On question Nr 28 they say the answer is:
B) Increased liquidity risk for Plan A bond purchasers.
C) Increased probability of bankruptcy with plan A
According the explanation (here below) the correct answer would be C) (which is the one I thought to be right):
The most likely difference in the cost of debt financing between the current level of 5.0% and the 8.5% for Plan A is that there is a greater probability of bankruptcy. Using the debt-to-equity ratio, we observe that Plan A calls for 2.33 / (2.33 + 1) = 70% debt financing, which is a very large proportion of the capital structure. The chances of bankruptcy are much greater with this heavy reliance on debt financing.