LD IncDeclared Bankruptcy Through a Chapter 7 Filing

question 105

Multiple Choice

LD Inc.declared bankruptcy through a Chapter 7 filing.Consider the following data in millions of dollars and determine the funds available for secured creditors.
• Proceeds from the liquidation of assets = $225
• First mortgage = $50
• Administration expenses associated with the bankruptcy = $5
• Notes payable to the banks = $205
• Subordinated debentures = $350
• Taxes due to federal,state,and other governmental agencies = $17
• Wages due employees (2,000 employees) = $6

• A)$197
• B)$147
• C)$199
• D)$149

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Definitions:

25-year Annuity

A financial product that provides a series of payments made at equal intervals over 25 years.

Compounded Semi-annually

A method of computing interest where the interest is calculated and added to the principal twice a year.

Periodic Interest Rate

The interest rate applied to a loan or investment over a specific period of time, less frequently than annually.

Compounded Monthly

The method of calculating interest where the accrued interest is added to the principal sum each month, leading to interest on interest the following month.