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Fundamentals of Corporate Finance, Second Edition

by Robert Parrino, David S. Kidwell, Thomas W. Bates

October 2011

Beginner

778 pages

36h 16m

English

Wiley

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1.1 THE ROLE OF THE FINANCIAL MANAGER1.2 FORMS OF BUSINESS ORGANIZATION1.3 MANAGING THE FINANCIAL FUNCTION1.4 THE GOAL OF THE FIRM1.5 AGENCY CONFLICTS: SEPARATION OF OWNERSHIP AND CONTROL1.6 THE IMPORTANCE OF ETHICS IN BUSINESSSUMMARY OF Learning ObjectivesSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
2.1 THE FINANCIAL SYSTEM2.2 DIRECT FINANCING2.3 TYPES OF FINANCIAL MARKETS2.4 MARKET EFFICIENCY2.5 FINANCIAL INSTITUTIONS AND INDIRECT FINANCING2.6 THE DETERMINANTS OF INTEREST RATE LEVELSSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
3.1 FINANCIAL STATEMENTS AND ACCOUNTING PRINCIPLES3.2 THE BALANCE SHEET3.3 MARKET VALUE VERSUS BOOK VALUE3.4 THE INCOME STATEMENT AND THE STATEMENT OF RETAINED EARNINGS3.5 THE STATEMENT OF CASH FLOWS3.6 TYING THE FINANCIAL STATEMENTS TOGETHER3.7 CASH FLOWS TO INVESTORS3.8 FEDERAL INCOME TAXSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
4.1 BACKGROUND FOR FINANCIAL STATEMENT ANALYSIS4.2 COMMON-SIZE FINANCIAL STATEMENTS4.3 FINANCIAL RATIOS AND FIRM PERFORMANCE4.4 THE DUPONT SYSTEM: A DIAGNOSTIC TOOL4.5 SELECTING A BENCHMARK4.6 USING FINANCIAL RATIOSSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
5.1 THE TIME VALUE OF MONEY5.2 FUTURE VALUE AND COMPOUNDING5.3 PRESENT VALUE AND DISCOUNTING5.4 ADDITIONAL CONCEPTS AND APPLICATIONSSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
6.1 MULTIPLE CASH FLOWS6.2 LEVEL CASH FLOWS: ANNUITIES AND PERPETUITIES6.3 CASH FLOWS THAT GROW AT A CONSTANT RATE6.4 THE EFFECTIVE ANNUAL INTEREST RATESUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test ProblemsAppendix: Deriving the Formula for the Present Value of an Ordinary AnnuityProblem
7.1 RISK AND RETURN7.2 QUANTITATIVE MEASURES OF RETURN7.3 THE VARIANCE AND STANDARD DEVIATION AS MEASURES OF RISK7.4 RISK AND DIVERSIFICATION7.5 SYSTEMATIC RISK7.6 COMPENSATION FOR BEARING SYSTEMATIC RISK7.7 THE CAPITAL ASSET PRICING MODELSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
8.1 CORPORATE BONDS8.2 BOND VALUATION8.3 BOND YIELDS8.4 INTEREST RATE RISK8.5 THE STRUCTURE OF INTEREST RATESSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
9.1 THE MARKET FOR STOCKS9.2 COMMON STOCK VALUATION9.3 STOCK VALUATION: SOME SIMPLIFYING ASSUMPTIONS9.4 VALUING PREFERRED STOCKSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
10.1 AN INTRODUCTION TO CAPITAL BUDGETING10.2 NET PRESENT VALUE10.3 THE PAYBACK PERIOD10.4 THE ACCOUNTING RATE OF RETURN10.5 INTERNAL RATE OF RETURN10.6 CAPITAL BUDGETING IN PRACTICESUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
11.1 CALCULATING PROJECT CASH FLOWS11.2 ESTIMATING CASH FLOWS IN PRACTICE11.3 FORECASTING FREE CASH FLOWS11.4 SPECIAL CASES (OPTIONAL)SUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
12.1 VARIABLE COSTS, FIXED COSTS, AND PROJECT RISK12.2 CALCULATING OPERATING LEVERAGE12.3 BREAK-EVEN ANALYSIS12.4 RISK ANALYSIS12.5 INVESTMENT DECISIONS WITH CAPITAL RATIONINGSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
13.1 THE FIRM's OVERALL COST OF CAPITAL13.2 THE COST OF DEBT13.3 THE COST OF EQUITY13.4 USING THE WACC IN PRACTICESUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
