Use the Information for the Question(s)below

question 1

Multiple Choice

Use the information for the question(s) below.
Kinston Enterprises has no debt and a debt obligation of $47 million that is due now.The market value of Kinston's assets is $102 million,and the firm has no other liabilities.Assume that capital markets are perfect and that Kinston has 5 million shares outstanding.
-The number of new shares that Kinston must issue to raise the capital needed to pay its debt obligation is closest to:

• A)4.3 million.
• B)4.7 million.
• C)5.0 million.
• D)4.0 million.

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Definitions:

Monopolistically Competitive

Describes a market structure where many companies sell products that are similar but not identical, leading to competition based on product differentiation.

Average Total Cost

is the total cost of production (fixed and variable costs combined) divided by the quantity of output produced.

Economic Profits

Represents the difference between a firm's total revenues and its total costs, including both explicit and implicit costs.

Monopolistically Competitive

A type of market organization where a large number of enterprises sell products that are closely related but not exact replicas, enabling these firms to possess a measure of market control.