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Calculate the present value if the company is alive

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Problem - A petition for the reorganization of the Boniface Company has been filed under the Insolvency Act. The trustees estimate the firm's liquidation value, after considering costs, is $102 million. Alternatively, the trustees, using the analysis of the Zulu Consulting firm, predict that the reorganized business will generate $18 million annual cash flows in perpetuity. The discount rate is 14%.

Required - Calculate the present value if the company is alive. Should Boniface be liquidated or reorganized?

Reference no: EM132761583

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