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Answer :
Bankruptcy costs can be broken down into two main types: direct costs and indirect costs.
Direct costs are the expenses that are directly associated with the legal and administrative fees of the bankruptcy process itself. These include costs such as court fees, attorney fees, and other legal expenses. These costs are typically easier to quantify because they are explicit and well-documented by receipts and invoices.
On the other hand, indirect costs are those that arise as a consequence of going bankrupt but are not directly billed by the legal process. These can include costs like the loss of customers, suppliers, and employees, as well as the harm to a company's reputation and brand value. Indirect costs often affect the company's operations and future earnings in more subtle ways, and they do not have clear financial records like direct costs do.
Therefore, the answer is:
C) Indirect costs are difficult to quantify.
Indirect costs can be challenging to measure because they involve estimating the impact on future sales, the value of lost business relationships, or damage to reputation, which are inherently more subjective and variable.
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