Question
In 2018, Caterpillar Inc. had about 759 million shares outstanding. Their book value was $35.0 per share, and the market price was $94.50 per share.
In 2018, Caterpillar Inc. had about 759 million shares outstanding. Their book value was $35.0 per share, and the market price was $94.50 per share. The companys balance sheet shows that the company had $32.50 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?
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