Ajax Corporation borrowed $50,000 from National Bank,giving National a security interest in its factory equipment.The agreement stated that the equipment would be security for this $50,000 loan and any future loans that National made to Ajax.National filed a valid financing statement.Over the next several months,Ajax borrowed another $100,000 from National.No additional financing statements were filed.Ajax has not made any payments on its loans from National.Ajax defaults on these loans.National wants to foreclose on the collateral.Assuming this security agreement is valid and perfected,how much of National's debt is secured?

Question

Quizplus · Accepted Answer

The security agreement between Ajax Corporation and National Bank included a future advances clause, which means that the security interest in the factory equipment covers not only the initial $50,000 loan but also any future loans that National makes to Ajax. Since National filed a valid financing statement for the initial loan and the future advances clause is valid, National's security interest covers the entire $150,000 loan. Therefore, the answer is D.

Ajax Corporation Borrowed $50,000 from National Bank,giving National a Security