Question
13-1) In 2013 Caterpillar Inc. had about 656 million shares outstanding. Their book value was $35 per share, and the market price was $87.50 per
13-1)
In 2013 Caterpillar Inc. had about 656 million shares outstanding. Their book value was $35 per share, and the market price was $87.50 per share. The companys balance sheet shows that the company had $17.7 billion of long-term debt, which was currently selling near par value.
a.What was Caterpillars book debt-to-value ratio?(Enter your answer as a decimal rounded to 2 decimal places. Do not round intermediate calculations.)
Book value
b.What was its market debt-to-value ratio?(Enter your answer as a decimal rounded to 2 decimal places. Do not round intermediate calculations.)
Market value
c.Which measure should you use to calculate the companys cost of capital?Book valueMarket value
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Management Theory And Practice
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
3rd Canadian Edition
017658305X, 978-0176583057
