Marcus is an experienced builder with over $12$ years in the construction industry. He has worked on several residential and commercial projects for various firms. However, Marcus has not independently completed a major project from start to finish as the lead builder.

Marcus now wants to start his own home building company. He has identified an opportunity to construct a new subdivision of $20$ single$-$family homes in an upcoming housing development. The total project cost is estimated at $$8$ million.

Marcus has approached Zeta Bank to seek financing for the subdivision project. He has provided the standard documentation $-$ business plan, project details, cost analysis, and projected returns.

While Marcus has solid construction experience, the bank needs to evaluate a few potential risk factors:

$1.$ Collateral: Marcus does not have enough personal assets or property to fully collateralize the requested $$8$ million loan. His current collateral is valued at only $$2\mathrm{.}5$ million.

$2.$ Legal Risk: Marcus is currently involved in a pending court case related to a previous construction project. Depending on the outcome, he may face fines up to $$50,000.$

$3.$ Limited Track Record: As Marcus lacks experience leading an entire project himself, he does not have a proven history of successfully delivering completed construction work as a lead builder.

Given these risks, the bank must carefully assess Marcus's loan application and the viability of the proposed home subdivision project.

How should the bank best address the $$50,000$ potential fine Marcus faces from the pending court case?

Question $8$Answer

a$.$

Reduce the loan amount by $$50,000$ to offset the potential fine liability

b$.$

Conditionally approve the loan, but delay funding until the court case is resolved

c$.$

Reject the loan request outright due to the legal risk

d$.$

Approve the full $$8$ million loan, but require Marcus maintain $$50,000$ in cash reserves