0 Chrome File Edit View History Bookmarks People Window Help O ezto.mheducation.

Question

0 Chrome File Edit View History Bookmarks People Window Help O ezto.mheducation.com/hm.tpx 46% D Sat 9:49 PM Student Home- × D BADM 300 Grou × Study Guide TE PracticeMarketix > D Quiz 22 Nodebt lnc. is a x e Solved: WACC. 5 Macie × x Macie Beltran 17 FINA 307: Fall 2017 FINANCE Quiz 22 instructions I help rese Question 6 (of 10) Save & Exit | Submit 6 value: 10.00 points In 2013 Caterpillar Inc. had about 710 million shares outstanding. Their book value was $42 per share, and the market price was $85.00 per share. The company's balance sheet shows that the company had $29.5 billion of long-term debt, which was currently selling near par value. a. What was Caterpillar's book debt-to-value ratio? (Enter your answer as a decimal rounded to 2 decimal places. Do not round intermediate calculations.) Book value 41 PM 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 .26 c. Which measure should you use to calculate the company's cost of capital? Book value Market value Hints References eBook & Resources 25

Explanation / Answer

a Book debt to Value ratio    0.50 29.5*1000/(29.5*1000+710*42) b Market debt to Value ratio    0.33 29.5*1000/(29.5*1000+710*85) c Market value is correct option

Related Questions

Navigate

• Browse (All)
• Browse
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.