Lecturer’s
Corporate Financial
Management
Sixth edition
Glen Arnold
Deborah Lewis
For further instructor
material, please visit:
www.pearsoned.co.uk/arnold
ISBN: 978-1-292-14045-2
Pearson Education Limited 2019
Lecturers adopting the main text are permitted to download and photocopy the manual as required.
,PEARSON EDUCATION LIMITED
KAO Two
KAO Park
Harlow CM17
9SR United
Kingdom
Tel: +44 (0)1279 623623
Web: www.pearson.com/uk
First published under the Financial
Times Pitman Publishing imprint in
1998 Second Edition published 2002
Third Edition published 2005
Fourth Edition published
2008 Fifth edition published
2013 Sixth edition published
2019
© Financial Times Professional Limited 1998
© Pearson Education Limited 2002, 2005, 2008, 2013, 2019
The rights of Glen Arnold and Deborah Lewis to be identified as authors of this work have been
asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN 978-1-292-14045-2
All rights reserved. Permission is hereby given for the material in this publication to be
reproduced for OHP transparencies and student handouts, without express permission of the
Publishers, for educational purposes only. In all other cases, no part of this publication may be
reproduced, stored in a retrieval system, or transmitted in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise without either the prior written
permission of the Publishers or a licence permitting restricted copying in the United Kingdom
issued by the Copyright Licensing Agency Ltd., Barnard’s Inn, 86 Fetter Lane, London EC4A
1EN. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in
any form of binding or cover other than that in which it is published, without the prior consent
of the Publishers.
The Financial Times. With a worldwide network of highly respected journalists, The Financial
Times provides global business news, insightful opinion and expert analysis of business,
finance and politics. With over 500 journalists reporting from 50 countries worldwide, our in-
depth coverage of international news is objectively reported and analysed from an
independent, global perspective. To find out more, visit www.ft.com/pearsonoffer.
, Contents
Chapters Pages
Preface 5
Location of answers to questions and problems 6
SUPPLEMENTARY MATERIAL FOR CHAPTERS
Chapter 1 The financial world 8
Chapter 2 Project appraisal: net present value and internal rate of return 12
Chapter 3 Project appraisal: cash flow and applications 17
Chapter 4 The decision-making process for investment appraisal 26
Chapter 5 Project appraisal: capital rationing, taxation and inflation 31
Chapter 6 Risk and project appraisal 38
Chapter 7 Portfolio theory 44
Chapter 8 The capital asset pricing model and multi-factor models 51
Chapter 9 Stock markets 54
Chapter 10 Raising equity capital 58
Chapter 11 Long-term debt finance 64
Chapter 12 Short-term and medium-term finance 69
Chapter 13 Stock market efficiency 78
Chapter 14 Value-based management 80
Chapter 15 Value-creation metrics 87
Chapter 16 The cost of capital 95
Chapter 17 Valuing shares 98
Chapter 18 Capital structure 104
Chapter 19 Dividend policy 108
Chapter 20 Mergers 110
Chapter 21 Derivatives 118
Chapter 22 Managing exchange-rate risk 126
3
, Arnold & Lewis, Corporate Financial Management, 6e, Instructor’s Manual
Corporate Financial Management Online
range of supporting resources are available at: Pearson | MyLab | Finance
to create your own personal account using the access code supplied with your copy of the book,* and access the following teaching and learning resources:
rces for students
mic eText of the book that you can search, bookmark, annotate and highlight as you please
essment questions that identify your strengths before recommending a personalised study plan that points you to the resources which can help you achieve a
cles keeping you up to date with key business concepts discussed in the book
rds to test your understanding of key terms
rces for instructors
te, downloadable Instructor’s Manual
oint slides that can be downloaded and used for presentations
e information, please contact your local Pearson Education sales representative or visit
o purchase access.
4
Corporate Financial
Management
Sixth edition
Glen Arnold
Deborah Lewis
For further instructor
material, please visit:
www.pearsoned.co.uk/arnold
ISBN: 978-1-292-14045-2
Pearson Education Limited 2019
Lecturers adopting the main text are permitted to download and photocopy the manual as required.
,PEARSON EDUCATION LIMITED
KAO Two
KAO Park
Harlow CM17
9SR United
Kingdom
Tel: +44 (0)1279 623623
Web: www.pearson.com/uk
First published under the Financial
Times Pitman Publishing imprint in
1998 Second Edition published 2002
Third Edition published 2005
Fourth Edition published
2008 Fifth edition published
2013 Sixth edition published
2019
© Financial Times Professional Limited 1998
© Pearson Education Limited 2002, 2005, 2008, 2013, 2019
The rights of Glen Arnold and Deborah Lewis to be identified as authors of this work have been
asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN 978-1-292-14045-2
All rights reserved. Permission is hereby given for the material in this publication to be
reproduced for OHP transparencies and student handouts, without express permission of the
Publishers, for educational purposes only. In all other cases, no part of this publication may be
reproduced, stored in a retrieval system, or transmitted in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise without either the prior written
permission of the Publishers or a licence permitting restricted copying in the United Kingdom
issued by the Copyright Licensing Agency Ltd., Barnard’s Inn, 86 Fetter Lane, London EC4A
1EN. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in
any form of binding or cover other than that in which it is published, without the prior consent
of the Publishers.
The Financial Times. With a worldwide network of highly respected journalists, The Financial
Times provides global business news, insightful opinion and expert analysis of business,
finance and politics. With over 500 journalists reporting from 50 countries worldwide, our in-
depth coverage of international news is objectively reported and analysed from an
independent, global perspective. To find out more, visit www.ft.com/pearsonoffer.
, Contents
Chapters Pages
Preface 5
Location of answers to questions and problems 6
SUPPLEMENTARY MATERIAL FOR CHAPTERS
Chapter 1 The financial world 8
Chapter 2 Project appraisal: net present value and internal rate of return 12
Chapter 3 Project appraisal: cash flow and applications 17
Chapter 4 The decision-making process for investment appraisal 26
Chapter 5 Project appraisal: capital rationing, taxation and inflation 31
Chapter 6 Risk and project appraisal 38
Chapter 7 Portfolio theory 44
Chapter 8 The capital asset pricing model and multi-factor models 51
Chapter 9 Stock markets 54
Chapter 10 Raising equity capital 58
Chapter 11 Long-term debt finance 64
Chapter 12 Short-term and medium-term finance 69
Chapter 13 Stock market efficiency 78
Chapter 14 Value-based management 80
Chapter 15 Value-creation metrics 87
Chapter 16 The cost of capital 95
Chapter 17 Valuing shares 98
Chapter 18 Capital structure 104
Chapter 19 Dividend policy 108
Chapter 20 Mergers 110
Chapter 21 Derivatives 118
Chapter 22 Managing exchange-rate risk 126
3
, Arnold & Lewis, Corporate Financial Management, 6e, Instructor’s Manual
Corporate Financial Management Online
range of supporting resources are available at: Pearson | MyLab | Finance
to create your own personal account using the access code supplied with your copy of the book,* and access the following teaching and learning resources:
rces for students
mic eText of the book that you can search, bookmark, annotate and highlight as you please
essment questions that identify your strengths before recommending a personalised study plan that points you to the resources which can help you achieve a
cles keeping you up to date with key business concepts discussed in the book
rds to test your understanding of key terms
rces for instructors
te, downloadable Instructor’s Manual
oint slides that can be downloaded and used for presentations
e information, please contact your local Pearson Education sales representative or visit
o purchase access.
4
