No

Names

Age

Shares (%)

Position

Assets

1

Anderson

35

50%

CEO/ Director

(a) Owns General Investment Account of RM 350,000.00 maintained with Bank JP Morgan.

(b) Owns one unit of a bungalow house located in California with a market value of $ 750, 000 .

2

John

30

20%

Director

Owns Public Listed Company Shares in NYSE of $ 270,000.00 .

3

Tony

68

30%

-

Owns ASB unit trust of $ 200 000

Total

-

100%

-

Assume that the bank has approved the following financing to Tony Anderson Inc full disbursement was made on 9 August 2002: -

No

Type of Financing

Purchase

Price

Market Value

Financing Amount ($)

Tenure

Financing Rate (%)

1.

Land

-

2,000,000.00

1,500,000.00

15 years

3.0%

2.

Factory building

-

1,000,000.00

800,000.00

15 years

3.5%

3.

Machineries

550,000.00

-

500,000.00

7 years

3.5%

4.

Vehicle

400,000.00

-

300,000.00

9 years

4.0 %

Total

950,000.00

3,000,000.00

3,100,000.00

The company started its operations at the factory with new machineries at the end of January 1995 and recorded a 70% increase in sales for financial year ended 31 December 1996. The performance remains consistent in year 2001 and the company has been prompted in servicing monthly instalment.

(f)Suggest ONE (1) type of collateral can be taken by the bank to secure each of the above financing. Calculate collateral value for each of the financing.