Use the Following Information to Answer the Question(s)below

question 102

Multiple Choice

Use the following information to answer the question(s) below.
d'Anconia Copper is considering issuing one-year debt,and has come up with the following estimates of the value of the interest tax shield and the probability of distress for different levels of debt:
-If in the event of distress,the present value of distress costs is equal to $5 million,then the optimal level of debt for d'Anconia Copper is:

• A)$25 million.
• B)$50 million.
• C)$60 million.
• D)$70 million.

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