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Ebook details:
عنوان: Core Principles and Applications (Mcgraw-hill Education Series in Finance, Insurance, and Real Estate)
نویسنده: 9781259289903
ناشر: McGraw-Hill Education; 5 edition (February 7, 2017)
زبان: English
شابک: 1259289907, 978-1259289903
حجم: 40 Mb
فرمت: Epub + Converted pdf

Half title The Mcgraw-Hill Education Series in Finance, Insurance, and Real Estate Title Copyright Dedication About the Authors From the Authors Pedagogy Comprehensive Teaching and Learning Package Acknowledgments Brief Contents Contents List of Boxes PART ONE OVERVIEW CHAPTER ONE Introduction to Corporate Finance 1.1 What Is Corporate Finance? The Balance Sheet Model of the Firm The Financial Manager 1.2 The Corporate Firm The Sole Proprietorship The Partnership The Corporation A Corporation by Another Name . . . 1.3 The Importance of Cash Flows 1.4 The Goal of Financial Management Possible Goals The Goal of Financial Management A More General Goal 1.5 The Agency Problem and Control of the Corporation Agency Relationships Management Goals Do Managers Act in the Stockholders’ Interests? Stakeholders 1.6 Regulation The Securities Act of 1933 and the Securities Exchange Act of 1934 Summary and Conclusions Closing Case: East Coast Yachts CHAPTER TWO Financial Statements and Cash Flow 2.1 The Balance Sheet Accounting Liquidity Debt versus Equity Value versus Cost 2.2 The Income Statement Generally Accepted Accounting Principles Noncash Items Time and Costs 2.3 Taxes Corporate Tax Rates Average versus Marginal Tax Rates 2.4 Net Working Capital 2.5 Cash Flow of the Firm 2.6 The Accounting Statement of Cash Flows Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities Summary and Conclusions Closing Case: Cash Flows at East Coast Yachts CHAPTER THREE Financial Statements Analysis and Financial Models 3.1 Financial Statements Analysis Standardizing Statements Common-Size Balance Sheets Common-Size Income Statements 3.2 Ratio Analysis Short-Term Solvency or Liquidity Measures Long-Term Solvency Measures Asset Management or Turnover Measures Profitability Measures Market Value Measures 3.3 The DuPont Identity A Closer Look at ROE Problems with Financial Statement Analysis 3.4 Financial Models A Simple Financial Planning Model The Percentage of Sales Approach 3.5 External Financing and Growth EFN and Growth Financial Policy and Growth A Note about Sustainable Growth Rate Calculations 3.6 Some Caveats Regarding Financial Planning Models Summary and Conclusions Closing Case: Ratios and Financial Planning at East Coast Yachts PART TWO VALUATION AND CAPITAL BUDGETING CHAPTER FOUR Discounted Cash Flow Valuation 4.1 Valuation: The One-Period Case 4.2 The Multiperiod Case Future Value and Compounding The Power of Compounding: A Digression Present Value and Discounting The Algebraic Formula 4.3 Compounding Periods Distinction between Annual Percentage Rate and Effective Annual Rate Compounding over Many Years Continuous Compounding 4.4 Simplifications Perpetuity Growing Perpetuity Annuity Trick 1: A Delayed Annuity Trick 2: Annuity Due Trick 3: The Infrequent Annuity Trick 4: Equating Present Value of Two Annuities Growing Annuity 4.5 Loan Types and Loan Amortization Pure Discount Loans Interest-Only Loans Amortized Loans 4.6 What Is a Firm Worth? Summary and Conclusions Closing Case: The MBA Decision CHAPTER FIVE Interest Rates and Bond Valuation 5.1 Bonds and Bond Valuation Bond Features and Prices Bond Values and Yields Interest Rate Risk Finding the Yield to Maturity: More Trial and Error 5.2 More on Bond Features Long-Term Debt: The Basics The Indenture Terms of a Bond Security Seniority Repayment The Call Provision Protective Covenants 5.3 Bond Ratings 5.4 Some Different Types of Bonds Government Bonds Zero Coupon Bonds Floating-Rate Bonds Other Types of Bonds 5.5 Bond Markets How Bonds Are Bought and Sold Bond Price Reporting A Note on Bond Price Quotes 5.6 Inflation and Interest Rates Real versus Nominal Rates The Fisher Effect 5.7 Determinants of Bond Yields The Term