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 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
b. executive airplanes
c. brand names
d. financial
e. bonds
*f. investment or capital expenditure
*g. capital budgeting or investment
h. financing
*Note that f and g are interchangeable in the question.
Est time: 01-05
2 A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all
. real assets. Real assets are identifiable as items with intrinsic value. The others in
the list are financial assets, that is, these assets derive value because of a
Est time:contractual
01-05 claim.
3 a Financial assets, such as stocks or bank loans, are claims held by investors.
. . Corporations sell financial assets to raise the cash to invest in real assets
such as plant and equipment. Some real assets are intangible.
b Capital expenditure means investment in real assets. Financing means
. raising the cash for this investment.
, c The shares of public corporations are traded on stock exchanges and can be
. purchased by a wide range of investors. The shares of closely held
corporations are not publicly traded and are held by a small group of private
investors.
d Unlimited liability: Investors are responsible for all the firm‘s debts. A sole
. proprietor has unlimited liability. Investors in corporations have limited
liability. They can lose their investment, but no more.
Est time: 01-05
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 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
b. executive airplanes
c. brand names
d. financial
e. bonds
*f. investment or capital expenditure
*g. capital budgeting or investment
h. financing
*Note that f and g are interchangeable in the question.
Est time: 01-05
2 A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all
. real assets. Real assets are identifiable as items with intrinsic value. The others in
the list are financial assets, that is, these assets derive value because of a
Est time:contractual
01-05 claim.
3 a Financial assets, such as stocks or bank loans, are claims held by investors.
. . Corporations sell financial assets to raise the cash to invest in real assets
such as plant and equipment. Some real assets are intangible.
b Capital expenditure means investment in real assets. Financing means
. raising the cash for this investment.
, c The shares of public corporations are traded on stock exchanges and can be
. purchased by a wide range of investors. The shares of closely held
corporations are not publicly traded and are held by a small group of private
investors.
d Unlimited liability: Investors are responsible for all the firm‘s debts. A sole
. proprietor has unlimited liability. Investors in corporations have limited
liability. They can lose their investment, but no more.
Est time: 01-05
