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28 September, 15:09

Parker Inc. is obligated to pay its creditors $33,333 very soon. If the market value of the firm's assets equals $49,700, calculate the residual value owed to the shareholders.

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  1. 28 September, 15:17
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    The market value of shareholders' equity is $16,367

    Explanation:

    In this question, we are asked to calculate the residual value owed to shareholders.

    We proceed as follows:

    Firstly, we identify the following;

    Amount payable to creditors = $33,333

    Market value of assets = $49,700

    Mathematically,

    Market value of shareholders equity = Market value of assets - Amount payable to creditors = $49,700 - $33,333 = $16,367
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