Solution Manual for Principles of Corporate Finance 14th Edition Author:Richard Brealey, Stewart Myers, Franklin Allen and Alex Edmans, All Chapters[1-34]Latest Version

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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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Chapter3:ValuingBonds
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Chapter4:ValuingStocks
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Chapter5:NetPresentValueandOtherInvestmentCriteria
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Chapter6:MakingInvestmentDecisionswiththeNetPresentValueRule
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Chapter7:IntroductiontoRisk,Diversification,andPortfolioSelectionChapter8: n n n




TheCapitalAssetPricingModel
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Chapter9:RiskandtheCostofCapital
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Chapter10:ProjectAnalysis
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Chapter11:HowtoEnsureThatProjectsTrulyHavePositiveNPVs
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Chapter12:EfficientMarketsandBehavioralFinance n




Chapter13:AnOverviewofCorporateFinancingChapter
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14:HowCorporationsIssueSecurities
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Chapter15:PayoutPolicy
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Chapter16:DoesDebtPolicyMatter?
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Chapter17:HowMuchShouldaCorporationBorrow? n n




Chapter18:FinancingandValuation
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Chapter19:AgencyProblemsandCorporateGovernanceChapter n n n




20:StakeholderCapitalismandResponsibleBusiness
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Chapter21:UnderstandingOptions
Chapter22:ValuingOptionsChapter
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23:RealOptions
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Chapter24:Credit RiskandtheValueofCorporateDebtChapter N n n




25:TheManyDifferentKindsofDebt
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Chapter26:Leasing
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Chapter27:ManagingRisk
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Chapter28:InternationalFinancialManagement
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Chapter29:FinancialAnalysis
Chapter30:FinancialPlanning
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Chapter31:WorkingCapitalManagement
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Chapter32:Mergers
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Chapter33:CorporateRestructuring
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,Chapter34:Conclusion:WhatWeDoandDoNotKnowaboutFinance
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CHAPTER1 n




IntroductiontoCorporateFinance n n n




Thevalues shown in thesolutions may be rounded forDdisplay purposes. However, the answers were derived
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nusing aspreadsheet withoutany 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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2. A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all real a ssets. Real
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assets are identifiable as items with intrinsic value. The others in the list are fina ncial assets,that is,
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these assets derive value because of a contractual claim.
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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
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as plantand 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.
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, c. The shares of public 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. A sole proprieto
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r 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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