Calculate the value of liquidation given to the equity holders, if the firm follows liquidation and the total settlement is $ 3.5 million Admin fee is $0.5 million Capital structure is Secured debt 1,500,000 Unsecured debt 1,000,000 Equity shares (@$100 per share) 2,000,000 Total 4,500,000 Calculate the amount of funds received by each shareholder. Solution : Liquidation value $3,500,000 Administrative cost : $500,000 Balance amount $3,000,000 Capital Claim Final settlement Balance amount Secured debt 1,500,000 1,500,000 1,500,000 Unsecured debt 1,000,000 1,000,000 5,00,000 Equity shares (@S100 2,000,000 500,000 per share) Total 4,500,000 Total Shareholders = 2,000,000 / 100 = 20,000 Each shareholder will get = 500,000 / 20,000 = $25 per share (as liquidation value)