2 percentage points.

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