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Solutions Manual Fundamentals of Corporate Finance 13th Edition Ross, Westerfield, and Jordan Chapters 1 - 27 $18.49
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Solutions Manual Fundamentals of Corporate Finance 13th Edition Ross, Westerfield, and Jordan Chapters 1 - 27
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Solutions Manual Fundamentals of Corporate Finance 13th Edition Ross, Westerfield, and Jordan Chapters 1 - 27

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  • February 2, 2025
  • 405
  • 2024/2025
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  • 9781264250073
  • fundamentals of corporate finance
  • solutions manual fundamentals of corporate finance
  • solutions manual fundamentals of corporate finance
  • 13th edition ross westerfield and jordan

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Solutions Manual Fundamentals of Corporate Finance
13th Edition Ross, Westerfield, and Jordan
Chapters 1 - 27

,CHAPTERr1:rIntroductionrtorCorporaterFinance

CHAPTERr2:rFinancialrStatements,rTaxes,rAndrCashrFlow

CHAPTERr3:rWorkingrwithrFinancialrStatements

CHAPTERr4:rLong-TermrFinancialrPlanningrandrGrowth

CHAPTERr5:rIntroductionrtorValuation:rTherTimerValuerofrMoney

CHAPTERr6:rDiscountedrCashrFlowrValuation

CHAPTERr7:rInterestrRatesrandrBondrValuation

CHAPTERr8:rStockrValuation

CHAPTERr9:rNetrPresentrValuerandrOtherrInvestmentrCriteria

CHAPTERr10:rMakingrCapitalrInvestmentrDecisions

CHAPTERr11:rProjectrAnalysisrandrEvaluation

CHAPTERr12:rSomerLessonsrfromrCapitalrMarketrHistory

CHAPTERr13:rReturn,rRisk,rAndrtherSecurityrMarketrLine

CHAPTERr14:rCostrofrCapital

CHAPTERr15:rRaisingrCapital

CHAPTERr16:rFinancialrLeveragerandrCapitalrStructurerPolicy

CHAPTERr17:rDividendsrandrPayoutrPolicy

CHAPTERr18:rShort-TermrFinancerandrPlanning

CHAPTERr19:rCashrandrLiquidityrManagement

CHAPTERr20:rCreditrandrInventoryrManagement

CHAPTERr21:rInternationalrCorporaterFinance

CHAPTERr22:rBehavioralrFinance:rImplicationsrforrFinancialrManage

CHAPTERr23:rEnterpriserRiskrManagement

CHAPTERr24:OptionsrandrCorporaterFinance

CHAPTERr25:rOptionrValuation

CHAPTERr26:rMergersrandrAcquisitions

CHAPTERr27:rLeasing

,CHAPTER 1 r



INTRODUCTION TO CORPORATE r r r



FINANCE
AnswersrtorConceptsrReviewrandrCriticalrThinkingrQuestions

1. Capitalrbudgetingr(decidingrwhetherrtorexpandrarmanufacturingrplant),rcapitalrstructurer(decidingrwhet
herrtorissuernewrequityrandrusertherproceedsrtorretireroutstandingrdebt),randrworkingrcapitalrmanageme
ntr(modifyingrtherfirm’srcreditrcollectionrpolicyrwithritsrcustomers).

2. Disadvantages:runlimitedrliability,rlimitedrlife,rdifficultyrinrtransferringrownership,rhardrtorraisercapita
lrfunds.rSomeradvantages:rsimpler,rlessrregulation,rtherownersrareralsorthermanagers,rsometimesrperso
nalrtaxrratesrarerbetterrthanrcorporatertaxrrates.

3. Therprimaryrdisadvantagerofrthercorporaterformrisrtherdoublertaxationrtorshareholdersrofrdistributedrear
ningsrandrdividends.rSomeradvantagesrinclude:rlimitedrliability,reaserofrtransferability,rabilityrtorraiserc
apital,runlimitedrlife,randrsorforth.

4. InrresponsertorSarbanes-
Oxley,rsmallrfirmsrhaverelectedrtorgordarkrbecauserofrthercostsrofrcompliance.rThercostsrtorcomplyrwit
hrSarboxrcanrberseveralrmillionrdollars,rwhichrcanrberarlargerpercentager ofr ar smallr firmsr profits.r Ar ma
jorr costr ofr goingr darkr isr lessr accessr tor capital.r Sincer therfirmrisrnorlongerrpubliclyrtraded,ritrcanrnorlon
gerrraisermoneyrinrtherpublicrmarket.rAlthoughrthercompanyrwillrstillrhaveraccessrtorbankrloansrandrther
privaterequityrmarket,rthercostsrassociatedrwithrraisingrfundsrinrthesermarketsrarerusuallyrhigherrthanrth
ercostsrofrraisingrfundsrinrtherpublicrmarket.

5. Ther treasurer’sr officer andr ther controller’sr officer arer ther twor primaryr organizationalr groupsr thatrre
portrdirectlyrtortherchiefrfinancialrofficer.rThercontroller’srofficerhandlesrcostrandrfinancialraccounting,r
taxrmanagement,randrmanagementrinformationrsystems,rwhilerthertreasurer’srofficerisrresponsibler forr
cashr andr creditr management,r capitalr budgeting,r andr financialr planning.r Therefore,rtherstudyrofrcorpo
raterfinancerisrconcentratedrwithinrthertreasuryrgroup’srfunctions.

