One of the factors that determines the present value (PV)of financial distress costs is
A)costs of unpaid interest arrears.
B)loss of dividend payments.
C)probability of financial distress.
D)employee compensation.

Question

Quizplus · Accepted Answer

The present value of financial distress costs is determined by the probability of financial distress, as this is a measure of how likely it is that the costs will be incurred. Other factors such as unpaid interest arrears, loss of dividend payments, and employee compensation may also contribute to financial distress costs, but they do not determine the present value of such costs.

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