(Solution) - In 2013 Caterpillar Inc had about 648 million shares outstanding -(2025 Original AI-Free Solution)

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In 2013 Caterpillar Inc. had about 648 million shares outstanding. Their book value was $27 per share, and the market price was $83.50 per share. The company's balance sheet shows that the company had $25.7 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 of these two measures should you use to calculate the company's cost of capital?