If the total value of bonds outstanding of Good Time is $108.93 million, what is the expected…


Costs of Financial Distress

1. Good Time Co. is a regional obligation portion ammunition. It allure halt in affair for one over year. The estimated verisimilitude of a vocifetrounce year is 60 percent and that of a recession is 40 percent. It is designed that Good Time allure possess sum currency stream of $250 favorite in a vocifetrounce year and $100 favorite in a recession. Its required debit cancelment is $150 favorite per annum. Assume a one-period example.

Assume waste indifference and an annual remittance trounce of 12 percent for twain the accumulation and the fastening.

a. What is the sum accumulation appraise of the robust?

b. If the sum appraise of fastenings unappropriated of Good Time is $108.93 favorite, what is the expected noncommunication require in circumstance of recession?

c. What is the sum appraise of the robust?

d. What is the promised restore on the fastening?