SOLUTION MANUAL FOR
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Principles Of Corporate Finance 14
Xt Xt Xt Xt
th Edition By Richard Brealey, Stewart Myers,
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ALL Chapters (1 - 34)
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, TABLE OF CONTENTS D D
Chapter 1: Introduction to Corporate Finance
Xt Xt Xt Xt Xt X
Chapter 2: How to Calculate Present Values
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Chapter 3: Valuing Bonds Xt Xt Xt
Chapter 4: Valuing Stocks Xt Xt Xt
Chapter 5: Net Present Value and Other Investment Criteria
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Chapter 6: Making Investment Decisions with the Net Present Value Rule
Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt
Chapter 7: Introduction to Risk, Diversification, and Portfolio Selection Chap
Xt Xt Xt Xt Xt Xt Xt Xt Xt
ter 8: The Capital Asset Pricing Model
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Chapter 9: Risk and the Cost of Capital
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Chapter 10: Project Analysis Xt Xt Xt
Chapter 11: How to Ensure That Projects Truly Have PositiveNPVs
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Chapter 12: Efficient Markets and Behavioral Finance C
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hapter 13: An Overview of Corporate Financing Chapte
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r 14: How Corporations Issue Securities
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Chapter Xt 15: Payout Policy
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Chapter Xt 16: Does Debt Policy Matter?
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Chapter Xt 17: How Much Should a Corporation Borrow?
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Chapter Xt 18: Financing and Valuation
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Chapter 19: Agency Problems and Corporate Governance Cha
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pter 20: Stakeholder Capitalism and Responsible Business
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Chapter 21: Understanding Options
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Chapter 22: Valuing Options Chapt
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er 23: Real Options
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Chapter 24: Credit Risk and the Value of Corporate Debt Chap
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ter 25: The Many Different Kinds of Debt
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Chapter 26: Leasing Xt Xt
Chapter 27: Managing Risk Xt Xt Xt
Chapter 28: International Financial Management
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Chapter 29: Financial Analysis Cha
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pter 30: Financial Planning
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Chapter 31: Working Capital Management
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Chapter 32: Mergers Xt Xt
Chapter 33: Corporate Restructuring
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,Chapter 34: Conclusion: What We Do and Do Not Know about Finance
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CHAPTER 1 Xt
Introduction to Corporate Finance Xt Xt Xt
The values shown in the solutions may be rounded forDdisplayDpurposes. However, the answers
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were derived using a spreadsheet without any intermediate rounding.
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Answers to Problem Sets Xt Xt Xt
1. a. real
b. executive airplanes Xt
c. brand names Xt
d. financial
e. bonds
*f. investment or capital expenditure Xt Xt Xt
*g. capital budgeting or investment
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h. financing
*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 re
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al a ssets. Real assets are identifiable as items with intrinsic value. The others in the
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list are fina ncial assets, that is, these assets derive value because of a contractua
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l claim. X t
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
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such a s plant and equipment. Some real assets are intangible.
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b. Capital expenditure means investment in real assets. Financing means raisin
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g the cash for this investment.
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, c. The shares ofDpublic corporations are traded on stock exchanges and can be
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Xtpurch ased by a wide range of investors. The shares of closely held corpo
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rations are not publicly traded and are held by a small group of private in
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vestors.
d. Unlimited liability: Investors are responsible for all the firm‘s debts. ADsole pr
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oprieto r has unlimited liability. Investors in corporations have limited liability. They c
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an lose their investment, but no more.
Xt Xt X t X t X t X t
Est time: 01-05
Xt Xt
Xt Xt
Principles Of Corporate Finance 14
Xt Xt Xt Xt
th Edition By Richard Brealey, Stewart Myers,
Xt Xt Xt Xt Xt Xt
ALL Chapters (1 - 34)
Xt Xt Xt Xt
, TABLE OF CONTENTS D D
Chapter 1: Introduction to Corporate Finance
Xt Xt Xt Xt Xt X
Chapter 2: How to Calculate Present Values
t Xt Xt Xt Xt Xt Xt Xt
Chapter 3: Valuing Bonds Xt Xt Xt
Chapter 4: Valuing Stocks Xt Xt Xt
Chapter 5: Net Present Value and Other Investment Criteria
Xt Xt Xt Xt Xt Xt Xt Xt
Chapter 6: Making Investment Decisions with the Net Present Value Rule
Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt
Chapter 7: Introduction to Risk, Diversification, and Portfolio Selection Chap
Xt Xt Xt Xt Xt Xt Xt Xt Xt
ter 8: The Capital Asset Pricing Model
Xt Xt Xt Xt Xt Xt
Chapter 9: Risk and the Cost of Capital
Xt Xt Xt Xt Xt Xt Xt
Chapter 10: Project Analysis Xt Xt Xt
Chapter 11: How to Ensure That Projects Truly Have PositiveNPVs
Xt Xt Xt Xt Xt Xt Xt Xt Xt
Chapter 12: Efficient Markets and Behavioral Finance C
Xt Xt Xt Xt Xt Xt Xt
hapter 13: An Overview of Corporate Financing Chapte
Xt Xt Xt Xt Xt Xt Xt
r 14: How Corporations Issue Securities
Xt Xt Xt Xt Xt
Chapter Xt 15: Payout Policy
Xt Xt
Chapter Xt 16: Does Debt Policy Matter?
