Question
In 2015, Caterpillar Inc. had about 657 million shares outstanding. Their book value was $36.3 per share, and the market price was $76.00 per share.
In 2015, Caterpillar Inc. had about 657 million shares outstanding. Their book value was $36.3 per share, and the market price was $76.00 per share. The companys balance sheet shows that the company had $16.20 billion of long-term debt, which was currently selling near par value. a. What was Caterpillars book debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) b. What was its market debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) c. Which measure should you use to calculate the companys cost of capital? Book value Market value
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