Question: Question: The coronavirus pandemic has no doubt increased the probability and costs of financial distress for many companies, particularly in hard- hit industries such as

Question: The coronavirus pandemic has no doubt increased the probability and costs of financial distress for many companies, particularly in hard- hit industries such as tourism, hospitality and discretionary consumer goods

Explain the effect of an increase in financial distress costs on firm value and the optimal level of debt in a company's capital structure using relevant theory.

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