Question

Teller, Kerr, and Ace are co-sureties on a $120,000 loan with maximum liabilities of $20,000, $40,000, and $60,000, respectively. The debtor defaulted on the loan when the loan balance was $60,000. Ace paid the lender $48,000 in full settlement of all claims against Teller, Kerr, and Ace. What amount may Ace collect from Kerr?

Answer 1

$16,000

Step-by-step explanation:

Given:

Total loan amount sureties = $120,000

Maximum liabilities of Teller = $20,000

Maximum liabilities of Kerr = $40,000

Maximum liabilities of Ace = $60,000

Amount paid in full settlement = $48,000

Now,

the responsibility of Kerr sureties in the total amount of loan =
`\frac{\textup{Maximum liability}}{\textup{Total amount}}`

=
`\frac{\textup{40,000}}{\textup{120,000}}`

=
`\frac{\textup{1}}{\textup{3}}`

Therefore,

The amount collected from Kerr =
`\frac{\textup{1}}{\textup{3}}*\$ 48,000`

or

The amount collected from Kerr = $16,000