In 2015, Caterpillar Inc. had about 653 million shares outstanding. Their book value was $32.3 per share, and the market price was $74.00 per share. The companys balance sheet shows that the company had $20.20 billion of long-term debt, which was currently selling near par value.

a. What was Caterpillars book debt-to-value ratio? Book Value______?

b. What was its market debt-to-value ratio? Market value_______?

c.

Which measure should you use to calculate the companys cost of capital?

Book value or

Market value