3. Consider Firm X hit by a severe recession in the market due to the ongoing Covid pan- demic. As a consequence the rm has to le for bankruptcy. The liquidators operating under the bankruptcy proceedings estimate the market value of Firm X's assets to be $402 million compared to their book value of $1380 million. Table 2 below shows the estimates for various categories of assets. Table 2: Firm X Assets [millions of $) Estimated Book Value Market Value Inventories 650 65 Equipment 18!] 2? Factory 350 210 Others 200 100 Total 1380 402 (a) What is the primary rationale for the difference between the book value and the estimated market value of Firm X's assets? Please explain your answer using the appropriate type of costs applicable here. (6 marks) (b) Consider the firm specificity of assets as the ratio in percentage of the difference between book value and estimated market value to book value. Calculate the asset specificity of (i) inventories, (ii) equipment, and (iii) factory. What determines the specificity of an asset in terms of its costs? (4 marks) (c) Provide a rationale for the asset specificity of Firm X's inventories and equipment being significantly different compared to that of its factory? (4 marks)