Question: Sunset has about $ 7 0 million in fixed assets and $ 5 0 0 million in debt / outstanding obligations to investors that will

Sunset has about $

70

million in fixed assets and $

500

million in debt

/

outstanding obligations to investors that will have to be paid off before the merger can proceed. Sunset is being sued by an academic partner for patent infringement on their new drug line. If the lawsuit is settled, they will have to pay around $

200

million to the University. New Dawn

s lawyers are saying that this is likely to happen with probability

95 % .

However, if the University is not willing to settle and they go to court, there is a

30 %

probability that the University will receive

30 %

of any and all proceeds from the drug

s sales and will not share any of the costs of development. Based on this information, what is the value of Sunset as a stand

-

alone company?

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