Use to calculate the company cost of capital

Assignment Help Financial Management
Reference no: EM131860589

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 company’s balance sheet shows that the company had $16.20 billion of long-term debt, which was currently selling near par value. a. What was Caterpillar’s 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 company’s cost of capital? Book value Market value

Reference no: EM131860589

Questions Cloud

Should the company buy the new welding system : Compute the NPV for Southward Manufacturing, assuming a discount rate of 12%. Should the company buy the new welding system?
Prestigious investment bank designed new security : A prestigious investment bank designed a new security that pays a quarterly dividend of $2.75 in perpetuity.
Security market value required rate of return : Security Market Value Required Rate of Return Debt $ 10 million 6 % Preferred stock 30 million 8 Common stock 60 million 12 What is its WACC?
Shortest maturity-about bankruptcy : Which of the following statements about bankruptcy is false? Which of the following has the shortest maturity?
Use to calculate the company cost of capital : What was its market debt-to-value ratio? Which measure should you use to calculate the company’s cost of capital?
Most popular ones being financing and leasing : There are many options when it comes to purchasing equipment with the most popular ones being financing and leasing.
Determine the interest payment for three bonds : Determine the interest payment for the following three bonds.
What is the value of company equity and value of icarus : What is the value of the company’s equity? What is the total value of Icarus?
What is par value and current interest payment : what is the par value and current interest payment of the TIPS?

Reviews

Write a Review

Financial Management Questions & Answers

  On the basis of the two payback computations

On the basis of the two payback computations, which of the two companies would you choose? Does this choice cause you any concern?

  The level of importance of various aspects of culture

It is a responsibility of the global firm to ascertain the level of importance of various aspects of culture.

  Random withdrawal rate

The fraction of long-term investment that is liquidated, respectively, in state of nature ω ∈ {L, H}). What does the solution look like for l = 0 and l close to 1?

  What is the company new cost of equity

What is the company’s new cost of equity? What is its new WACC?

  What will be the winning auction offer? price

Roundtree Software is going public using an auction IPO. The firm has received the following? bids: Assuming Roundtree would like to sell 2.16 million shares in its? IPO, what will be the winning auction offer? price?

  Growth stocks tend

Growth stocks tend to:

  National bank should offer to provide effective annual rate

What is the corresponding nominal rate compounded monthly that Second National Bank should offer to provide the same effective annual rate?

  What is the expected payoff to the bondholders

A firm is equally likely to be worth $50 million, $80 million, $120 million, or $150 million. There is one bond outstanding that promises to pay $100 million at an interest rate of 6%. The appropriate cost of capital for the firm's projects is 12%. W..

  Investment in bonds

The goal of the corporation is to incorporate bonds into your company's investment portfolio. What factors affect the price of a fixed-rate bond?

  What was the rate of return to shareholders

If share price changes from $15 to $12 per share, and pays a dividend of $4 per share, what was the rate of return to shareholders?

  Manufactures medical diagnostic equipment

Worldwide Medical Devices (WMD) manufactures medical diagnostic equipment at several locations across Europe. Estimate the weighted average cost of capital.

  Large bank may be willing to accept higher average loss rate

Explain why a large bank may be willing to accept higher average loss rates on loans it is able to credit score.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd