i Safari File Edit View History Bookmarks Window Help . 59% D, Fri 1 1:13:19 AM

Question

i Safari File Edit View History Bookmarks Window Help . 59% D, Fri 1 1:13:19 AM : Chegg Study Guided Solutions a HW 6 Fantasy Football Yahool Sports Saved Help Save & Exit Submit Check my work Sludge Corporation has two bonds outstanding, each with a face value of $2.85 million. Bond A is a senior bond; bond B is subordinated. Sludge has suffered a severe downturn in demand, and its assets are now worth only $4.70 million. If the company defaults, what payoff can the holders of bond B expect? (Enter your answer in millions. Round your answer to 2 decimal places.) points Payoff of bond B million eBook pptx Print pptx Bond

Explanation / Answer

Answer is $1.85

Bond A is senior bond so it has prefference to a subordiante bond at the time of liquidation

Bond Payoff to B =Asset Available - less Bond Payoff to A

=4.70-2.85=$1.85

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.