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Fundamentals of Corporate Finance by Robert Parrino

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BUILDING INTUITION

Throughout the book important finance principles and concepts are identified and emphasized in Building Intuition boxes. These boxes restate an important finance concept that has been discussed in the main text, such as the importance of cash flows, and provide an intuitive example or explanation of the concept. The Building Intuition boxes and the pages on which they appear are as follows:

  PAGE
Cash Flows Matter Most to Investors 4
Sound Investments Are Those Where the Value of the Benefits Exceeds Their Cost 5
Financing Decisions Affect the Value of the Firm 6
The Timing of Cash Flows Affects Their Value 13
The Riskiness of Cash Flows Affects Their Value 13
The Financial Manager's Goal Is to Maximize the Value of the Firm's Stock 14
The Value of Money Changes with Time 128
Compounding Drives Much of the Earnings on Long-Term Investments 134
More Risk Means a Higher Expected Return 185
Diversified Portfolios Are Less Risky 206
Systematic Risk Is the Risk That Matters 207
Investment Decisions Have Opportunity Costs 288
Capital Budgeting Is Forward Looking 329
Incremental After-Tax Free Cash Flows Are What Stockholders Care About in Capital Budgeting 331
We Discount Expected Cash Flows in an NPV Analysis 349
The Market Value of a Firm's Assets Equals the Market Value of the Claims on Those Assets 366
A Firm's Cost of Capital Is a Weighted Average of All of Its Financing Costs 368
The Current Cost of Long-Term Debt Is ...

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