Pumpkin Pie Industries Has 5 Million Shares of Common Stock

question 105

Multiple Choice

Pumpkin Pie Industries has 5 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10 thousand bonds. If the common shares are selling for $50 per share, the preferred shares are selling for $31 per share, and the bonds are selling for 98 percent of par ($1,000) , what would be the weights used in the calculation of Pumpkin Pie's WACC for common stock, preferred stock, and bonds, respectively?

• A) 33.33 percent, 33.33 percent, 33.33 percent
• B) 83.19 percent, 16.64 percent, 0.17 percent
• C) 85.97 percent, 10.67 percent, 3.38 percent
• D) 27.93 percent, 17.32 percent, 54.75 percent

Analyze the implications of excess capacity in monopolistically competitive markets.

Evaluate the role of advertising in competitive markets and its effects on competition.

Explain why monopolistically competitive firms face a downward-sloping demand curve.

Assess the impact of new market entrants on demand and long-run profitability for existing firms.

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