Structure of Interest Rates Bond Yields and the Yield Curve: Putting It All Together Conclusion Summary and Conclusions Closing Case: Financing East Coast Yachts’ Expansion Plans with a Bond Issue CHAPTER SIX Stock Valuation 6.1 The Present Value of Common Stocks Dividends versus Capital Gains Valuation of Different Types of Stocks Case 1 (Zero Growth) Case 2 (Constant Growth) Case 3 (Differential Growth) 6.2 Estimates of Parameters in the Dividend Discount Model Where Does g Come From? Where Does R Come From? A Healthy Sense of Skepticism The No-Payout Firm 6.3 Comparables Price-to-Earnings Ratio Enterprise Value Ratios 6.4 Valuing Stocks Using Free Cash Flows 6.5 Some Features of Common and Preferred Stocks Common Stock Features Shareholder Rights Proxy Voting Classes of Stock Other Rights Dividends Preferred Stock Features Stated Value Cumulative and Noncumulative Dividends Is Preferred Stock Really Debt? 6.6 The Stock Markets Dealers and Brokers Organization of the NYSE Members Operations Floor Activity NASDAQ Operations ECNs Stock Market Reporting Summary and Conclusions Closing Case: Stock Valuation at Ragan Engines CHAPTER SEVEN Net Present Value and Other Investment Rules 7.1 Why Use Net Present Value? 7.2 The Payback Period Method Defining the Rule Problems with the Payback Method Problem 1: Timing of Cash Flows within the Payback Period Problem 2: Payments after the Payback Period Problem 3: Arbitrary Standard for Payback Period Managerial Perspective Summary of Payback 7.3 The Discounted Payback Period Method 7.4 The Average Accounting Return Method Defining the Rule Step 1: Determining Average Net Income Step 2: Determining Average Investment Step 3: Determining AAR Analyzing the Average Accounting Return Method 7.5 The Internal Rate of Return 7.6 Problems with the IRR Approach Definition of Independent and Mutually Exclusive Projects Two General Problems Affecting Both Independent and Mutually Exclusive Projects Problem 1: Investing or Financing? Problem 2: Multiple Rates of Return NPV Rule Modified IRR The Guarantee against Multiple IRRs General Rules Problems Specific to Mutually Exclusive Projects The Scale Problem The Timing Problem Redeeming Qualities of IRR A Test 7.7 The Profitability Index Calculation of Profitability Index Application of the Profitability Index 7.8 The Practice of Capital Budgeting Summary and Conclusions Closing Case: Bullock Gold Mining CHAPTER EIGHT Making Capital Investment Decisions 8.1 Incremental Cash Flows Cash Flows—Not Accounting Income Sunk Costs Opportunity Costs Side Effects Allocated Costs 8.2 The Baldwin Company: An Example An Analysis of the Project Investments Income and Taxes Salvage Value Cash Flow Net Present Value Which Set of Books? A Note on Net Working Capital A Note on Depreciation Interest Expense 8.3 Inflation and Capital Budgeting Discounting: Nominal or Real? 8.4 Alternative Definitions of Operating Cash Flow The Bottom-Up Approach The Top-Down Approach The Tax Shield Approach Conclusion 8.5 Some Special Cases of Discounted Cash Flow Analysis Setting the Bid Price Evaluating Equipment Options with Different Lives The General Decision to Replace Summary and Conclusions Closing Case: Expansion at East Coast Yachts Closing Case: Bethesda Mining Company CHAPTER NINE Risk Analysis, Real Options, and Capital Budgeting 9.1 Decision Trees Warning 9.2 Sensitivity Analysis, Scenario Analysis, and Break-Even Analysis Sensitivity Analysis and Scenario Analysis Revenues Costs Break-Even Analysis Accounting Profit Financial Breakeven 9.3 Monte Carlo Simulation Step 1: Specify the Basic Model Step 2: Specify a Distribution for Each Variable in the Model Step 3: The Computer Draws One Outcome Step 4: Repeat the Procedure Step 5: Calculate NPV 9.4 Real Options The Option to Expand The Option to Abandon Timing Options Summary and Conclusions Closing Case: Bunyan Lumber, LLC PART THREE RISK AND RETURN CHAPTER TEN Risk and Return: Lessons from Market History 10.1 Returns Dollar Returns Percentage Returns 10.2 Holding Period Returns 10.3 Return Statistics 