Question

Consider the table given below to answer the first question (shares and market values in millions). Callaway Golf (ELY) Alaska Air Group (ALK) Entergy (ETR) Yum! Brands (YUM) General Electric (GE) Number of Shares 93.8 124.7 178.5 408.7 9,331.2 X X * * Market Stock Price = Capitalization $ 8.76 = $ 821 $ 80.77 = $ 10,674 $ 75.92 = $ 13,551 $ 77.77 = $ 31,875 $ 30.34 = $283, 691 * a. The price of Entergy stock has risen to $90. What is the market value of the firm's equity If the number of outstanding shares does not change? (Enter your answer In billions rounded to 3 decimal places.) * Answer is complete but not entirely correct. Market $16.085.000® value b. The rating agency has revised Catalytic Concept's bond rating to A (use Table 2.2). What Interest rate, approximately, would the company now need to pay on its bonds? (Enter your answer as a percent rounded to 2 decimal places.) Answer is complete and correct. Interest rate 3.03 %

Answer 1

Market value of firm	Market price per share*No of shares outstanding
Market value of firm	90*178.5
Market value of firm	$16,065	million
We need to convert market value in billion from million
Market value of firm	$16.065	billion
	(16,065*0.001)
Thus, market value of firm is $16.065 billion