In 2015, Caterpillar Inc. had about 582 million shares outstanding. Their book value was $27.30 per share,

Question:

In 2015, Caterpillar Inc. had about 582 million shares outstanding. Their book value was $27.30 per share, and the market price was $71.50 per share. The company's balance sheet shows that the company had $25.2 billion of long-term debt, which was currently selling near par value.

a. What was Caterpillar's book debt-to-value ratio?

b. What was its market debt-to-value ratio?

c. Which measure should you use to calculate the company's cost of capital?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...