Precision Trucking has an outstanding credit rating and decides to approach its bank about financing a new factory it wants to build. The bank agrees to lend money to Precision Trucking over a 15-year period using Precision's fleet of vehicles as collateral. Precision will need to pay monthly installments during the life of the agreement. This agreement is best described as which of the following terms?
A) private placement
B) venture capital
C) term-loan agreement
D) financial leverage
E) commercial paper

Question

Quizplus · Accepted Answer

This agreement is best described as a term-loan agreement, which is a loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate. In this case, Precision Trucking is borrowing money with its fleet of vehicles as collateral, to be repaid over a 15-year period through monthly installments.

Precision Trucking Has an Outstanding Credit Rating and Decides to Approach