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4 November, 20:12

A firm has current assets that could be sold for their book value of $34 million. The book value of its fixed assets is $72 million, but they could be sold for $102 million today. The firm has total debt with a book value of $52 million, but interest rate declines have caused the market value of the debt to increase to $62 million. What is this firm's market-to-book ratio?

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  1. 4 November, 20:26
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    2.51

    Explanation:

    MV - Market Value

    BV - Book Value

    MV = 34 + 102=$ 136 million

    BV = 34 + 72 - 52 = $54 million

    MV / BV = 136 / 54 = 2.51

    The firm's market-to-book ratio is 2.51
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