Solutions Manual for Principles of Managerial Finance, 16th Edition by Chad J. Zutter ,Verified Chapters 1-19|| Latest Update 2025

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PART 1 Introduction to Managerial Finance
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1 The Role of Managerial Finance
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2 The Financial Market Environment
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PART 2 Financial Tools
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3 Financial Statements and Ratio Analysis
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4 Long- and Short-Term Financial Planning
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5 Time Value of Money
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PART 3 Valuation of Securities
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6 Interest Rates and Bond Valuation
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7 Stock Valuation
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PART 4 Risk and the Required Rate of Return
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8 Risk and Return
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9 The Cost of Capital
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PART 5 Long-Term Investment Decisions
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10 Capital Budgeting Techniques
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11 Capital Budgeting Cash Flows
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12 Risk Refinements in Capital Budgeting
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PART 6 Long-Term Financial Decisions
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13 Leverage and Capital Structure s s s 329
14 Payout Policy s 349

PART 7 Short-Term Financial Decisions
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15 Working Capital and Current Assets Management
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16 Current Liabilities Management
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PART 8 Special Topics in Managerial Finance
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17 Hybrid and Derivative Securities
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18 Mergers, LBOs, Divestitures, and Business Failure
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19 International Managerial Finance s s 437

,Part One s




Introduction to Managerial Finance
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Chapters in This Part
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Chapter 1 s The Role of Managerial Finance
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Chapter 2 s The Financial Market Environment
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Integrative Case 1: Merit Enterprise Corp.
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Chapter1 s




The Role of Managerial Finance
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 Instructor’s Resources s




Chapter Overview s



This chapter introduces the field of finance through building-block terms and concepts. The chapter starts by
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explaining what a firm is and discussing the goals that managers of a firm might pursue. The chapter provides a
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justification for focusing on shareholders rather than stakeholders broadly, but it also discusses other goals that
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firms might pursue. The opening section concludes with material on the importance of ethical behavior in
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business.
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The next section discusses the managerial finance function, the key decisions that financial managers make, and the
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principles that guide their decisions. The discussion draws out distinctions among the overlapping disciplines of
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finance, economics, and accounting.
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The third section describes pros and cons of different legal forms for a business. This section places particular
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emphasis on differences in taxation of proprietorships, partnerships, and corporations, and it highlights the
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importance of the marginal tax rate rather than the average tax rate. Next, this section describes the classical
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principal-agent problem and describes both internal and external corporate governance mechanisms that help
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manage that problem.
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This chapter and the ones to follow stress the important role finance vocabulary, concepts, and tools will play in
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the professional and personal lives of students—even those choosing other majors, such as accounting, economics
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information systems, management, marketing, or operations. Whenever possible, personal-finance applications are
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provided to motivate and illustrate topics. This pedagogical approach should inspire students to master chapter
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content quickly and easily.
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 Suggested Answer to Opener-in-Review s s s




Students learned the stock price of Brookdale Senior Living lost 80% of its value from 2015 to 2019, prompting
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Land and Buildings (a prominent stockholder) to urge the firm sell its real-estate holdings, distribute the
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anticipated net sales proceeds ($21 cash) to shareholders, and then focus on managing its senior living facilities.
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Students were asked whether the proposal would make Brookdale’s shareholders better off if the expected cash
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proceeds were realized, but stock price dipped to $5 per share.
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Before restructuring, an investor with one Brookdale share had $21.35 in total wealth. Afterward, that same
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investor might have a share worth $5 and $21 in cash—total wealth of $26. The hypothetical shareholder reaped a
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gain of $4.65 per share or 21.8%. Before the asset sale, with 185.45 million shares outstanding and a share price of
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$21.35, total shareholder wealth was $3.96 billion. After the sale, with same shares outstanding and wealth per
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share now $26, shareholder wealth rose to $4.82 billion—a net gain of $0.86 billion.
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