One of the Factors That Determines the Present Value (PV)of

question 75

Multiple Choice

One of the factors that determines the present value (PV) of financial distress costs is:

• A)costs of unpaid interest arrears.
• B)loss of dividend payments.
• C)probability of financial distress.
• D)employee compensation.
• E)size of the interest tax shield.

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Definitions:

Instrument

A legal document formally recording a right, liability, or transaction.

Payment

The act of providing money or other compensation to fulfill a transaction or obligation.

Order Paper

A financial or legal document that is payable to the holder or the individual whose name appears on the document.

Endorsed

Officially approved or recommended; in finance, it refers to signing the back of a negotiable document to make it payable to someone other than the stated payee.