6. Tormaximizerthercurrentrmarketrvaluer(sharerprice)rofrtherequityrofrtherfirmr(whetherrit’srpublicly-
rtradedrorrnot).



7. Inrthercorporaterformrofrownership,rthershareholdersrarertherownersrofrtherfirm.rThershareholdersrelectrt
herdirectorsrofrthercorporation,rwhorinrturnrappointrtherfirm’srmanagement.rThisrseparationrofrownersh
iprfromrcontrolrinrthercorporaterformrofrorganizationrisrwhatrcausesragencyrproblemsrtorexist.rManage
mentrmayractrinritsrownrorrsomeonerelse’srbestrinterests,rratherrthanrthoserofrthershareholders.rIfrsuchre
ventsroccur,rtheyrmayrcontradictrthergoalrofrmaximizingrthersharerpricerofrtherequityrofrtherfirm.

8. Arprimaryrmarketrtransaction.

, B-2r SOLUTIONS


9. InrauctionrmarketsrlikertherNYSE,rbrokersrandragentsrmeetratrarphysicalrlocationr(therexchange)rtormat
chrbuyersrandrsellersrofrassets.rDealerrmarketsrlikerNASDAQrconsistrofrdealersroperatingratrdispersedrl
ocalesrwhorbuyrandrsellrassetsrthemselves,rcommunicatingrwithrotherrdealersreitherrelectronicallyrorrlit
erallyrover-the-counter.

10. Suchrorganizationsrfrequentlyrpursuersocialrorrpoliticalrmissions,rsormanyrdifferentrgoalsrarerconceiva
ble.rOnergoalrthatrisroftenrcitedrisrrevenuerminimization;ri.e.,rproviderwhateverrgoodsrandrservicesrarero
fferedratrtherlowestrpossiblercostrtorsociety.rArbetterrapproachrmightrbertorobserverthatrevenrarnot-for-
profitrbusinessrhasrequity.rThus,roneranswerrisrthatrtherappropriatergoalrisr tormaximizerthervaluerofrther
equity.

11. Presumably,rthercurrentrstockrvaluerreflectsrtherrisk,rtiming,randrmagnituderofrallrfuturercashrflows,rbot
hrshort-termrandrlong-term.rIfrthisrisrcorrect,rthenrtherstatementrisrfalse.

12. Anrargumentrcanrbermadereitherrway.rAtrtheronerextreme,rwercouldrarguerthatrinrarmarketreconomy,rallr
ofrtheserthingsrarerpriced.rThererisrthusranroptimalrlevelrof,rforrexample,rethicalrand/orrillegalrbehavior,r
andrtherframeworkrofrstockrvaluationrexplicitlyrincludesrthese.rAtrtherotherrextreme,rwercouldrarguerth
atrtheserarernon-
economicrphenomenarandrarerbestrhandledrthroughrtherpoliticalrprocess.rArclassicr(andrhighlyrrelevant
)rthoughtrquestionrthatrillustratesrthisrdebatergoesrsomethingrlikerthis:r“Arfirmrhasrestimatedrthatrtherco
strofrimprovingrthersafetyrofronerofritsrproductsrisr$30rmillion.rHowever,rtherfirmrbelievesrthatrimprovi
ngrthersafetyrofrtherproductrwillronlyrsaver$20rmillionrinrproductrliabilityrclaims.rWhatrshouldrtherfirmr
do?”

13. Thergoalrwillrberthersame,rbutrtherbestrcourserofractionrtowardrthatrgoalrmayrberdifferentrbecauserofrdiff
eringrsocial,rpolitical,randreconomicrinstitutions.

14. Thergoalrofrmanagementrshouldrbertormaximizerthersharerpricerforrthercurrentrshareholders.rIfrmanage
mentrbelievesrthatritrcanrimprovertherprofitabilityrofrtherfirmrsorthatrthersharerpricerwillrexceedr$35,rthe
nrtheyrshouldrfightrtherofferrfromrtheroutsidercompany.rIfrmanagementrbelievesrthatrthisrbidderrorrother
runidentifiedrbiddersrwillractuallyrpayrmorerthanr$35rperrsharertoracquirerthercompany,rthenrtheyrshoul

drstillrfightrtheroffer.rHowever,rifrthercurrentrmanagementrcannotrincreaserthervaluerofrtherfirmrbeyondr
therbidrprice,randrnorotherrhigherrbidsrcomerin,rthenrmanagementrisrnotractingrinrtherinterestsrofrthersha
reholdersrbyrfightingrtheroffer.rSincercurrentrmanagersroftenrlosertheirrjobsrwhenrthercorporationrisracq
uired,rpoorlyrmonitoredrmanagersrhaveranrincentivertorfightrcorporatertakeoversrinrsituationsrsuchrasrth
is.

15. Werwouldrexpectragencyrproblemsrtorberlessrsevererinrotherrcountries,rprimarilyrduertortherrelativelyrs
mallrpercentagerofrindividualrownership.rFewerrindividualrownersrshouldrreducerthernumberrofrdiverse
ropinionsrconcerningrcorporatergoals.rTherhighrpercentagerofrinstitutionalrownershiprmightrleadrtorarhi

gherrdegreerofragreementrbetweenrownersrandrmanagersronrdecisionsrconcerningrriskyrprojects.rInradd
ition,rinstitutionsrmayrberbetterrablertorimplementreffectivermonitoringrmechanismsronrmanagersrthanr
canrindividualrowners,rbasedronrtherinstitutions’rdeeperrresourcesrandrexperiencesrwithrtheirrownrmana
gement.rTherincreaserinrinstitutionalrownershiprofrstockrinrtherUnitedrStatesrandrthergrowingractivismro
frtheserlargershareholderrgroupsrmayrleadrtorarreductionrinragencyrproblemsrforrU.S.rcorporationsrandra
rmorerefficientrmarketrforrcorporatercontrol.

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