10.4 Average Stock Returns and Risk-Free Returns 10.5 Risk Statistics Variance Normal Distribution and Its Implications for Standard Deviation 10.6 The U.S. Equity Risk Premium: Historical and International Perspectives 10.7 2008: A Year of Financial Crisis 10.8 More on Average Returns Arithmetic versus Geometric Averages Calculating Geometric Average Returns Arithmetic Average Return or Geometric Average Return? Summary and Conclusions Closing Case: A Job at East Coast Yachts, Part 1 CHAPTER ELEVEN Return and Risk: The Capital Asset Pricing Model (CAPM) 11.1 Individual Securities 11.2 Expected Return, Variance, and Covariance Expected Return and Variance Covariance and Correlation 11.3 The Return and Risk for Portfolios The Expected Return on a Portfolio Variance and Standard Deviation of a Portfolio The Variance Standard Deviation of a Portfolio The Diversification Effect An Extension to Many Assets 11.4 The Efficient Set The Two-Asset Case The Efficient Set for Many Securities 11.5 Riskless Borrowing and Lending The Optimal Portfolio 11.6 Announcements, Surprises, and Expected Returns Expected and Unexpected Returns Announcements and News 11.7 Risk: Systematic and Unsystematic Systematic and Unsystematic Risk Systematic and Unsystematic Components of Return 11.8 Diversification and Portfolio Risk The Effect of Diversification: Another Lesson from Market History The Principle of Diversification Diversification and Unsystematic Risk Diversification and Systematic Risk 11.9 Market Equilibrium Definition of the Market Equilibrium Portfolio Definition of Risk When Investors Hold the Market Portfolio The Formula for Beta A Test 11.10 Relationship between Risk and Expected Return (CAPM) Expected Return on Individual Security Summary and Conclusions Closing Case: A Job at East Coast Yachts, Part 2 CHAPTER TWELVE Risk, Cost of Capital, and Valuation 12.1 The Cost of Equity Capital 12.2 Estimating the Cost of Equity Capital with the CAPM The Risk-Free Rate Market Risk Premium Method 1: Using Historical Data Method 2: Using the Dividend Discount Model (DDM) 12.3 Estimation of Beta Real-World Betas Stability of Beta Using an Industry Beta 12.4 Determinants of Beta Cyclicality of Revenues Operating Leverage Financial Leverage and Beta 12.5 Dividend Discount Model Comparison of DDM and CAPM 12.6 Cost of Capital for Divisions and Projects 12.7 Cost of Fixed Income Securities Cost of Debt Cost of Preferred Stock 12.8 The Weighted Average Cost of Capital 12.9 Valuation With RWACC Project Evaluation and the RWACC Firm Valuation with the RWACC 12.10 Estimating Eastman Chemical’s Cost of Capital Eastman’s Cost of Equity Eastman’s Cost of Debt Eastman’s WACC 12.11 Flotation Costs and the Weighted Average Cost of Capital The Basic Approach Flotation Costs and NPV Internal Equity and Flotation Costs Summary and Conclusions Closing Case: The Cost of Capital for Swan Motors PART FOUR CAPITAL STRUCTURE AND DIVIDEND POLICY CHAPTER THIRTEEN Efficient Capital Markets and Behavioral Challenges 13.1 A Description of Efficient Capital Markets Foundations of Market Efficiency Rationality Independent Deviations from Rationality Arbitrage 13.2 The Different Types of Efficiency The Weak Form The Semistrong and Strong Forms Some Common Misconceptions about the Efficient Market Hypothesis The Efficacy of Dart Throwing Price Fluctuations Stockholder Disinterest 13.3 The Evidence The Weak Form The Semistrong Form Event Studies The Record of Mutual Funds The Strong Form 13.4 The Behavioral Challenge to Market Efficiency Rationality Independent Deviations from Rationality Arbitrage 13.5 Empirical Challenges to Market Efficiency 13.6 Reviewing the Differences Representativeness Conservatism 13.7 Implications for Corporate Finance 1. Accounting Choices, Financial Choices, and Market Efficiency 2. The Timing Decision 3. Speculation and Efficient Markets 4. Information in Market Prices Summary and Conclusions Closing Case: Your 401(K) Account at East Coast Yachts CHAPTER FOURTEEN Capital Structure: Basic Concepts 14.1 The Capital Structure