One of the factors that determines the present value (PV) of financial distress costs i?

Question

Quizplus · Accepted Answer

The probability of financial distress is one of the key factors that determine the present value of financial distress costs. As the probability of financial distress increases, the PV of financial distress costs also increases. Factors such as employee compensation, costs of unpaid interest arrears, and loss of dividend payments may also contribute to the overall financial distress costs, but they are not the primary determinants of PV of financial distress.

One of the Factors That Determines the Present Value (PV)