Question
The steel Pony company is having financial difficulties due to high interest payments. The estimated going concern value of the firm is $3.2 million. The
The steel Pony company is having financial difficulties due to high interest payments. The estimated "going concern" value of the firm is $3.2 million. The senior debt claim is on all fixed assets. There are current assets of $1.1 million, fixed assets of $2.9 million, senior debt of $2.2 million, subordinated debt of $1.8 million, with the remainder allocated to stockholder's equity.
Assume the firm files for formal bankruptcy and sells the firm for the estimated "going concern" value and nets 92% of that amount after wages are paid. What amount will be distributed to the subordinated debtholders?
A. 709,000
B. 721,000
C. 744,000
D. 811,000
E. 687,000
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