Question and the Pie Theory 14.2 Maximizing Firm Value versus Maximizing Stockholder Interests 14.3 Financial Leverage and Firm Value: An Example Leverage and Returns to Shareholders The Choice between Debt and Equity A Key Assumption 14.4 Modigliani and Miller: Proposition II (No Taxes) Risk to Equityholders Rises with Leverage Proposition II: Required Return to Equityholders Rises with Leverage MM: An Interpretation 14.5 Taxes The Basic Insight Present Value of the Tax Shield Value of the Levered Firm Expected Return and Leverage under Corporate Taxes The Weighted Average Cost of Capital (RWACC) and Corporate Taxes Stock Price and Leverage under Corporate Taxes Summary and Conclusions Closing Case: Stephenson Real Estate Recapitalization CHAPTER FIFTEEN Capital Structure: Limits to the Use of Debt 15.1 Costs of Financial Distress Direct Bankruptcy Costs Indirect Bankruptcy Costs Agency Costs Selfish Investment Strategy 1: Incentive to Take Large Risks Selfish Investment Strategy 2: Incentive Toward Underinvestment Selfish Investment Strategy 3: Milking the Property Summary of Selfish Strategies 15.2 Can Costs of Debt be Reduced? Protective Covenants Consolidation of Debt 15.3 Integration of Tax Effects and Financial Distress Costs Pie Again 15.4 Signaling 15.5 Shirking, Perquisites, and Bad Investments: A Note on Agency Cost of Equity Effect of Agency Costs of Equity on Debt–Equity Financing Free Cash Flow 15.6 The Pecking-Order Theory Rules of the Pecking Order Rule #1 Use Internal Financing Rule #2 Issue Safe Securities First Implications 15.7 How Firms Establish Capital Structure 15.8 A Quick Look at the Bankruptcy Process Liquidation and Reorganization Bankruptcy Liquidation Bankruptcy Reorganization Financial Management and the Bankruptcy Process Agreements to Avoid Bankruptcy Summary and Conclusions Closing Case: Dugan Corporation’s Capital Budgeting CHAPTER SIXTEEN Dividends and Other Payouts 16.1 Different Types of Dividends 16.2 Standard Method of Cash Dividend Payment 16.3 The Benchmark Case: An Illustration of the Irrelevance of Dividend Policy Current Policy: Dividends Set Equal to Cash Flow Alternative Policy: Initial Dividend Is Greater than Cash Flow The Indifference Proposition Homemade Dividends A Test Dividends and Investment Policy 16.4 Repurchase of Stock Dividend versus Repurchase: Conceptual Example Dividends versus Repurchases: Real-World Considerations 1. Flexibility 2. Executive Compensation 3. Offset to Dilution 4. Undervaluation 5. Taxes 16.5 Personal Taxes, Issuance Costs, and Dividends Firms without Sufficient Cash to Pay a Dividend Firms with Sufficient Cash to Pay a Dividend Summary on Personal Taxes 16.6 Real-World Factors Favoring A High-Dividend Policy Desire for Current Income Behavioral Finance Agency Costs Information Content of Dividends and Dividend Signaling 16.7 The Clientele Effect: A Resolution of Real-World Factors? 16.8 What We Know and Do Not Know about Dividend Policy Corporate Dividends Are Substantial Fewer Companies Pay Dividends Corporations Smooth Dividends Some Survey Evidence about Dividends 16.9 Putting It All Together 16.10 Stock Dividends and Stock Splits Example of a Small Stock Dividend Example of a Stock Split Example of a Large Stock Dividend Value of Stock Splits and Stock Dividends The Benchmark Case Popular Trading Range Reverse Splits Summary and Conclusions Closing Case: Electronic Timing, Inc. PART FIVE SPECIAL TOPICS CHAPTER SEVENTEEN Options and Corporate Finance 17.1 Options 17.2 Call Options The Value of a Call Option at Expiration 17.3 Put Options The Value of a Put Option at Expiration 17.4 Selling Options 17.5 Option Quotes 17.6 Combinations of Options 17.7 Valuing Options Bounding the Value of a Call Lower Bound Upper Bound The Factors Determining Call Option Values Exercise Price Expiration Date Stock Price The Key Factor: The Variability of the Underlying Asset The Interest Rate A Quick Discussion of Factors Determining Put Option Values 17.8 An Option Pricing Formula A Two-State Option Model Determining the Delta