Project #12794 - Finance

1.     You own shares representing 10% of Textra Company.  You paid $500,000 for these shares 5 years ago.  The corporation has 9 other shareholders each with a 10% equity position in the company.  The corporation has grown over the past 5 years and your shares are now worth $1,000,000.  The corporation recently issued bonds in the amount of $2,000,000 to fund an acquisition.  The acquisition was a disaster and the company is now unable to meet its interest commitments and is on the verge of bankruptcy.  There are no other debts.  As a 10% shareholder, what is the maximum potential loss you could have if the company declares bankruptcy?  Explain. How would your answer change if the company was a general partnership instead?  ( 5 points)

Subject Business
Due By (Pacific Time) 09/19/2013 06:00 pm
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