Question
A term loan of ₹80 crore is secured by Plant & Machinery valued at ₹90 crore and land valued at ₹30 crore. The forced sale value of machinery is assessed at 50%, while land is taken at full value. The bank wants to compute security coverage on FSV basis. What is the effective security coverage ratio?
Solution
FSV = 45 + 30 = 75. Coverage = 75 / 80 = 0.94
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