Determining the Amount of Borrowing Risk-Neutral Valuation The Black–Scholes Model 17.9 Stocks and Bonds as Options The Firm Expressed in Terms of Call Options The Stockholders The Bondholders The Firm Expressed in Terms of Put Options The Stockholders Cash Flow Is Less Than $800 Cash Flow Is Greater Than $800 The Bondholders Cash Flow Is Less Than $800 Cash Flow Is Greater Than $800 A Resolution of the Two Views A Note on Loan Guarantees Summary and Conclusions Closing Case: Exotic Cuisines Employee Stock Options CHAPTER EIGHTEEN Short-Term Finance and Planning 18.1 Tracing Cash and Net Working Capital 18.2 The Operating Cycle and the Cash Cycle Defining the Operating and Cash Cycles The Operating Cycle The Cash Cycle The Operating Cycle and the Firm’s Organization Chart Calculating the Operating and Cash Cycles The Operating Cycle The Cash Cycle Interpreting the Cash Cycle 18.3 Some Aspects of Short-Term Financial Policy The Size of the Firm’s Investment in Current Assets Alternative Financing Policies for Current Assets An Ideal Case Different Policies for Financing Current Assets Which Financing Policy Is Best? Current Assets and Liabilities in Practice 18.4 The Cash Budget Sales and Cash Collections Cash Outflows The Cash Balance 18.5 Short-Term Borrowing Unsecured Loans Compensating Balances Cost of a Compensating Balance Letters of Credit Secured Loans Accounts Receivable Financing Inventory Loans Commercial Paper Trade Credit Understanding Trade Credit Terms Cash Discounts 18.6 A Short-Term Financial Plan Summary and Conclusions Closing Case: Keafer Manufacturing Working Capital Management CHAPTER NINETEEN Raising Capital 19.1 Early-Stage Financing and Venture Capital Venture Capital Stages of Financing Some Venture Capital Realities Crowdfunding 19.2 Selling Securities to the Public: The Basic Procedure 19.3 Alternative Issue Methods 19.4 Underwriters Choosing an Underwriter Types of Underwriting Firm Commitment Underwriting Best Efforts Underwriting Dutch Auction Underwriting The Green Shoe Provision The Aftermarket Lockup Agreements The Quiet Period 19.5 IPOs and Underpricing Evidence on Underpricing IPO Underpricing: The 1999–2000 Experience Why Does Underpricing Exist? The Partial Adjustment Phenomenon 19.6 What CFOs Say About the IPO Process 19.7 SEOs and the Value of the Firm 19.8 The Cost of Issuing Securities 19.9 Rights The Mechanics of a Rights Offering Subscription Price Number of Rights Needed to Purchase a Share Effect of Rights Offering on Price of Stock Effects on Shareholders The Underwriting Arrangements The Rights Puzzle 19.10 Dilution Dilution of Proportionate Ownership Dilution of Value: Book versus Market Values A Misconception The Correct Arguments 19.11 Issuing Long-Term Debt 19.12 Shelf Registration Summary and Conclusions Closing Case: East Coast Yachts Goes Public CHAPTER TWENTY International Corporate Finance 20.1 Terminology 20.2 Foreign Exchange Markets and Exchange Rates Exchange Rates Exchange Rate Quotations Cross-Rates and Triangle Arbitrage Types of Transactions 20.3 Purchasing Power Parity Absolute Purchasing Power Parity Relative Purchasing Power Parity The Basic Idea The Result Currency Appreciation and Depreciation 20.4 Interest Rate Parity, Unbiased Forward Rates, and the International Fisher Effect Covered Interest Arbitrage Interest Rate Parity Forward Rates and Future Spot Rates Putting It All Together Uncovered Interest Parity The International Fisher Effect 20.5 International Capital Budgeting Method 1: The Home Currency Approach Method 2: The Foreign Currency Approach Unremitted Cash Flows 20.6 Exchange Rate Risk Short-Run Exposure Long-Run Exposure Translation Exposure Managing Exchange Rate Risk 20.7 Political Risk Summary and Conclusions Closing Case: East Coast Yachts Goes International APPENDIX A Mathematical Tables APPENDIX B Solutions to Selected End-of-Chapter Problems APPENDIX C Using the HP 10B and TI BA II Plus Financial Calculators NAME INDEX COMPANY INDEX SUBJECT INDEX KEY EQUATIONS

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