Final answer:
Xerox would have priority in the copying machines if it holds a Purchase Money Security Interest that is perfected within the required time frame, giving it precedence over the bank's floating lien. This follows Uniform Commercial Code provisions regarding PMSI.
Step-by-step explanation:
The issue in question deals with whether a bank's security interest or a supplier's purchase money security interest (PMSI) has priority in the collateral, in this case, the industrial Xerox copying machines. According to the Uniform Commercial Code (UCC), which governs such transactions in the United States, a Purchase Money Security Interest (PMSI) in goods will take priority over a conflicting security interest in the same goods if the PMSI is perfected at the time the debtor (Carol) receives possession of the goods, or within 20 days thereafter. Since Xerox is providing the copying machines on credit and retains a security interest in the machines until paid in full, Xerox would hold a PMSI.
On the other hand, the bank's security interest is referred to as a floating lien, which attaches to assets acquired by the debtor after the loan agreement is executed. However, for the bank to have priority, it must have perfected its security interest by filing before Xerox. Assuming the bank has indeed filed and perfected its interest first, it would generally take priority unless Xerox's interest qualifies as a PMSI and is perfected within the prescribed time frame.
Therefore, the correct answer to who has priority in the copying machines would be d. Xerox, because this is a purchase money security interest and assuming that Xerox takes the necessary steps to perfect the PMSI within the allocated time frame after Carol received possession of the copiers.