You are a Custom Home Builder and was hit hard by the economic downfall of 2008 in the housing market. You have a 100-acre subdivision with $19,000 a month payment on a land and development loan of$1.8 million. You have already invested $575,000 of your own money in the venture. You also built three houses to sell in your subdivision and have been using the construction loans to keep the land development loan up to date. Needless to say, you are desperate because the buyers have not shown up in this economy and the one home you built has a buyer who had taken a questionable loan she was not qualified for so defaulted. That means a defaulted home loan is sitting on one of your $50,000 lots which you will lose. Over the weekend, a big city bank took over your local bank and called the loans on all builders in your county. It looks like you must consider bankruptcy. Explain what you would do in this situation and how you came to your conclusions. If you decide for bankruptcy, how would you go about this?

According to the U.S. Census Bureaus Business Information Tracking System (go online to find this), what is the failure rate of companies over the first six years? What else did you find on this Web site concerning the companies most at risk to failure?

Explain the role of the investment bank in (a) selling bonds and in (b) selling stocks.

Left-in-the-Dust Bank has a standing rate of 8% (APR) for all bank loans and requires monthly payments. Your company is a bit desperate for immediate funds to cover the next two years, but you need to see which the best deal is for the company. Calculate the monthly payment to see which loan you need for the following sums below. Then, make your decision and explain which loan would work out the best for your company and why.

• $100,000 for five years?
• $250,000 for six years?
• $450,000 for 12 years?
• $1,250,000 for 30 years?