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Asked Nov 1, 2019
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Question: Assuming the debt-equity ratio is 0.70, what is the value of the Microsoft? Which factors are missing when calculating the firm value with just this amount of data?

Shares outstanding: 7,753,000,000

Current stock price: 137.32 

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Expert Answer

Step 1

Firm’s value represents the total value including market capitalization, debt (long-term and short-term both) and cash balance as per company’s balance sheet.

Step 2

Given:

Debt-equity ratio = .70

Shares outstanding = 7,753,000,000

Current stock price = $137.32

Step 3

Calculations:

Formula to calculate...

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Market capitalization = Total shares outstanding x Current share price 7,753,000,000 x $13 7.32 $1,064,641.96 million

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