Question
In 2013 Caterpillar Inc. had about 649 million shares outstanding. Their book value was $28 per share, and the market price was $84.00 per share.
| In 2013 Caterpillar Inc. had about 649 million shares outstanding. Their book value was $28 per share, and the market price was $84.00 per share. The companys balance sheet shows that the company had $24.7 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? |
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Options Futures And Other Derivatives
Authors: John C. Hull
9th Edition
0133456315, 9780133456318
