One of the indirect costs of bankruptcy is the incentive to underinvest. Such underinvestment generally would result in:

Multiple Choice

the firm turning down positive NPV projects that would clearly be accepted if the firm were all-equity financed.

the firm accepting more projects than it would if the probability of bankruptcy was ignored.

bondholders contributing the full amount of any new investment, but both stockholders and bondholders sharing in the benefits of those investments.

the firm selecting all projects with positive NPVs.

shareholders making decisions based on the best interests of the bondholders.