[Candy Company] Milton, Ava, and Hiro Own a Candy Company

question 43

Multiple Choice

[Candy Company] Milton, Ava, and Hiro own a candy company. The business is failing and Milton is declared bankrupt by the bankruptcy court. Ava wants to keep the business running because she is sure she can turn it around. Hiro tells her that, it's too late, the partnership is already over because of Milton. Ava tells him that no one has asked to end the partnership so they do not have to dissolve. The partnership debts include a loan to the bank, loans Ava made to the company, and the initial capital that all three partners invested. Milton has no money to pay any of their debts.
-In what order should the partnership's debts be paid?

• A) The bank loan, then the loan to Ava, then the capital to the partners.
• B) The bank loan, then the capital to the partners, then the loan to Ava.
• C) The loan to Ava, then the bank loan, then the capital to the partners.
• D) The capital to the partners, then the bank loan, then the loan to Ava.
• E) The order of payment of debts does not matter.

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Definitions:

Solver

A software tool that finds the optimal solution to a mathematical model or equation, often used in optimization and decision-making processes.

Number of Hours

The total amount of time, counted in hours, spent or required for a particular activity or process.

Monthly Profit

The net amount of money gained by a business during a one-month period after all expenses have been paid.

Binding Constraint

A constraint in an optimization problem that directly limits the ability to achieve an optimal solution, where any relaxation of the constraint would improve the outcome.