The Cost of Bankruptcy

question 344

Multiple Choice

The cost of bankruptcy:

• A) Includes only the direct costs associated with the actual bankruptcy filing.
• B) At least partially offsets the benefits of the interest tax shield.
• C) Is minimal due to the regulated processes that have been established under the Bankruptcy and Insolvency Act.
• D) Is not affected by the level of the debt-equity ratio.
• E) Ignores all opportunity costs.