SOLUTION MANUAL FOR Principles Of Corporate Finance 14th Edition By Richard Brealey, Stewart Myers

SOLUTIONMANUALFOR
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PrinciplesOfCorporateFinance
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n 14thEditionByRichardBrealey,StewartMyers,
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ALLChapters(1-34)
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, TABLE OF CONTENTS D D



Chapter 1: Introduction to Corporate Finance
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Chapter 2: How to Calculate Present Values
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Chapter 3: Valuing Bonds
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Chapter 4: Valuing Stocks
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Chapter 5: Net Present Value and Other Investment Criteria
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Chapter 6: Making Investment Decisions with the Net Present Value Rule
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Chapter 7: Introduction to Risk, Diversification, and Portfolio Selection Chapter 8:
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The Capital Asset Pricing Model
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Chapter 9: Risk and the Cost of Capital
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Chapter 10: Project Analysis
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Chapter 11: How to Ensure That Projects Truly Have PositiveNPVs
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Chapter 12: Efficient Markets and Behavioral Finance
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Chapter 13: An Overview of Corporate Financing Chapter
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14: How Corporations Issue Securities
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Chapter 15: Payout Policy
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Chapter 16: Does Debt Policy Matter?
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Chapter 17: How Much Should a Corporation Borrow?
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Chapter 18: Financing and Valuation
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Chapter 19: Agency Problems and Corporate Governance Chapter
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20: Stakeholder Capitalism and Responsible Business
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Chapter 21: Understanding Options
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Chapter 22: Valuing Options Chapter
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23: Real Options
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Chapter 24: Credit Risk and the Value of Corporate Debt Chapter
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25: The Many Different Kinds of Debt
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Chapter 26: Leasing n n




Chapter 27: Managing Risk
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Chapter 28: International Financial Management
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Chapter 29: Financial Analysis
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Chapter 30: Financial Planning
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Chapter 31: Working Capital Management
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Chapter 32: Mergers n n




Chapter 33: Corporate Restructuring
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,Chapter 34: Conclusion: What We Do and Do Not Know about Finance
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CHAPTER 1 n




Introduction to Corporate Finance n n n




The values shown in the solutions may be rounded forDdisplayDpurposes. However, the answers were
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derived using a spreadsheet without any intermediate rounding.
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Answers to Problem Sets n n n




1. a. real

b. executive airplanes n




c. brand names n




d. financial

e. bonds

*f. investment or capital expenditure n n n




*g. capital budgeting or investment n n n




h. financing

*Note that f and g are interchangeable in the question.
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Est time: 01-05
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2. A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all real a ssets.
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Real assets are identifiable as items with intrinsic value. The others in the list are fina ncial
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assets,that is, these assets derive value because of a contractual claim.
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Est time: 01-05
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3. a.
Financial assets, such as stocks or bank loans, are claims held by investors. n n n n n n n n n n n n




Corporations sell financial assets to raise the cash to invest in real assets such a
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s plantand equipment. Some real assets are intangible.
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b. Capital expenditure means investment in real assets. Financing means raising the
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cash for this investment.
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, c. The shares ofDpublic corporations are traded on stock exchanges and can be purch
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asedby a wide range of investors. The shares of closely held corporations are not
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publicly traded and are held by a small group of private investors.
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d. Unlimited liability: Investors are responsible for all the firm‘s debts. ADsole proprieto r
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has unlimited liability. Investors in corporations have limited liability. They can lose their
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investment, but no more.
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Est time: 01-05
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