Which of the following statements is FALSE?

Question content area bottom Part 1

A. When investor of the firm choose to not invest in a positive NPV project, the firm will experience an under-investment issue.

B. If there is no chance the firm will default and impose losses on its debt holders this will cause agency costs of debt

C. When managers consider new projects to finance, Positive NPV projects may not be considered when the firm is faced with financial distress.

D. The firms optimal capital structure choice will be effected by increasing the level of leverage in the firm and is another cost depicting agency cost