(Answered) The steel pony company is having financial difficulties due

Statistics

The steel Pony company is having financial difficulties due to high interest payments. The estimated "going concern" value of the firm is $3.2 million. The senior debt claim is on all fixed assets. There are current assets of $1.1 million, fixed assets of $2.9 million, senior debt of $2.2 million, subordinated debt of $1.8 million, with the remainder allocated to stockholder's equity.

Assume the firm files for formal bankruptcy and sells the firm for the estimated "going concern" value and nets 92% of that amount after wages are paid. What amount will be distributed to the subordinated debtholders?

A. 709,000

B. 721,000

C. 744,000

D. 811,000

E. 687,000

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