Liquidation
Southwestern Wear Inc. has the following balance sheet:
Current assets
$1,875,000
Accounts payable
$375,000
Fixed assets
1,875,000
Notes payable
750,000
Subordinated debentures
750,000
Total debt
$1,875,000
Common equity
1,875,000
Total assets
$3,750,000
Total liabilities and equity
$3,750,000
The trustee's costs total $233,500, and the firm has no accrued
taxes or wages. Southwestern has no unfunded pension liabilities.
The debentures are subordinated only to the notes payable. If the
firm goes bankrupt and liquidates, how much will each class of...