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One of the indirect costs to bankruptcy is the incentive toward underinvestment. Following this strategy may result in: A. the firm always choosing projects with
One of the indirect costs to bankruptcy is the incentive toward underinvestment. Following this strategy may result in:
A. | the firm always choosing projects with the positive NPVs. | |
B. | the firm turning down positive NPV projects that it would clearly accept in an all equity firm. | |
C. | bondholders contributing the full amount of the investment, but only stockholders reaping the benefits of the project. | |
D. | Both A and C. | |
E. | None of the above. |
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