Solution Manual for Principles of Corporate Finance 14th Edition Author:Richard Brealey, Stewart Myers, Franklin Allen and Alex Edmans, All Chapters[1-34]Latest Version

SOLUTION MANUAL FOR
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Principles Of Corporate Finance 14
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th Edition By Richard Brealey, Stewart Myers,
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ALL Chapters (1 - 34)
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, TABLE OF CONTENTS D D



Chapter 1: Introduction to Corporate Finance
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Chapter 2: How to Calculate Present Values
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Chapter 3: Valuing Bonds cf cf cf


Chapter 4: Valuing Stocks cf cf cf


Chapter 5: Net Present Value and Other Investment Criteria
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Chapter 6: Making Investment Decisions with the Net Present Value Rule
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Chapter 7: Introduction to Risk, Diversification, and Portfolio Selection Chapt
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er 8: The Capital Asset Pricing Model
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Chapter 9: Risk and the Cost of Capital
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Chapter 10: Project Analysis cf cf cf


Chapter 11: How to Ensure That Projects Truly Have PositiveNPVs
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Chapter 12: Efficient Markets and Behavioral Finance C
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hapter 13: An Overview of Corporate Financing Chapter
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14: How Corporations Issue Securities
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Chapter 15: Payout Policy cf cf cf


Chapter 16: Does Debt Policy Matter?cf cf cf cf cf


Chapter 17: How Much Should a Corporation Borrow? C
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hapter 18: Financing and Valuation
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Chapter 19: Agency Problems and Corporate Governance Cha
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pter 20: Stakeholder Capitalism and Responsible Business
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Chapter 21: Understanding Options cf cf cf cf


Chapter 22: Valuing Options Chapte cf cf cf cf


r 23: Real Options
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Chapter 24: Credit Risk and the Value of Corporate Debt Chapt
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er 25: The Many Different Kinds of Debt
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Chapter 26: Leasing cf cf




Chapter 27: Managing Risk cf cf cf


Chapter 28: International Financial Management
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Chapter 29: Financial Analysis Cha cf cf cf cf


pter 30: Financial Planning
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Chapter 31: Working Capital Management
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Chapter 32: Mergers cf cf


Chapter 33: Corporate Restructuring cf cf cf

,Chapter 34: Conclusion: What We Do and Do Not Know about Finance
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CHAPTER 1 cf


Introduction to Corporate Finance cf cf cf




The values shown in the solutions may be rounded forDdisplayDpurposes. However, the answers
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were derived using a spreadsheet without any intermediate rounding.
cf c f c f cf c f cf c f c f




Answers to Problem Sets
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1. a. real

b. executive airplanes cf




c. brand names cf




d. financial

e. bonds

*f. investment or capital expenditure cf cf cf




*g. capital budgeting or investment
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h. financing

*Note that f and g are interchangeable in the question.
c f cf cf cf c f cf cf c f c f

Est time: 01-05
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2. A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all real
cf cf cf cf cf c f c f c f c f cf cf cf cf c f cf c f c f cf

a ssets. Real assets are identifiable as items with intrinsic value. The others in the list
cf c f c f c f cf c f c f c f c f c f cf c f c f cf cf c

are fina ncial assets, that is, these assets derive value because of a contractual claim
f c f cf c f cf c f c f c f c f c f c f c f c f c f c f

.
Est time: 01-05
cf cf




3. a.
Financial assets, such as stocks or bank loans, are claims held by investors. Co
cf cf cf cf cf cf cf cf cf cf cf cf cf

rporations sell financial assets to raise the cash to invest in real assets suc
c f c f c f c f c f c f c f c f c f c f c f c f c f

h a s plant and equipment. Some real assets are intangible.
c f cf c f cf c f c f c f c f c f c f




b. Capital expenditure means investment in real assets. Financing means raising
cf c f cf cf cf cf c f c f cf

the cash for this investment.
c f cf cf c f c f

, c. The shares ofDpublic corporations are traded on stock exchanges and can be
cf c f c f c f c f c f cf c f c f cf cf c f

purch ased by a wide range of investors. The shares of closely held corporati
cf cf c f c f c f c f c f c f c f c f c f c f c f

ons are not publicly traded and are held by a small group of private investo
c f c f cf c f c f c f c f c f c f c f c f c f c f c f

rs.

d. Unlimited liability: Investors are responsible for all the firm‘s debts. ADsole pro
c f c f c f c f c f c f c f c f c f c f c f

prieto r has unlimited liability. Investors in corporations have limited liability. They can l
cf cf cf cf cf cf cf cf cf cf cf cf cf

ose their investment, but no more.
cf c f c f c f c f

Est time: 01-05
cf cf