Incentive toward underinvestment is one of the costs of bankruptcy. The result of a corporation's stockholders choosing to underinvest is:

Multiple Choice

• the corporation accepts a larger number of projects than it otherwise would if it ignored the chance of bankruptcy.

• the corporation accepts all projects that have the NPV greater than zero.

• the corporation rejects projects with positive NPV that would definitely be accepted if the corporation were instead all-equity.

• the full amount of the initial investment is paid by the corporation's bondholders, but both bondholders and stockholders are sharing the future cash flows coming from those investments.

• the decisions of the stockholders of the corporation coincide with the bondholders' interests.