Consider the following financial information for Caterpillar Inc. stock. Use this information to answer parts (a), (b), and (c).
Caterpillar
Stock price per share: $126.59
Earnings per share: $11.56
Price to book ratio: 4.8000
(a) Calculate Caterpillar's book value per share.
(b) Calculate Caterpillar's price-to-earnings ratio.
(c) Deere & Company (the producer of John Deere equipment and a competitor for Caterpillar) has earnings per share of $10.08. If Deere & Company has the same price-to-earnings ratio as Caterpillar, what is the value of Deere's stock?
Correct Answer:
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