Raul needed an expensive piece of equipment to expand his business. He borrowed the money from the bank and pledged the equipment as _____. If Raul does not repay the loan, the bank can take his equipment.

Question

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Collateral refers to the property or asset that is used as security for a loan. In this case, Raul pledged the equipment as collateral for the loan. If he fails to repay the loan, the bank can seize the equipment to recover their losses. Promissory note is a written promise to pay a sum of money to a specific person or organization at a specified time in the future. Depreciable asset is an asset that loses value over time due to wear and tear or obsolescence. Long-term debt refers to a financial liability that extends beyond one year.

Raul Needed an Expensive Piece of Equipment to Expand His