SOLUTION MANUAL FOR
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Principles Of Corporate Finance
sw sw sw sw
14th Edition By Richard Brealey, Stewart Myers,
sw sw sw sw sw sw
sw ALL Chapters (1 - 34)
sw sw sw sw
, TABLE OF CONTENTS SW SW
Chapter sw 1: sw Introduction to Corporate Finance sw sw sw
Chapter sw 2: sw How to Calculate Present Values
sw sw sw sw
Chapter sw 3: sw Valuing Bonds sw
Chapter sw 4: sw Valuing Stocks sw
Chapter sw 5: sw Net Present Value and Other Investment Criteria
sw sw sw sw sw sw
Chapter sw 6: sw Making Investment Decisions with the Net Present Value Rule
sw sw sw sw sw sw sw sw sw
Chapter 7: Introduction to Risk, Diversification, and Portfolio Selection
sw sw sw sw sw sw sw sw
Chapter 8: The Capital Asset Pricing Model
sw sw sw sw sw sw
Chapter 9: Risk and the Cost of Capital
sw sw sw sw sw sw sw
Chapter 10: Project Analysis
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Chapter 11: How to Ensure That Projects Truly Have PositiveNPVs
sw sw sw sw sw sw sw sw sw sw
Chapter 12: Efficient Markets and Behavioral Finance
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Chapter 13: An Overview of Corporate Financing
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Chapter 14: How Corporations Issue Securities
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Chapter sw 15: Payout Policy
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Chapter sw 16: Does Debt Policy Matter?
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Chapter sw 17: How Much Should a Corporation Borrow?
sw sw sw sw sw sw
Chapter sw 18: Financing and Valuation
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Chapter 19: Agency Problems and Corporate Governance
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Chapter 20: Stakeholder Capitalism and Responsible Business
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Chapter 21: Understanding Options
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Chapter 22: Valuing Options
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Chapter 23: Real Options
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Chapter 24: Credit Risk and the Value of Corporate Debt
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Chapter 25: The Many Different Kinds of Debt
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Chapter 26: Leasing
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Chapter 27: Managing Risk
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Chapter 28: International Financial Management
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Chapter 29: Financial Analysis
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Chapter 30: Financial Planning
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Chapter 31: Working Capital Management
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Chapter 32: Mergers
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Chapter 33: Corporate Restructuring
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,Chapter 34: Conclusion: What We Do and Do Not Know about Finance
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CHAPTER 1 sw
Introduction to Corporate Finance sw sw sw
The values shown in the solutions may be rounded for display purposes. However, the answers
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
werederived using a spreadsheet without any intermediate rounding.
sw sw sw sw sw sw sw sw sw
Answers to Problem Sets
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1. a. real
b. executive airplanes sw
c. brand names sw
d. financial
e. bonds
*f. investment or capital expenditure sw sw sw
*g. capital budgeting or investment
sw sw sw
h. financing
*Note that f and g are interchangeable in the question.
sw sw sw sw sw sw sw sw sw
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
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
assets. Real assets are identifiable as items with intrinsic value. The others in the list are
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
financial assets,that is, these assets derive value because of a contractual claim.
sw sw sw sw sw sw sw sw sw sw sw sw sw
Est time: 01-05
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3. a. Financial assets, such as stocks or bank loans, are claims held by investors.
sw sw sw sw sw sw sw sw sw sw sw sw
Corporations sell financial assets to raise the cash to invest in real assets such
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
as plantand equipment. Some real assets are intangible.
sw sw sw sw sw sw sw sw sw
b. Capital expenditure means investment in real assets. Financing means raising the
sw sw sw sw sw sw sw sw sw sw
cashfor this investment.
sw sw sw sw
, c. The shares of public corporations are traded on stock exchanges and can be
sw sw sw sw sw sw sw sw sw sw sw sw
purchasedby a wide range of investors. The shares of closely held corporations
sw sw sw sw sw sw sw sw sw sw sw sw sw
are not publicly traded and are held by a small group of private investors.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
d. Unlimited liability: Investors are responsible for all the firm‘s debts. A sole
sw sw sw sw sw sw sw sw sw sw sw
proprietor hasunlimited liability. Investors in corporations have limited liability. They
sw sw sw sw sw sw sw sw sw sw sw
can lose their investment, but no more.
