Luther Corporation's Stock Price Is $39 Per Share and the Company

question 38

Multiple Choice

Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its Debt -Capital Ratio for 2009 is closest to:

• A)0.696
• B)0.37
• C)1.89
• D)0.654

---

Definitions:

Cost Of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project by discounting future cash flows.

Cash Flow

Cash flow represents the net amount of cash and cash equivalents being transferred into and out of a business, crucial for assessing its liquidity, flexibility, and overall financial health.

WACC

Stands for Weighted Average Cost of Capital, which calculates a firm's cost of capital, considering the proportion of each capital component, including debt and equity.