Under federal bankruptcy court protection

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Reference no: EM131347318

The Pen Central Railroad has not paid local taxes since 1969, under federal bankruptcy court protection. Some years later the court required Pen Central to offer municipalities a choice of two payment options to clear this liability. (Penn Central had been absorbed by Conrail, so there were no future tax liabilities involved). The choices were (a) immediate payment of 44 percent of the total liability or (b) immediate payment of 20 percent of the liability, 10 percent paid at the end of the next three years, and 50 percent paid at the end of ten years. Which alternative would you recommend to a municipality and why.

Reference no: EM131347318

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