Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under a reorganization plan accepted by all parties. Mannheim's balance sheet shows:

Various assets	$2,000,000	Prepetition liabilities, fully secured	$ 400,000
		Prepetition liabilities subject to compromise	1,360,000
		Postposition liabilities	820,000
		Shareholders' equity	(580,000)
TOTAL	$2,000,000	TOTAL	$2,000,000

New equity interests in the reorganized company are $160,000. The present value of future cash flows from the reorganized company's operating assets is $2,370,000. The compromised amount of Mannheim's prepetition liabilities is

• $1,360,000.
• $1,390,000.
• $2,210,000.
• $ 990,000.

Answer rating: 100% (QA)

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