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The management of Magic Mobile Homes has proposed to reorganize the firm. The proposal is based on a going-concern value of $2.0 million. The

 

The management of Magic Mobile Homes has proposed to reorganize the firm. The proposal is based on a going-concern value of $2.0 million. The proposed financial structure is $750,000 in new mortgage debt, $250,000 in subordinated debt and $1,000,000 in new equity. All creditors, both secured and unsecured, are owed $2.5 million dollars. Secured creditors have a mortgage lien for $1,500,000 on the factory. The corporate tax rate is 34%. How much should the unsecured creditors receive? Select one: OA. $500,000 OB. S667,000 C. $1,000,000 D. $750,000 Notes (+) Mark

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