Canadian Psychiatric Mental Health Nursing Author(s): Sheila L. Varcarolis (3rd Edition)

SOLUTION MANUAL FOR

Principles Of Corporate Finance
14th Edition By Richard Brealey, Stewart Myers,
ALL Chapters (1 - 34)

, TABLE OF CONTENTS
Chapter 1: Introduction to Corporate Finance
Chapter 2: How to Calculate Present Values
Chapter 3: Valuing Bonds
Chapter 4: Valuing Stocks
Chapter 5: Net Present Value and Other Investment Criteria
Chapter 6: Making Investment Decisions with the Net Present Value Rule

Chapter 7: Introduction to Risk, Diversification, and Portfolio Selection
Chapter 8: The Capital Asset Pricing Model
Chapter 9: Risk and the Cost of Capital

Chapter 10: Project Analysis
Chapter 11: How to Ensure That Projects Truly Have PositiveNPVs

Chapter 12: Efficient Markets and Behavioral Finance
Chapter 13: An Overview of Corporate Financing
Chapter 14: How Corporations Issue Securities

Chapter 15: Payout Policy
Chapter 16: Does Debt Policy Matter?
Chapter 17: How Much Should a Corporation Borrow?
Chapter 18: Financing and Valuation

Chapter 19: Agency Problems and Corporate Governance
Chapter 20: Stakeholder Capitalism and Responsible Business

Chapter 21: Understanding Options
Chapter 22: Valuing Options
Chapter 23: Real Options

Chapter 24: Credit Risk and the Value of Corporate Debt
Chapter 25: The Many Different Kinds of Debt
Chapter 26: Leasing

Chapter 27: Managing Risk
Chapter 28: International Financial Management

Chapter 29: Financial Analysis
Chapter 30: Financial Planning
Chapter 31: Working Capital Management

Chapter 32: Mergers
Chapter 33: Corporate Restructuring

,Chapter 34: Conclusion: What We Do and Do Not Know about Finance




CHAPTER 1
Introduction to Corporate Finance


The values shown in the solutions may be rounded for display purposes. However, the answers were
derived using a spreadsheet without any intermediate rounding.


Answers to Problem Sets

1. a. real q




b. executive airplanes q q




c. brand names q q




d. financial q




e. bonds q




*f. investment or capital expenditure q q q q




*g. capital budgeting or investment
q q q q




h. financing q




*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 assets.
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q Real assets are identifiable as items with intrinsic value. The others in the list are financial
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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.
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Corporations sell financial assets to raise the cash to invest in real assets such as plant
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q and equipment. Some real assets are intangible.
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b. Capital expenditure means investment in real assets. Financing means raising the cash
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for this investment.
q q q

, c. The shares of public corporations are traded on stock exchanges and can be purchased
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q by a wide range of investors. The shares of closely held corporations are not publicly
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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. A sole proprietor has
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q unlimited liability. Investors in corporations have limited liability. They can lose their
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investment, but no more.q q q q


Est time: 01-05
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