Question 1: General Mills, Inc., the large manufacturer of packaged foods, reported the following in its annual report for the year ending May 25, 2008 (in millions):
Short-term borrowing $ 442.0
Long-term debt 4,348.7
Stockholders' equity 6,215.8
The short-term borrowing and long-term debt are carried on the balance sheet at approximately their market value. The firm's 337.5 million shares traded at $62 per share when the annual report was released. From these numbers, calculate General Mills's enterprise market value (the market value of the firm).
Question 2: Hewlett-Packard, the computer equipment manufacturer and systems consultant, had 2,473 million shares outstanding in May 2008, trading at $47 per share. Its most recent quarterly report listed the following (in millions):
'Investments in interest-bearing debt securities and deposits $ 11,513
Short-term borrowings 711
Long-term debt 7,688
Stockholders' equity 38,153
Calculate the enterprise market value of Hewlett-Packard. The question requires you to consider the treatment of the interest-bearing debt investments. Are they part of the enterprise?