If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total of $ 3 million is received form sale of the assets?

Southwestern Wear 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 and equity $3,750,000

The trustees cost total $263,750 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 each class of investors receive if a total of $ 3 million is received form sale of the assets?

 

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Reference no: EM132069492

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