Which One of the Following Is an Example of a Direct

question 31

Multiple Choice

Which one of the following is an example of a direct bankruptcy cost?

• A)Operating at a debt-equity ratio that is less than the optimal ratio
• B)Reducing the dividend payout ratio as a means of increasing a firm's equity
• C)Forgoing a positive net present value project to conserve current cash
• D)Incurring legal fees for the preparation of bankruptcy filings
• E)Losing a key customer due to concerns over a firm's financial viability