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The trustee estimates firm Pro's liquidation value is $135 million. Alternatively, the trustee predicts that the reorganized business will generate $16 million annual cash flows

The trustee estimates firm Pro's liquidation value is $135 million. Alternatively, the trustee predicts that the reorganized business will generate $16 million annual cash flows in perpetuity. The discount rate is 12%. Should firm Pro be liquidated or reorganized? Show your work and discuss the result. Assuming the cost of liquidating is $5 million.

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