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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:

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The correct answer is A.The number of new shares that Kinston must issue to raise the capital needed to pay its debt obligation is closest to 4.3 million. This is because the market value of Kinston's assets is $102 million, and the firm has no other liabilities. Therefore, the firm's equity value is $102 million. The firm has 5 million shares outstanding, so the current share price is $20.40. The firm needs to raise $47 million to pay its debt obligation, so it needs to issue 4.3 million new shares.

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