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Garcia & Smith owes $96 to its bondholders for the payment of principal and interest. The company expects to have a cash flow of $224
Garcia & Smith owes $96 to its bondholders for the payment of principal and interest. The company expects to have a cash flow of $224 if the economy continues to be normal, but $88 if the economy enters a recession. If the company ever faces the real possibility of bankruptcy, it will incur legal and other fees of $22. What amount will the bondholders be paid in the case of a recession? Garcia & Smith owes $96 to its bondholders for the payment of principal and interest. The company expects to have a cash flow of $224 if the economy continues to be normal, but $88 if the economy enters a recession. If the company ever faces the real possibility of bankruptcy, it will incur legal and other fees of $22. What amount will the bondholders be paid in the case of a recession? $22 $96 $88 $0 $66
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