In 2018, Caterpillar Inc. had about 730 million shares outstanding. Their book value was $30.0 per share, and the market price was $87.00 per share. The company's balance sheet shows that the company had $30.50 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? a. Book debt-to-value ratio b. Markeet debt-to-value ratio C. Measure

In 2018, Caterpillar Inc. had about 730 million shares outstanding. Their book value was $30.0 per share, and the market price was $87.00 per share. The company's balance sheet shows that the company had $30.50 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? a. Book debt-to-value ratio b. Markeet debt-to-value ratio C. Measure

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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FarCry Industries, a maker of telecommunications equipment, has 3 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares are selling for $24 per share, the preferred shares are selling for $13.00 per share, and the bonds are selling for 97 percent of par. What weight should you use for debt in the computation of FarCry's WACC? (Round your answer to 2 decimal places.) Weight used pe here to search 近 TL
MV Corporation has debt with market value of $95 million, common equity with a book value of $101 million, and preferred stock worth $22 million outstanding. Its common equity trades at $45 per share, and the firm has 5.6 million shares outstanding. What weights should MV Corporation use in its WACC? The preferred stock weight for the WACC calculation is __ % ? (Round to two decimal places.)
Blunderbluss Manufacturing's balance sheets report $270 million in total debt, $83 million in short-term investments, and $55 million in preferred stock. Blunderbluss has 5 million shares of common stock outstanding. A financial analyst estimated that Blunderbuss's value of operations is $940 million. What is the analyst's estimate of the intrinsic stock price per share? Round your answer to the nearest cent.
MV Corporation has debt with market value of $95 million, common equity with a book value of $101 million, and preferred stock worth $22 million outstanding. Its common equity trades at $45 per share, and the firm has 5.6 million shares outstanding. What weights should MV Corporation use in its WACC? The common equity weight for the WACC calculation is __ % ? (Round to two decimal places.)
Borland, Inc., has a profit margin of 6.5 percent on sales of $2,600,000. Assume the firm has debt of 8,700,000 and total assets of $15,300,000. What is the firm's ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
OMG Inc. has 7 million shares of common stock outstanding, 5 million shares of preferred stock outstanding, and 4,000 bonds. Suppose the common shares are selling for $30 per share, the preferred shares are selling for $29 per share, and the bonds are selling for 109 percent of par.What weight should you use for debt in the computation of OMG’s WACC? (Round your answer to 2 decimal places.)
Book Co. has 1.3 million shares of common equity with a par (book) value of $1.30, retained earnings of $31.6 million, and its shares have a market value of $50.11 per share. It also has debt with a par value of $20.8 million that is trading at 101% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC? a. What is the market value of its equity? The market value of the equity is $ __ million ? (Round to two decimal places.)
The Bouchard Company's EPS was $6.80 in 2021, up from $3.34 in 2016. The company pays out 50% of its earnings as dividends, and its common stock sells for $35.00. a. Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places. % b. The last dividend was Do = 0.50($6.80) = $3.40. Calculate the next expected dividend, D₁, assuming that the past growth rate continues. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. What is Bouchard's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. %
Book Co. has 1.3 million shares of common equity with a par (book) value of $1.30, retained earnings of $31.6 million, and its shares have a market value of $50.11 per share. It also has debt with a par value of $20.8 million that is trading at 101% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC? What is the market value of its debt? The market value of the debt is $ __ million. ? (Round to two decimal places.)
Given the information below for Seger Corporation, compute the expected share price at the end of 2022 using price ratio analysis. Assume that the historical (arithmetic) average growth rates will remain the same for 2022. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Year Price EPS CFPS SPS 2016 $ 88.60 2.55 7.47 45.10 Using PE ratio Using P/CF ratio Using P/S ratio 2017 $ 94.50 3.26 8.40 50.10 2018 $ 93.20 4.06 8.83 49.50 Share Price 2019 2020 2021 $90.70 $112.20 $127.60 4.76 10.32 53.00 7.20 11.92 64.20 8.201 13.18 72.20
Price Ratio Analysis (LO4, CFA8) The current price of Parador Industries stock is $67 per share. Current earnings per share is $3.40, the earnings growth rate is 6 percent, and Parador does not pay a dividend. The expected return on Parador stock is 13 percent. What one-year-ahead PE ratio is consistent with Parador’s expected return and earnings growth rate?.
The CWI for common stocks (S&P 500) for 1926-2010 (85 years) was $5364.78 based on a geometric mean of 9.6% for that period. The average dividend yield for those 85 years was 5.99 %. a) Calculate the CDY b) Calculate cumulative price change

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