One of the factors that determine 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 probability of financial distress is a factor that determines the present value of financial distress costs. This is because the higher the probability of financial distress, the higher the present value of the costs associated with it. Factors such as loss of dividend payments, unpaid interest arrears, and employee compensation may be considered in estimating the actual costs of financial distress, but they do not determine the present value of these costs.

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