Find the true statements on given situation

Reference no: EM1349455

Grandma's Applesauce, Inc. has a 0.60 probility of a good year with operating cash flow of $50,000; and 0.40 probability of a bad year with operating cash flow of $30,000. The company has a debt of $35,000 with 8 percent interest due next year. Assuming the company has no means of servicing its debt other than operations, and a 0% tax rate, which of the following is true?

A. Shareholders expected claim is $12,200
B. Creditors expected claim is $37,800
C. Creditors expected claim is $34,680
D. None of the above

Reference no: EM1349455

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