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One of the indirect costs to bankruptcy is the incentive toward underinvestment. Following this strategy may result in: 1) the firm always choosing projects with
One of the indirect costs to bankruptcy is the incentive toward underinvestment. Following this strategy may result in: 1) the firm always choosing projects with positive NPVs; II) stockholders turning down low-risk, low-return but positive NPV projects; III) the firm declaring and paying high cash dividends 1. I only 2. ll only 3. Ill only 4. II and III only
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