PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 24, Problem 9PS
Summary Introduction
To determine: The amount that each security holders receive if the assets are sold and distributed strictly as per precedence.
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TJH Company is currently under financial difficulty and is unable to meet interest payments and fund requirements to retire its P 10,000,000 bonds payable held by DEF Corporation. Accrued interest on the bonds amounted to 10% of face value of the bonds.In order to prevent bankruptcy, TJH Company entered into an agreement with DEF Corporation to exchange equity securities for the bonds. TJH Company is issuing 100,000 shares of its P 50 par value ordinary shares. The ordinary share is currently selling at P 80.How much is the gain on debt restructuring?
Hurrah, Inc. recently has had financial difficulty and is being liquidated by the Federal Bankruptcy Court. The firm has a liquidation value of $1,000,000 from the fixed assets that served as collateral for the mortgage bonds (all prior claims have been satisfied). The firm's current capital structure is shown below. How much will the common stockholders receive in the liquidation?
Source of Capital
Amount
Unsecured bonds
$500,000
Mortgage bonds
400,000
Preferred stock
100,000
Common stock
500,000
Shanghai Company is unable to meet interest payments and fund requirements to retire its P1,500,000 bonds payable. Accrued interest on the bonds amounted to P150,000. The bonds are held by Spaghetti Investments, Inc. To prevent bankruptcy, Shanghai Company entered into an agreement with Spaghetti Financing, Inc. to exchange equity securities for the debt. Shanghai Company is issuing 20,000 shares of its P50 par value ordinary shares. The ordinary share is currently selling at P65. The gain on debt restructuring is
A. 250,000
B. 350,000
C. 650,000
D. 0
Chapter 24 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 24 - Bond terms Use Table 24.1 (but not the text) to...Ch. 24 - Bond terms Look at Table 24.1: a. The AMAT bond...Ch. 24 - Bond terms Select the most appropriate term from...Ch. 24 - Prob. 5PSCh. 24 - Bond terms Bond prices can fall either because of...Ch. 24 - Security and seniority a. As a senior bondholder,...Ch. 24 - Prob. 8PSCh. 24 - Prob. 9PSCh. 24 - Security and seniority a. Residential mortgages...Ch. 24 - Sinking funds For each of the following sinking...
Ch. 24 - Call provisions a. Look at Table 24.1. Suppose...Ch. 24 - Covenants Alpha Corp. is prohibited from issuing...Ch. 24 - Prob. 14PSCh. 24 - Private placements Explain the three principal...Ch. 24 - Convertible bonds True or false? a. Convertible...Ch. 24 - Convertible bonds Maple Aircraft has issued a 4%...Ch. 24 - Convertible bonds The Surplus Value Company had 10...Ch. 24 - Prob. 19PSCh. 24 - Convertible bonds Iota Microsystems 10%...Ch. 24 - Convertible bonds Zenco Inc. is financed by 3...Ch. 24 - Prob. 22PSCh. 24 - Prob. 23PSCh. 24 - Bank loans, commercial paper, and medium-term...Ch. 24 - Prob. 25PSCh. 24 - Tax benefits Dorlcote Milling has outstanding a 1...Ch. 24 - Convertible bonds This question illustrates that...Ch. 24 - Prob. 28PS
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