Suppose tefco corp has a value of 102million if it, Ask an Expert

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Suppose Tefco Corp. has a value of $102million if it continues to operate, but has outstanding debt of $116million that is now due. If the firm declares bankruptcy, bankruptcy costs will equal $21million, and the remaining $81million will go to creditors. Instead of declaring bankruptcy, management proposes to exchange the firm's debt for a fraction of its equity in a workout. What is the minimum fraction of the firm's equity that management would need to offer to creditors for the workout to be successful?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92172213

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