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GraduateStrong Inc. has the following balance sheet: Current Assets $1,875,000 Accounts Payable $375,000 Fixed Assets $1,875,000 Notes Payable $750,000 Subordinated Debentures $750,000 Total Debt $1,875,000

GraduateStrong Inc. has the following balance sheet:

Current Assets $1,875,000 Accounts Payable $375,000
Fixed Assets $1,875,000 Notes Payable $750,000
Subordinated Debentures $750,000
Total Debt $1,875,000
Common Equity $1,875,000
TOTAL ASSETS $3,750,000 TOTAL LIABILITIES & EQUITY $3,750,000

The trustee's costs total $281,250, and the firm has no accrued taxes or wages. The debentures are subordinated only to the notes payable. If the firm goes bankrupt and liquidates, how much will common stockholders receive if a total of $2.5 million is received from sale of the assets?

A.

$625,000

B.

$281,250

C.

$1,875,000

D.

$343,750

E.

They will not receive any payment, since the firm has not enough proceeds from its assets.

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