The Management of Schroeder Books Has Proposed to Reorganize the Company

The management of Schroeder Books has proposed to reorganize the company. The proposal is based on a going-concern value of $2.3 million. The proposed financial structure is $500,000 in new mortgage debt,$300,000 in subordinated debt and $1,500,000 in new equity. All creditors,both secured and unsecured,are owed $3 million dollars. Secured creditors have a mortgage lien for $2,000,000 on the book bindery. The corporate tax rate is 34%. How much should the unsecured creditors receive?

A) $300,000
B) $500,000
C) $1,000,000
D) $2,300,000
E) None of these.