Suppose that a recently-healthy firm has just defaulted, has been liquidated, an

Question

Suppose that a recently-healthy firm has just defaulted, has been liquidated, and where the firm's assets were worth $100 million before the liquidation. Also suppose that the firm had, at the time of its liquidation, $12 in preferred stock claims, $45 million in debt claims, $65 million in common stock claims, and that the liquidation process racked up a total of $10 million in legal and administrative expenses. Finally, suppose that the firm was able to recover 60% of the firm's value in liquidation (i.e. $60 million). How much money would common shareholder get in aggregate post-liquidation?

$0 million

$13 million

$23 million

$33 million

1 points   

$0 million

$13 million

$23 million

$33 million

Explanation / Answer

assets 100 Preferred Stock 12 Debt 45 Common Stock 65 Legal & Admin Expenses 10 Total Realisation = 60 The common shareholders will get A ,. 0 Million Because common share holders will get after payment of Preferred stock Debt & Legal Expenses

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