14.1 WORKING CAPITAL BASICS14.2 THE OPERATING AND CASH CONVERSION CYCLES14.3 WORKING CAPITAL MANAGEMENT STRATEGIES14.4 ACCOUNTS RECEIVABLE14.5 INVENTORY MANAGEMENT14.6 CASH MANAGEMENT AND BUDGETING14.7 FINANCING WORKING CAPITALSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
15.1 BOOTSTRAPPING15.2 VENTURE CAPITAL15.3 INITIAL PUBLIC OFFERING15.4 IPO PRICING AND COST15.5 GENERAL CASH OFFER BY A PUBLIC COMPANY15.6 PRIVATE MARKETS AND BANK LOANSSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
16.1 CAPITAL STRUCTURE AND FIRM VALUE16.2 THE BENEFITS AND COSTS OF USING DEBT16.3 TWO THEORIES OF CAPITAL STRUCTURE16.4 PRACTICAL CONSIDERATIONS IN CHOOSING A CAPITAL STRUCTURESUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test ProblemsAppendix: LeasingSUMMARY OF Learning ObjectivesSelf-Study ProblemSolution to Self-Study ProblemCritical Thinking QuestionsQuestions and Problems
17.1 DIVIDENDS17.2 STOCK REPURCHASES17.3 DIVIDENDS AND FIRM VALUE17.4 STOCK DIVIDENDS AND STOCK SPLITS17.5 SETTING A DIVIDEND PAYOUTSUMMARY OF Learning ObjectivesSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
18.1 STARTING A BUSINESS18.2 THE ROLE OF THE BUSINESS PLAN18.3 VALUING A BUSINESS18.4 IMPORTANT ISSUES IN VALUATIONSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
19.1 FINANCIAL PLANNING19.2 FINANCIAL PLANNING MODELS19.3 A BETTER FINANCIAL PLANNING MODEL19.4 BEYOND THE BASIC PLANNING MODELS19.5 MANAGING AND FINANCING GROWTHSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
20.1 FINANCIAL OPTIONS20.2 OPTION VALUATION20.3 REAL OPTIONS20.4 AGENCY COSTS20.5 OPTIONS AND RISK MANAGEMENTSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems
21.1 INTRODUCTION TO INTERNATIONAL FINANCIAL MANAGEMENT21.2 FOREIGN EXCHANGE MARKETS21.3 INTERNATIONAL CAPITAL BUDGETING21.4 GLOBAL MONEY AND CAPITAL MARKETS21.5 INTERNATIONAL BANKINGSUMMARY OF Learning ObjectivesSUMMARY OF Key EquationsSelf-Study ProblemsSolutions to Self-Study ProblemsCritical Thinking QuestionsQuestions and ProblemsSample Test Problems

Content preview from Fundamentals of Corporate Finance, Second Edition

11 Cash Flows and Capital Budgeting

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Learning Objectives

Explain why incremental after-tax free cash flows are relevant in evaluating a project and calculate them for a project.

Discuss the five general rules for incremental after-tax free cash flow calculations and explain why cash flows stated in nominal (real) dollars should be discounted using a nominal (real) discount rate.

Describe how distinguishing between variable and fixed costs can be useful in forecasting operating expenses.

Explain the concept of equivalent annual cost and use it to compare projects with unequal lives, decide when to replace an existing asset, and calculate the opportunity cost of using an existing asset.

Determine the appropriate time to harvest an asset.

On September 27, 2010, Southwest Airlines announced that it had agreed to purchase its smaller rival AirTran Airways for $1.4 billion ...

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Introduction to Finance: Markets, Investments, and Financial Management, Fourteenth Edition

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ISBN: 9780470876442Purchase book

Fundamentals of Corporate Finance, Second Edition

by Robert Parrino, David S. Kidwell, Thomas W. Bates

11

Cash Flows and Capital Budgeting

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
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Introduction to Finance: Markets, Investments, and Financial Management, Fourteenth Edition