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AVX Inc. has $100,000 debt outstanding that it needs to pay in full over the next year. The firms shareholders hold claim to whatever is
AVX Inc. has $100,000 debt outstanding that it needs to pay in full over the next year. The firms shareholders hold claim to whatever is left after the debtholders claims have been satisfied. If the assets of AVX Inc. total $67,000 at the end of the year, how much is the debt worth and how much is the equity worth? How would your answers change if the assets total $90,000 and $140,000?
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