Bank restructure question
Question # 00086909
Posted By:
Updated on: 07/31/2015 03:26 PM Due on: 07/04/2015
ABC Company is having financial difficulty and
has requested the bank restructure its $4 million note outstanding. The current
note has 5 remaining years and pays an interest rate of 10%. The current market
rate for a loan of this nature is 12%. ABC's note was issued at face value. The
bank has agreed to accept land in exchange for relinquishing its claim on this
note.
The land has a book value of
$2.95 million anda fair value of $3.5 million. (Note. Do not include the
restructure date in your updated statements.)
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Rating:
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Solution: Bank restructure question