Question

In: Finance

A petition for the reorganization of the Boniface Company has been filed under the Insolvency Act....

A petition for the reorganization of the Boniface Company has been filed under the Insolvency Act. The trustees estimate the firm's liquidation value, after considering costs, is $140 million. Alternatively, the trustees, using the analysis of the Zulu Consulting firm, predict that the reorganized business will generate $18 million annual cash flows in perpetuity. The discount rate is 11%.

Calculate the present value if the company is alive. (Enter the answer in millions. Round the final answer to 2 decimal places. Omit $ sign in your response.)

PV            $ ________?

Solutions

Expert Solution

Present value of annual cashflows = Annual Cashflow / Discount rate

Present value of annual cashflows = $18,000,000 / 11%

Present value of annual cashflows = $163,636,363.60

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Consider a corporation who recently filed Chapter 11 bankruptcy (reorganization). Under the reorganization, the company has...
Consider a corporation who recently filed Chapter 11 bankruptcy (reorganization). Under the reorganization, the company has been allowed to reorganize their debt structure with a consolidated new deferral bond issue with more favorable terms. The new issue will be a 40- year, 12% coupon rate bond with semiannual coupons. However, under the bond indenture, the company is relieved of making interest payments (deferred interest) for the first 10 years. For the remaining 30 years, the regular interest payments would resume....
Consider a corporation who recently filed Chapter 11 bankruptcy (reorganization). Under the reorganization, the company has...
Consider a corporation who recently filed Chapter 11 bankruptcy (reorganization). Under the reorganization, the company has been allowed to reorganize their debt structure with a consolidated new deferral bond issue with more favorable terms. The new issue will be a 40- year, 12% coupon rate bond with semiannual coupons. However, under the bond indenture, the company is relieved of making interest payments (deferred interest) for the first 10 years. For the remaining 30 years, the regular interest payments would resume....
How is the Provision for Reorganization and Restructuring recognized under IFRS?
How is the Provision for Reorganization and Restructuring recognized under IFRS?
A lawsuit has been filed against XYZ Company. As year-end, the company’s attorney believes that there...
A lawsuit has been filed against XYZ Company. As year-end, the company’s attorney believes that there is an 85% likelihood that the company will be found liable. The attorney believes that the estimated range of the liability is between $50,000 and $150,000 and that all amounts within the range are equally likely. In addition, the company has announced a restructuring plan prior to year-end that has created a valid expectation on the part of the employees to be terminated with...
what reports are filed with the SEC by public companies? Under what circumstances are they filed?  
what reports are filed with the SEC by public companies? Under what circumstances are they filed?  
Be familiar with the consequences of a tax-free reorganization under Section 368. Be familiar with the...
Be familiar with the consequences of a tax-free reorganization under Section 368. Be familiar with the judicial doctrines common to all types of reorganizations
Firm A, under Chapter 11 bankruptcy proceedings, has an estimated going-concern reorganization value of $3.0 million....
Firm A, under Chapter 11 bankruptcy proceedings, has an estimated going-concern reorganization value of $3.0 million. The last pre-bankruptcy balance sheet of the firm is below (this shows the “old” capital structure). Assume that there are no other claims from any party. LAST PRE-BANKRUPTCY BALANCE SHEET ASSETS Current Assets                                             $1,250,000    Fixed Assets                                                  3,500,000     TOTAL ASSETS                                          $4,750,000 LIABILITIES and NET WORTH Senior Debt                                                    1,000,000 Subordinated Debt                                         3,000,000 Common Stockholders Equity    750,000    TOTAL LIABILITIES and NET WORTH   $4,750,000 Assume that the reorganized “new” capital structure must be...
As has been played out since its inception, the use of the Patriot Act has been...
As has been played out since its inception, the use of the Patriot Act has been controversial on many levels, yet it has also proved to be a useful tool in fighting terrorism, and preventing another large-scale attack on American soil. Some see it as an absolute infringement on long-treasured civil liberties in the United States, while others see it as an absolute necessity to deal with the reality of modern terrorism. Taken as a whole, how do you feel...
Format of Accounting report under companies act and Gst act and audit report under gst law.
Format of Accounting report under companies act and Gst act and audit report under gst law.
Which transcript shows if a tax lien has been filed A. Account Transcript B. Wage and...
Which transcript shows if a tax lien has been filed A. Account Transcript B. Wage and Income C. Verification of Nonfiling Transcript D. Tax Return Transcript
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT