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Firm A and Firm B are identical except that A is incorporated while B is an unlimited liability partnership. Both have assets worth $500,000 ($500K)

Firm A and Firm B are identical except that A is incorporated while B is an unlimited liability partnership. Both have assets worth $500,000 ($500K) funded with a debt ratio of 40%. Suppose that the assets suddenly become worthless, what is the maximum possible loss to the equityholders of each company?

A.) Firm A: $500K; Firm B: $200K
B.) Firm A: $300K; Firm B: $500K
C.) Firm A: $200K; Firm B: $300K

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