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Business, 01.12.2021 03:40 SKYBLUE1015

That is, Assume 20% of the cash flow (revenue) is lost upon bankruptcy (i. e., when debtholders control the firm). Also, assume that renegotiations are allowed and the manager may be allowed to stay if debtholders find it better than firing. Upon renegotiation debt and equity holders have 2:3 bargaining power. Draw value of debt, equity, and the company.

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That is, Assume 20% of the cash flow (revenue) is lost upon bankruptcy (i. e., when debtholders cont...
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