The Wiz Co

question 39

Multiple Choice

The Wiz Co.owes $60 to its bondholders for the payment of principal and interest.The company expects to have a cash flow of $136 if the economy continues as it is but that cash flow will decrease to $54 if the economy enters a recession.Should the company ever face the real possibility of bankruptcy,it will incur legal and other fees of $30.What amount will the bondholders be paid in the case of a recession?

• A)$30
• B)$60
• C)$54
• D)$24
• E)$0

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