Principles of Corporate Finance – Solution Manual & Instructor Resources (2025 Edition)

SOLUTION MANUAL FOR
l l




Principles Of Corporate Finance 14t
l l l l




h Edition By Richard Brealey, Stewart Myers,
l l l l l l




ALL Chapters (1 - 34)
l l l l

, TABLE OF CONTENTS
D D



Chapterl1:lIntroductionltolCorporatelFinancelC
hapterl2:lHowltolCalculatelPresentlValueslCha
pterl3:lValuinglBonds
Chapterl 4:l Valuingl Stocks
Chapterl 5:l Netl Presentl Valuel andl Otherl Investmentl Criteria
Chapterl 6:l Makingl Investmentl Decisionsl withl thel Netl Presentl Valuel Rule

Chapterl7:lIntroductionltolRisk,lDiversification,landlPortfoliolSelectionlChapterl
8:lThelCapitallAssetlPricinglModel
Chapterl 9:l Riskl andl thel Costl ofl Capital

Chapterl 10:l Projectl Analysis
Chapterl 11:l Howl tol Ensurel Thatl Projectsl Trulyl Havel PositiveNPVs

Chapterl12:lEfficientlMarketslandlBehaviorallFinancelCha
pterl13:lAnlOverviewloflCorporatelFinancinglChapterl14:l
HowlCorporationslIssuelSecurities

Chapterl 15:l Payoutl Policy
Chapterl 16:l Doesl Debtl Policyl Matter?
Chapterl17:lHowlMuchlShouldlalCorporationlBorrow?lCha
pterl18:lFinancinglandlValuation

Chapterl19:lAgencylProblemslandlCorporatelGovernancelChapte
rl20:lStakeholderlCapitalismlandlResponsiblelBusiness

Chapterl21:lUnderstandinglOptionsl
Chapterl22:lValuinglOptionslChapterl
23:lReallOptions

Chapterl24:lCreditlRisklandlthelValueloflCorporatelDebtlChapterl2
5:lThelManylDifferentlKindsloflDebt
Chapterl 26:l Leasing

Chapterl 27:l ManaginglRisk
Chapterl 28:l Internationall Financiall Management

Chapterl29:lFinanciallAnalysislChapt
erl30:lFinanciallPlanning
Chapterl 31:l Workingl Capitall Management

Chapterl 32:l Mergers
Chapterl 33:l CorporatelRestructuring

,Chapterl 34:l Conclusion:l Whatl Wel Dol andl Dol Notl Knowl aboutl Finance




CHAPTERl 1
Introductionl tol Corporatel Finance


Thelvaluesl shownl inl thelsolutionsl mayl bel roundedl forDdisplayDpurposes.l However,l thel answersl werelderi
vedl usingl alspreadsheetl withoutlanyl intermediatel rounding.


Answersl tol Probleml Sets

1. a. real

b. executivel airplanes

c. brandl names

d. financial

e. bonds

*f. investmentl orl capitall expenditure

*g. capitall budgetingl orl investment

h. financing

*Notel thatl fl andl gl arel interchangeablel inl thel question.
Estl time:l 01-05



2. Altrademark,lalfactory,lundevelopedlland,l andl yourl workl forcel(c,ld,le,landl g)larel alll reallalssets.l R
eall assetsl arel identifiablel asl itemsl withl intrinsicl value.l Thel othersl inl thel listl arel finalnciall assets
,lthatl is,l thesel assetsl derivel valuel becausel ofl al contractuall claim.
Estl time:l 01-05



3. a.
Financiallassets,lsuchlaslstockslorlbanklloans,larelclaimslheldlbylinvestors.lCorpor
ationsl selll financiall assetsl tol raisel thel cashl tol investl inl reall assetsl suchl alsl plantlan
dl equipment.l Somel reall assetsl arel intangible.

b. Capitall expenditurel meansl investmentl inl reall assets.l Financingl meansl raisingl thelca
shlforl thisl investment.

, c. Thel sharesl ofDpublicl corporationsl arel tradedl onl stockl exchangesl andl canl bel purchlas
edlbyl al widel rangel ofl investors.l Thel sharesl ofl closelyl heldl corporationsl arel notlpublic
lyl tradedl andl arel heldl byl al smalll groupl ofl privatel investors.

d. Unlimitedl liability:l Investorsl arel responsiblel forl alll thel firm‘sl debts.l ADsolel proprietolrlh
aslunlimitedlliability.lInvestorslinlcorporationslhavellimitedlliability.lTheylcanlloseltheirl inv
estment,l butl nol more.
Estl time:l 01-05