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Los Alamon in an entertainment company that, unfortunately, has gone bankrupt. The company's creditors, Dakota Bank and Bank Nevada, will bargain for 3 days over

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Los Alamon in an entertainment company that, unfortunately, has gone bankrupt. The company's creditors, Dakota Bank and Bank Nevada, will bargain for 3 days over $50 million that was obtained through the liquidation of Los Alamos' assets. Given the seniority of its debt claims, Dakota Bank initially makes an offer proposing a specific split of the money with Bank Nevada in day 1 of negotiations. If the offer is rejected, Bank Nevada makes a counteroffer to Dakota Bank in day 2. If the counteroffer is rejected, Dakota Bank makes a take-it-or-leave-it offer to Bank Nevada in day 3. If there is no agreement in the last day of negotiations, the court will need to get involved and the amount of money that creditors can get drops to zero. Assuming that the discount rates for Dakota Bank and Bank Nevada are 5% and 20%, respectively: a) How much of the $50 million will Dakota Bank and Bank Nevada end up with? (4 marks] b) Would the outcome change if the negotiation could be extended indefinitely? Explain. [6 marks] Los Alamon in an entertainment company that, unfortunately, has gone bankrupt. The company's creditors, Dakota Bank and Bank Nevada, will bargain for 3 days over $50 million that was obtained through the liquidation of Los Alamos' assets. Given the seniority of its debt claims, Dakota Bank initially makes an offer proposing a specific split of the money with Bank Nevada in day 1 of negotiations. If the offer is rejected, Bank Nevada makes a counteroffer to Dakota Bank in day 2. If the counteroffer is rejected, Dakota Bank makes a take-it-or-leave-it offer to Bank Nevada in day 3. If there is no agreement in the last day of negotiations, the court will need to get involved and the amount of money that creditors can get drops to zero. Assuming that the discount rates for Dakota Bank and Bank Nevada are 5% and 20%, respectively: a) How much of the $50 million will Dakota Bank and Bank Nevada end up with? (4 marks] b) Would the outcome change if the negotiation could be extended indefinitely? Explain. [6 marks]

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