LO4 Marlene opens an outdoor sports complex that features batting cages, miniature golf, and a driving range. She invests $100,000 of her own money and borrows
$750,000 from her bank. She uses $475,000 of the loan proceeds to acquire the land and construct the office building for the sports complex. The remaining loan proceeds are used to acquire equipment and furnishings. The loan is secured by the land, build- ing, and equipment. What is Marlene’s amount at risk in the business if the $750,000 debt was obtained on reasonably commercial terms and is secured by
a. The business assets purchased, and Marlene is personally liable if the business assets are insufficient to satisfy the debt?
b. The business assets purchased, and Marlene is not personally liable if the business assets are insufficient to satisfy the debt?
c. Assume the same facts as in part b, except that Marlene uses the $750,000 loan to purchase an apartment complex.
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