Complete Solutions Manual — Principles of Corporate Finance, 13th Edition — Richard A. Brealey — (All Chapters Covered 1–33, Solutions Included)

Principles of Corporate
Finance 13th Edition
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SOLUTIONS
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MANUAL
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Richard Brealey
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Stewart Myers
Franklin Allen
Alex Edmans
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Comprehensive Solutions Manual for Instructors
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and Students

© Richard Brealey, Stewart Myers, Franklin Allen & Alex Edmans.
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All rights reserved. Reproduction or distribution without permission is prohibited.
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© Successhands

, Solutions Manual for Principles of Corporate Finance (13th Edition)
Richard Brealey, Stewart Myers, Franklin Allen & Alex Edmans



PART ONE: VALUE
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Chapter 1. Introduction to Corporate Finance
Chapter 2. How to Calculate Present Values
Chapter 3. Valuing Bonds
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Chapter 4. Valuing Stocks
Chapter 5. Net Present Value and Other Investment Criteria
Chapter 6. Making Investment Decisions with the Net Present Value Rule

PART TWO: RISK
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Chapter 7. Introduction to Risk, Diversification, and Portfolio Selection
Chapter 8. The Capital Asset Pricing Model
Chapter 9. Risk and the Cost of Capital
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PART THREE: BEST PRACTICES IN CAPITAL BUDGETING
Chapter 10. Project Analysis
Chapter 11. How to Ensure That Projects Truly Have Positive NPVs
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PART FOUR: FINANCING DECISIONS AND MARKET EFFICIENCY
Chapter 12. Efficient Markets and Behavioral Finance
Chapter 13. An Overview of Corporate Financing
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Chapter 14. How Corporations Issue Securities

PART FIVE: PAYOUT POLICY AND CAPITAL STRUCTURE
Chapter 15. Payout Policy
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Chapter 16. Does Debt Policy Matter?
Chapter 17. How Much Should a Corporation Borrow?
Chapter 18. Financing and Valuation
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PART SIX: CORPORATE OBJECTIVES AND GOVERNANCE
Chapter 19. Agency Problems and Corporate Governance
Chapter 20. Stakeholder Capitalism and Responsible Business
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, PART SEVEN: OPTIONS
Chapter 21. Understanding Options
Chapter 22. Valuing Options
Chapter 23. Real Options

PART EIGHT: DEBT FINANCING
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Chapter 24. Credit Risk and the Value of Corporate Debt
Chapter 25. The Many Different Kinds of Debt
Chapter 26. Leasing
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PART NINE: RISK MANAGEMENT
Chapter 27. Managing Risk
Chapter 28. International Financial Management
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PART TEN: FINANCIAL PLANNING AND WORKING CAPITAL
MANAGEMENT
Chapter 29. Financial Analysis
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Chapter 30. Financial Planning
Chapter 31. Working Capital Management

PART ELEVEN: MERGERS, CORPORATE CONTROL, AND
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GOVERNANCE
Chapter 32. Mergers
Chapter 33. Corporate Restructuring
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, CHAPTER 1
Introduction to Corporate Finance
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The values shown in the solutions may be rounded for display purposes. However, the answers were
derived using a spreadsheet without any intermediate rounding.


Answers to Problem Sets
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1. a. real

b. executive airplanes

c. brand names
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d. financial

e. bonds

*f. investment or capital expenditure
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*g. capital budgeting or investment

h. financing

*Note that f and g are interchangeable in the question.
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2. A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all real assets.
Real assets are identifiable as items with intrinsic value. The others in the list are financial assets,
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that is, these assets derive value because of a contractual claim.
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3. a. Financial assets, such as stocks or bank loans, are claims held by investors.
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Corporations sell financial assets to raise the cash to invest in real assets such as plant
and equipment. Some real assets are intangible.

b. Capital expenditure means investment in real assets. Financing means raising the cash
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for this investment.

c. The shares of public corporations are traded on stock exchanges and can be purchased
by a wide range of investors. The shares of closely held corporations are not publicly
traded and are held by a small group of private investors.

Unlimited liability: Investors are responsible for all the firm‘s debts. A sole proprietor has
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d.
unlimited liability. Investors in corporations have limited liability. They can lose their
investment, but no more.
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