a,b,c

Your firm is considering issuing one-year debt, and has come up with the following estimates of the value of the interest tax shieid and the probability of distress for different levels of debt: Suppose the firm has a beta of zero, so that the appropriate discount rate for financial distress costs is the risk-tree rate of 5%. Which level of debt above is optimal if, in the event of distress, the firm will have distress costs equal to a. $1 milion? b. 56 million? c. $22 million? a. $1 milion? If distress costs are equal to $1 million, the optimal level of dobt is $ milion. (Round to the nearest intoger.) Data table (Click on the following icon a in order to copy its contents into a spreadsheet.)