Solution manual for fundamentals of corporate finance 11th Edition by Stephen A. Ross and Randolph W. Westerfield All Chapters 1-26 Covered

Solution manual
fundamentals of corporate finance 11th Edition
by Stephen A. Ross and Randolph W. Westerfield
All Chapters 1-26 Covered

,TABLE OF CONTENT
n n




PARTn1nOverviewnofnCorporatenFinance

1.nIntroductionntonCorporatenFinance
2.nFinancialnStatements,nCashnFlow,nandnTaxes


PARTn2nFinancialnStatementsnandnLong-TermnFinancialnPlanning

3.nWorkingnwithnFinancialnStatements
4.nLong-TermnFinancialnPlanningnandnCorporatenGrowth
Appendixn4A:nAnFinancialnPlanningnModelnfornthenHoffmannCompanyn(AvailablenonnConnect)nAppe
ndixn4B:nDerivationnofnthenSustainablenGrowthnFormulan(AvailablenonnConnect)


PARTn3nValuationnofnFuturenCashnFlows

5.nIntroductionntonValuation:nThenTimenValuenofnMoney
6.nDiscountednCashnFlownValuation
7.nInterestnRatesnandnBondnValuationnAppendixn7A:nManagingnInterestnRatenRisknAppendixn7B:nCal
lablenBondsnandnBondnRefundingn(AvailablenonnConnect)
8.nStocknValuation


PARTn4nCapitalnBudgeting

9.nNetnPresentnValuenandnOthernInvestmentnCriterianAppendixn9A:nThenModifiednInternalnRatenofnR
eturn
10.nMakingnCapitalnInvestmentnDecisions
Appendixn10A:nMorenonnInflationnandnCapitalnBudgeting
Appendixn10B:nCapitalnBudgetingnwithnSpreadsheets
Appendixn10C:nDerivingnthenTaxnShieldnonnCCAnFormula
11.nProjectnAnalysisnandnEvaluation


PARTn5nRisknandnReturn

12.nLessonsnfromnCapitalnMarketnHistory
13.nReturn,nRisk,nandnthenSecuritynMarketnLinenAppendixn13A:nDerivationnofnthenCapitalnAssetnPrici
ngnModel

,PARTn6nCostnofnCapitalnandnLong-TermnFinancialnPolicy

14.nCostnofnCapitalnAppendixn14A:nAdjustednPresentnValuenAppendixn14B:nEconomicnValuenAdde
dnandnthenMeasurementnofnFinancialnPerfomance
15.nRaisingnCapital
16.nFinancialnLeveragenandnCapitalnStructurenPolicy
Appendixn16A:nCapitalnStructurenandnPersonalnTaxes
Appendixn16B:nDerivationnofnPropositionnIIn(Equationn16.4)
17.nDividendsnandnDividendnPolicy


PARTn7nShort-TermnFinancialnPlanningnandnManagement

18.nShort-TermnFinancenandnPlanning
19.nCashnandnLiquiditynManagement
Appendixn19A:nCashnManagementnModelsn(AvailablenonnConnect)
20.nCreditnandnInventorynManagementnAppendixn20A:nMorenonnCreditnPolicynAnalysisn(Availableno
nnConnect)


PARTn8nTopicsninnCorporatenFinance

21.nInternationalnCorporatenFinance
22.nLeasing
23.nMergersnandnAcquisitions


PARTn9nDerivativenSecuritiesnandnCorporatenFinance

24.nEnterprisenRisknManagement
25.nOptionsnandnCorporatenSecurities
26.nBehaviouralnFinance:nImplicationsnfornFinancialnManagement

, FundamentalsnOfnCorporatenFinancen11cenStephennA.nRoss,nRandolphnW.nWesterfield,nBr

adfordnD.nJordan,nJ.nArinPandes,nThomasnHolloway
Chapter 1-26 n




CHAPTER 1 n


INTRODUCTION TO CORPORATE FINANCE
n n n



LearningnObjectives

LO1n Thenbasicntypesnofnfinancialnmanagementndecisionsnandnthenrolenofnthenfinancialnmanager.
LO2n Thenfinancialnimplicationsnofnthendifferentnformsnofnbusinessnorganization.
LO3n Thengoalnofnfinancialnmanagement.
LO4n Thenconflictsnofninterestsnthatncannarisenbetweennmanagersnandnowners.
LO5n Thenrolesnofnfinancialninstitutionsnandnmarkets.
LO6n Typesnofnfinancialninstitutions.
LO7n Trendsninnfinancialnmarkets.

AnswersntonConceptsnReviewnandnCriticalnThinkingnQuestions

1. (LO1)nCapitalnbudgetingn(decidingnonnwhetherntonexpandnanmanufacturingnplant),ncapitalnstructuren(d
ecidingnwhetherntonissuennewnequitynandnusenthenproceedsntonretirenoutstandingndebt),nandnworkingnc
apitalnmanagementn(modifyingnthenfirm‘sncreditncollectionnpolicynwithnitsncustomers).n(LO1)

2. (LO2)nDisadvantages:nunlimitednliability,nlimitednlife,ndifficultyninntransferringnownership,nhardntonraisen
capitalnfunds.nSomenadvantages:nsimpler,nlessnregulation,nthenownersnarenalsonthenmanagers.

3. (LO2)nThenprimaryndisadvantagenofnthencorporatenformnisnthendoublentaxationntonshareholdersnofndistr
ibutednearningsnandndividends.nSomenadvantagesninclude:nlimitednliability,neasenofntransferability,nabili
tyntonraisencapital,nunlimitednlife,nandnsonforth.

4. (LO4)nThentreasurer‘snofficenandnthencontroller‘snofficenarenthentwonprimarynorganizationalngroupsnthat
nreportndirectlyntonthenchiefnfinancialnofficer.nThencontroller‘snofficenhandlesncostnandnfinancialnaccoun

ting,ntaxnmanagement,nandnmanagementninformationnsystems,nwhilenthentreasurer‘snofficenisnresponsi
blenforncashnandncreditnmanagement,ncapitalnbudgeting,nandnfinancialnplanning.nTherefore,nthenstudyno
fncorporatenfinancenisnconcentratednwithinnthentreasuryngroup‘snfunctions.

5. (LO3)nTonmaximizenthencurrentnmarketnvaluen(sharenprice)nofnthenequitynofnthenfirmn(whethernit‘snpubli
cly-tradednornnot).

6. (LO4)nInnthencorporatenformnofnownership,nthenshareholdersnarenthenownersnofnthenfirm.nThensharehol
dersnelectnthendirectorsnofnthencorporation,nwhoninnturnnappointnthenfirm‘snmanagement.nThisnseparati
onnofnownershipnfromncontrolninnthencorporatenformnofnorganizationnisnwhatncausesnagencynproblemsn
tonexist.nManagementnmaynactninnitsnownnornsomeonenelse‘snbestninterests,nrathernthannthosenofnthens
hareholders.nIfnsuchneventsnoccur,ntheynmayncontradictnthengoalnofnmaximizingnthensharenpricenofnthen
equitynofnthenfirm.

7. (LO5)nAnprimarynmarketntransaction.nAnsecondarynmarketntransactionnwouldnentailnthensalenbetweenn