sw sw sw sw sw sw sw
Est time: 01-05
sw sw
sw sw sw
Principles Of Corporate Finance
sw sw sw sw
14th Edition By Richard Brealey, Stewart Myers,
sw sw sw sw sw sw
sw ALL Chapters (1 - 34)
sw sw sw sw
, TABLE OF CONTENTS SW SW
Chapter sw 1: sw Introduction to Corporate Finance sw sw sw
Chapter sw 2: sw How to Calculate Present Values
sw sw sw sw
Chapter sw 3: sw Valuing Bonds sw
Chapter sw 4: sw Valuing Stocks sw
Chapter sw 5: sw Net Present Value and Other Investment Criteria
sw sw sw sw sw sw
Chapter sw 6: sw Making Investment Decisions with the Net Present Value Rule
sw sw sw sw sw sw sw sw sw
Chapter 7: Introduction to Risk, Diversification, and Portfolio Selection
sw sw sw sw sw sw sw sw
Chapter 8: The Capital Asset Pricing Model
sw sw sw sw sw sw
Chapter 9: Risk and the Cost of Capital
sw sw sw sw sw sw sw
Chapter 10: Project Analysis
sw sw sw
Chapter 11: How to Ensure That Projects Truly Have PositiveNPVs
sw sw sw sw sw sw sw sw sw sw
Chapter 12: Efficient Markets and Behavioral Finance
sw sw sw sw sw sw
Chapter 13: An Overview of Corporate Financing
sw sw sw sw sw sw
Chapter 14: How Corporations Issue Securities
sw sw sw sw sw sw
Chapter sw 15: Payout Policy
sw sw
Chapter sw 16: Does Debt Policy Matter?
sw sw sw sw
Chapter sw 17: How Much Should a Corporation Borrow?
sw sw sw sw sw sw
Chapter sw 18: Financing and Valuation
sw sw sw sw
Chapter 19: Agency Problems and Corporate Governance
sw sw sw sw sw sw
Chapter 20: Stakeholder Capitalism and Responsible Business
sw sw sw sw sw sw sw
Chapter 21: Understanding Options
sw sw sw
Chapter 22: Valuing Options
sw sw sw
Chapter 23: Real Options
sw sw sw sw
Chapter 24: Credit Risk and the Value of Corporate Debt
sw sw sw sw sw sw sw sw sw
Chapter 25: The Many Different Kinds of Debt
sw sw sw sw sw sw sw
Chapter 26: Leasing
sw sw
Chapter 27: Managing Risk
sw sw sw
Chapter 28: International Financial Management
sw sw sw sw sw
Chapter 29: Financial Analysis
sw sw sw
Chapter 30: Financial Planning
sw sw sw
Chapter 31: Working Capital Management
sw sw sw sw
Chapter 32: Mergers
sw sw
Chapter 33: Corporate Restructuring
sw sw sw sw
,Chapter 34: Conclusion: What We Do and Do Not Know about Finance
sw sw sw sw sw sw sw sw sw sw sw
CHAPTER 1 sw
Introduction to Corporate Finance sw sw sw
The values shown in the solutions may be rounded for display purposes. However, the answers
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
werederived using a spreadsheet without any intermediate rounding.
sw sw sw sw sw sw sw sw sw
Answers to Problem Sets
sw sw sw
1. a. real
b. executive airplanes sw
c. brand names sw
d. financial
e. bonds
*f. investment or capital expenditure sw sw sw
*g. capital budgeting or investment
sw sw sw
h. financing
*Note that f and g are interchangeable in the question.
sw sw sw sw sw sw sw sw sw
Est time: 01-05
sw sw
2. A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all real
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
assets. Real assets are identifiable as items with intrinsic value. The others in the list are
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
financial assets,that is, these assets derive value because of a contractual claim.
sw sw sw sw sw sw sw sw sw sw sw sw sw
Est time: 01-05
sw sw
3. a. Financial assets, such as stocks or bank loans, are claims held by investors.
sw sw sw sw sw sw sw sw sw sw sw sw
Corporations sell financial assets to raise the cash to invest in real assets such
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
as plantand equipment. Some real assets are intangible.
sw sw sw sw sw sw sw sw sw
b. Capital expenditure means investment in real assets. Financing means raising the
sw sw sw sw sw sw sw sw sw sw
cashfor this investment.
sw sw sw sw
, c. The shares of public corporations are traded on stock exchanges and can be
sw sw sw sw sw sw sw sw sw sw sw sw
purchasedby a wide range of investors. The shares of closely held corporations
sw sw sw sw sw sw sw sw sw sw sw sw sw
are not publicly traded and are held by a small group of private investors.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
d. Unlimited liability: Investors are responsible for all the firm‘s debts. A sole
sw sw sw sw sw sw sw sw sw sw sw
proprietor hasunlimited liability. Investors in corporations have limited liability. They
sw sw sw sw sw sw sw sw sw sw sw
can lose their investment, but no more.
sw sw sw sw sw sw sw
Est time: 01-05
sw sw
