Two key qualitative factors determine ________ of financial distress costs: (1)the probability of financial distress and (2)the magnitude of the costs after a firm is in distress.

Question

Quizplus · Accepted Answer

The present value of financial distress costs is determined by the probability of financial distress occurring and the magnitude of costs once the firm is in distress, as these factors affect the expected cash flows and their discounting to present value.

Two Key Qualitative Factors Determine ________ of Financial Distress Costs