Xt Xt Xt Xt
Chapter Xt 17: How Much Should a Corporation Borrow?
Xt Xt Xt Xt Xt Xt Xt
Chapter Xt 18: Financing and Valuation
Xt Xt Xt
Chapter 19: Agency Problems and Corporate Governance Cha
Xt Xt Xt Xt Xt Xt Xt
pter 20: Stakeholder Capitalism and Responsible Business
Xt Xt Xt Xt Xt Xt
Chapter 21: Understanding Options
Xt Xt Xt
Chapter 22: Valuing Options Chapt
Xt Xt Xt Xt Xt
er 23: Real Options
Xt Xt Xt
Chapter 24: Credit Risk and the Value of Corporate Debt Chap
Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt
ter 25: The Many Different Kinds of Debt
Xt Xt Xt Xt Xt Xt Xt
Chapter 26: Leasing Xt Xt
Chapter 27: Managing Risk Xt Xt Xt
Chapter 28: International Financial Management
Xt Xt Xt Xt
Chapter 29: Financial Analysis Cha
Xt Xt Xt Xt
pter 30: Financial Planning
Xt Xt Xt
Chapter 31: Working Capital Management
Xt Xt Xt Xt
Chapter 32: Mergers Xt Xt
Chapter 33: Corporate Restructuring
Xt Xt Xt
,Chapter 34: Conclusion: What We Do and Do Not Know about Finance
Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt
CHAPTER 1 Xt
Introduction to Corporate Finance Xt Xt Xt
The values shown in the solutions may be rounded forDdisplayDpurposes. However, the answers
Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt X
were derived using a spreadsheet without any intermediate rounding.
t Xt X t X t Xt X t Xt X t X t
Answers to Problem Sets Xt Xt Xt
1. a. real
b. executive airplanes Xt
c. brand names Xt
d. financial
e. bonds
*f. investment or capital expenditure Xt Xt Xt
*g. capital budgeting or investment
Xt Xt Xt
h. financing
*Note that f and g are interchangeable in the question.
Xt Xt Xt Xt Xt Xt Xt Xt Xt
Est time: 01-05
Xt Xt
2. A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all re
Xt Xt Xt Xt Xt X t X t X t X t Xt Xt Xt Xt X t Xt X t X t
al a ssets. Real assets are identifiable as items with intrinsic value. The others in the
Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt X t Xt Xt
list are fina ncial assets, that is, these assets derive value because of a contractua
Xt Xt Xt Xt X t Xt X t X t X t X t X t X t X t X t X t
l claim. X t
Est time: 01-05
Xt Xt
3. a.
Financial assets, such as stocks or bank loans, are claims held by investors.
Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt
Corporations sell financial assets to raise the cash to invest in real assets
X t X t X t X t X t X t X t X t X t X t X t X t
such a s plant and equipment. Some real assets are intangible.
X t X t Xt X t Xt X t X t X t X t X t X t
b. Capital expenditure means investment in real assets. Financing means raisin
Xt Xt Xt Xt Xt Xt Xt Xt Xt
g the cash for this investment.
Xt Xt Xt X t X t
, c. The shares ofDpublic corporations are traded on stock exchanges and can be
Xt X t Xt Xt Xt X t Xt Xt X t Xt Xt
Xtpurch ased by a wide range of investors. The shares of closely held corpo
Xt Xt X t X t X t X t X t X t X t X t X t X t X t
rations are not publicly traded and are held by a small group of private in
X t X t Xt X t X t X t X t X t X t X t X t X t X t X t
vestors.
d. Unlimited liability: Investors are responsible for all the firm‘s debts. ADsole pr
Xt Xt Xt Xt Xt X t X t Xt X t X t X t
oprieto r has unlimited liability. Investors in corporations have limited liability. They c
Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt Xt
an lose their investment, but no more.
Xt Xt X t X t X t X t
Est time: 01-05
Xt Xt
