A Company Has a Share Price of $22

question 42

Multiple Choice

A company has a share price of $22.15 and 118 million shares outstanding. Its market-to-book ratio is 4.2, its book debt-equity ratio is 3.2, and it has cash of $800 million. How much would it cost to take over this business assuming you pay its enterprise value?

• A) $1.9 billion
• B) $3.044 billion
• C) $4.566 billion
• D) $3.8 billion

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Definitions:

Secondary Shoes

Components of a drum brake system positioned to assist in braking, usually having less wear than primary shoes.

Cast Iron Master Cylinder

A crucial component in a vehicle’s brake system, typically made from cast iron, that uses hydraulic pressure to control brake application.

Hone Lubricate

The process of applying lubricant during the honing of engine cylinders or other surfaces to facilitate the smoothing operation and prolong the life of the honing tool.

Brake Fluid

A type of hydraulic fluid used in brake systems to transfer force into pressure, enabling braking.