When Financial Distress Is a Possibility, the Value of a Levered

Multiple Choice

When financial distress is a possibility, the value of a levered firm is a function of:
I.value of the firm if all-equity-financed;
II.present value of tax shield;
III.present value of costs of financial distress;
IV.present value of omitted dividend payments

A) I only
B) I + II
C) I + II − III
D) I + II - III − IV