Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its excess cash in 2009 is $23.4.Its Debt-to-Enterprise Value Ratio in 2009 is closest to:
A)0.696
B)0.37
C)0.255
D)0.654

Question

Quizplus · Accepted Answer

C)Net Debt = 10.5 + 39.9 + 239.7 - 23.4 = 266.7
Debt-to-Enterprise Value = Net Debt/Market value of equity + Net debt = 266.7/(39 × 20 + 266.7)= 0.255

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