Magic Mobile Homes Is to Be Liquidated

question 35

Multiple Choice

Magic Mobile Homes is to be liquidated.All creditors, both secured and unsecured, are owed €2 million.Administrative costs of liquidation and wages payments are expected to be €500,000.A
Sale of assets is expected to bring €1.8 million after all costs and taxes.Secured creditors have a
Mortgage lien for €1,200,000 on the factory which will be liquidated for €900,000 out of the sale
Proceeds.The corporate tax rate is 34%.How much and what percentage of their claim will the
Unsecured creditors receive, in total?

• A)€ 100,000; 12.50%
• B)€ 290,909; 36.36%
• C)€ 300,000; 37.50%.
• D)€ 600,000; 75.00%
• E)Not enough information to answer.

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Definitions:

Recovery Stage

A phase in the economic cycle or in the lifecycle of a project where performance begins to improve after a period of decline or recession.

Business Spending

The expenditure by businesses on goods and services, including capital goods and labor.

Consumer Spending

The total amount of money spent by consumers on goods and services within an economy.

Recession

Cyclical economic contraction that lasts for six months or longer.