Solution manual for principles of managerial finance 16th edition by chad j zutter scott smart | Complete Guide A+.

ISBN-13: 978-0-13-694561-1
V



ISBN-10: 0-13-694561-9
V

, Chapter 1
V V V The Role and Environment of Managerial Finance
V V V V V V iii




Table of Contents V V




PART 1 Introduction to Managerial Finance
V V V V V 1
1 The Role of Managerial Finance
V V V V 3
2 The Financial Market Environment
V V V 19

PART 2 Financial Tools
V V V 29
3 Financial Statements and Ratio Analysis
V V V V 31
4 Long- and Short-Term Financial Planning
V V V V 55
5 Time Value of Money
V V V 79

PART 3 Valuation of Securities
V V V V 119
6 Interest Rates and Bond Valuation
V V V V 121
7 Stock Valuation
V 149

PART 4 Risk and the Required Rate of Return
V V V V V V V V 167
8 Risk and Return
V V 169
9 The Cost of Capital
V V V 205

PART 5 Long-Term Investment Decisions
V V V V 231
10 Capital Budgeting Techniques
V V 233
11 Capital Budgeting Cash Flows
V V V 261
12 Risk Refinements in Capital Budgeting
V V V V 293

PART 6 Long-Term Financial Decisions
V V V V 327
13 Leverage and Capital Structure V V V 329
14 Payout Policy V 349

PART 7 Short-Term Financial Decisions
V V V V 367
15 Working Capital and Current Assets Management
V V V V V 369
16 Current Liabilities Management
V V 383

PART 8 Special Topics in Managerial Finance
V V V V V V 399
17 Hybrid and Derivative Securities
V V V 401
18 Mergers, LBOs, Divestitures, and Business Failure
V V V V V 421
19 International Managerial Finance V V 437

,iv Gitman • Principles of Managerial Finance, Twelfth
V V V V V V


Edition


Part One V




Introduction to Managerial Finance V V V




Chapters in This Part
V V V




Chapter 1 V The Role of Managerial Finance
V V V V




Chapter 2 V The Financial Market Environment
V V V




V Integrative Case 1: Merit Enterprise Corp.
V V V V V

, Chapter 1 V




The Role of Managerial Finance
V V V V




 Instructor’s Resources V




Chapter Overview V




This chapter introduces the field of finance through building-block terms and concepts. The chapter starts by
V V V V V V V V V V V V V V V



explaining what a firm is and discussing the goals that managers of a firm might pursue. The chapter provides a
V V V V V V V V V V V V V V V V V V V V



justification for focusing on shareholders rather than stakeholders broadly, but it also discusses other goals that
V V V V V V V V V V V V V V V V



firms might pursue. The opening section concludes with material on the importance of ethical behavior in
V V V V V V V V V V V V V V V V



business.
V




The next section discusses the managerial finance function, the key decisions that financial managers make, and the
V V V V V V V V V V V V V V V V



principles that guide their decisions. The discussion draws out distinctions among the overlapping disciplines of
V V V V V V V V V V V V V V V



finance, economics, and accounting.
V V V V




The third section describes pros and cons of different legal forms for a business. This section places particular
V V V V V V V V V V V V V V V V V



emphasis on differences in taxation of proprietorships, partnerships, and corporations, and it highlights the
V V V V V V V V V V V V V V



importance of the marginal tax rate rather than the average tax rate. Next, this section describes the classical
V V V V V V V V V V V V V V V V V V



principal-agent problem and describes both internal and external corporate governance mechanisms that
V V V V V V V V V V V V



help manage that problem.
V V V V




This chapter and the ones to follow stress the important role finance vocabulary, concepts, and tools will play in
V V V V V V V V V V V V V V V V V V



the professional and personal lives of students—even those choosing other majors, such as accounting, economics
V V V V V V V V V V V V V V V



information systems, management, marketing, or operations. Whenever possible, personal-finance applications are
V V V V V V V V V V V



provided to motivate and illustrate topics. This pedagogical approach should inspire students to master chapter
V V V V V V V V V V V V V V V



content quickly and easily.
V V V V




 Suggested Answer to Opener-in-Review V V V




Students learned the stock price of Brookdale Senior Living lost 80% of its value from 2015 to 2019, prompting
V V V V V V V V V V V V V V V V V V



Land and Buildings (a prominent stockholder) to urge the firm sell its real-estate holdings, distribute the
V V V V V V V V V V V V V V V V



anticipated net sales proceeds ($21 cash) to shareholders, and then focus on managing its senior living facilities.
V V V V V V V V V V V V V V V V V



Students were asked whether the proposal would make Brookdale’s shareholders better off if the expected cash
V V V V V V V V V V V V V V V V



proceeds were realized, but stock price dipped to $5 per share.
V V V V V V V V V V V




Before restructuring, an investor with one Brookdale share had $21.35 in total wealth. Afterward, that same
V V V V V V V V V V V V V V V



investor might have a share worth $5 and $21 in cash—total wealth of $26. The hypothetical shareholder reaped
V V V V V V V V V V V V V V V V V V



a gain of $4.65 per share or 21.8%. Before the asset sale, with 185.45 million shares outstanding and a share price
V V V V V V V V V V V V V V V V V V V V V



of
V



$21.35, total shareholder wealth was $3.96 billion. After the sale, with same shares outstanding and wealth per
V V V V V V V V V V V V V V V V



share now $26, shareholder wealth rose to $4.82 billion—a net gain of $0.86 billion.
V V V V V V V V V V V V V V