Solution Manual for Principles of Corporate Finance, 14th Edition by Brealey, Myers, Allen, Edmans

SOLUTION MANUAL FOR
b b




Principles Of Corporate Finance 14
b b b b




th Edition By Richard Brealey, Stewart Myers,
b b b b b b




ALL Chapters (1 - 34)
b b b b

, TABLE OF CONTENTS
D D



Chapterb1:bIntroductionbtobCorporatebFinanceb
Chapterb2:bHowbtobCalculatebPresentbValuesbC
hapterb3:bValuingbBonds
Chapterb 4:b Valuingb Stocks
Chapterb 5:b Netb Presentb Valueb andb Otherb Investmentb Criteria
Chapterb 6:b Makingb Investmentb Decisionsb withb theb Netb Presentb Valueb Rule

Chapterb7:bIntroductionbtobRisk,bDiversification,bandbPortfoliobSelectionbChapte
rb8:bThebCapitalbAssetbPricingbModel
Chapterb 9:b Riskb andb theb Costb ofb Capital

Chapterb 10:b Projectb Analysis
Chapterb 11:b Howb tob Ensureb Thatb Projectsb Trulyb Haveb PositiveNPVs

Chapterb12:bEfficientbMarketsbandbBehavioralbFinancebCh
apterb13:bAnbOverviewbofbCorporatebFinancingbChapterb1
4:bHowbCorporationsbIssuebSecurities

Chapterb 15:b Payoutb Policy
Chapterb 16:b Doesb Debtb Policyb Matter?
Chapterb17:bHowbMuchbShouldbabCorporationbBorrow?bC
hapterb18:bFinancingbandbValuation

Chapterb19:bAgencybProblemsbandbCorporatebGovernancebChap
terb20:bStakeholderbCapitalismbandbResponsiblebBusiness

Chapterb21:bUnderstandingbOptionsb
Chapterb22:bValuingbOptionsbChapte
rb23:bRealbOptions

Chapterb24:bCreditbRiskbandbthebValuebofbCorporatebDebtbChapte
rb25:bThebManybDifferentbKindsbofbDebt
Chapterb 26:b Leasing

Chapterb27:b Managingb Risk
Chapterb 28:b Internationalb Financialb Management

Chapterb29:bFinancialbAnalysisbChap
terb30:bFinancialbPlanning
Chapterb 31:bWorkingb Capitalb Management

Chapterb 32:b Mergers
Chapterb33:bCorporatebRestructuring

,Chapterb 34:b Conclusion:b WhatbWeb Dob andb Dob Notb Knowb aboutb Finance




CHAPTERb 1
Introductionb tob Corporateb Finance


Thebvaluesb shownb inb thebsolutionsb mayb beb roundedb forDdisplayDpurposes.b However,b theb answersb wereb
derivedb usingb abspreadsheetb withoutbanyb intermediateb rounding.


Answersb tob Problemb Sets

1. a. real

b. executiveb airplanes

c. brandb names

d. financial

e. bonds

*f. investmentb orb capitalb expenditure

*g. capitalb budgetingb orb investment

h. financing

*Noteb thatb fb andb gb areb interchangeableb inb theb question.
Estb time:b 01-05



2. Abtrademark,babfactory,bundevelopedbland,b andb yourb workb forceb(c,bd,be,bandb g)bareb allb realbabss
ets.b Realb assetsb areb identifiableb asb itemsb withb intrinsicb value.b Theb othersb inb theb listb areb finabn
cialb assets,bthatb is,b theseb assetsb deriveb valueb becauseb ofb ab contractualb claim.
Estb time:b 01-05



3. a.
Financialbassets,bsuchbasbstocksborbbankbloans,barebclaimsbheldbbybinvestors.bCor
porationsb sellb financialb assetsb tob raiseb theb cashb tob investb inb realb assetsb suchb absb
plantbandb equipment.b Someb realb assetsb areb intangible.

b. Capitalb expenditureb meansb investmentb inb realb assets.b Financingb meansb raisingb the
bcashbforb thisb investment.

, c. Theb sharesb ofDpublicb corporationsb areb tradedb onb stockb exchangesb andb canb beb purch
basedbbyb ab wideb rangeb ofb investors.b Theb sharesb ofb closelyb heldb corporationsb areb no

tbpubliclyb tradedb andb areb heldb byb ab smallb groupb ofb privateb investors.

d. Unlimitedb liability:b Investorsb areb responsibleb forb allb theb firm‘sb debts.b ADsoleb proprieto
brbhasbunlimitedbliability.bInvestorsbinbcorporationsbhaveblimitedbliability.bTheybcanblosebth

eirb investment,b butb nob more.
Estb time:b 01-05