LICEO DE CAGAYAN UNIVERSITY

Rodolfo N. Pelaez Boulevard, Kauswagan

Cagayan de Oro City, Misamis Oriental

CREDIT AND COLLECTION

MIDTERM ASSIGNMENT

Submitted By:

Charrysah T. Tabaosares

BSBA – FM4

Submitted To:

Mario E. Temporada

Date Submitted:

September 25, 2020

TEST QUESTIONS: Explain your answers.

1. Mr. B obtained a P 100,000 cash loan, using a 3–year old motorcycle with a
market value of P 50,000. Is this loan secured?

❖ No, because the market value of the asset given could not repay the loan
acquired. The asset that serve as the collateral would have a greater value than
loan acquired so that when the borrower would not be able to pay its loan
anymore you can sell the collateral in order to pay off the loan.

2. What kind of loan would you offer to a poultry farmer who wants to build his
poultry housing for broilers? What would be the appropriate term or
maturity?

❖ I am going to offer the poultry farmer a Time Loan as the book defined it as a
loan intended for the development or improvement of the farm.
❖ The appropriate term or maturity for a poultry farmer loan is short term, 1 year
or less.

3. Would it be right to grant a 10-year loan term on a motorcycle? Explain your

answer.

❖ No, because you have to keep in mind that motorcycles tend to depreciate in
value rather quickly, and most financing options are restricted to 36 to 60
months. Assign any of your cash assets as a down payment. The larger your
down payment the more manageable your loan.
4. How does an appliance company make money?

❖ An appliance company can make money by granting credit to installment from

its buyer. They resort to borrowing from banks or financing companies, using
the same receivables of their customers. With these practices they are able to
expand its operations and increase sales.

5. It is possible to get a P 1.0 M from a pawnshop?

❖ No, because according to Presidential Decree 114 pawnshop can only lend
money in small amounts and its minimum paid-up capitalization is just
Php 100,000.00.