Principles of Corporate Finance 14th Edition by Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans ISBN 9781265074159 1265074151

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Product details:
ISBN 10: 1265074151
ISBN 13: 9781265074159
Author: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

Principles of Corporate Finance 14th Edition Table of contents:

Part One: Value

1 Introduction to Corporate Finance

1-1 Corporate Investment and Financing Decisions

Investment Decisions

Financing Decisions

What Is a Corporation?

The Role of the Financial Manager

1-2 The Financial Goal of the Corporation

Shareholders Want Managers to Maximize Market Value

A Fundamental Result: Why Maximizing Shareholder Wealth Makes Sense

Should Managers Maximize Shareholder Wealth?

The Investment Trade-Off

Agency Problems and Corporate Governance

1-3 Key Questions in Corporate Finance

Key Takeaways

Problem Sets

Solutions to Self-Test Questions

Appendix: Why Maximizing Shareholder Value Makes Sense

2 How to Calculate Present Values

2-1 How to Calculate Future and Present Values

Calculating Future Values

Calculating Present Values

Valuing an Investment Opportunity

Net Present Value

Risk and Present Value

Present Values and Rates of Return

Calculating Present Values When There Are Multiple Cash Flows

The Opportunity Cost of Capital

2-2 How to Value Perpetuities and Annuities

How to Value Perpetuities

How to Value Annuities

Valuing Annuities Due

Calculating Annual Payments

Future Value of an Annuity

2-3 How to Value Growing Perpetuities and Annuities

Growing Perpetuities

Growing Annuities

2-4 How Interest Is Paid and Quoted

Continuous Compounding

Key Takeaways

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

3 Valuing Bonds

3-1 Using the Present Value Formula to Value Bonds

A Short Trip to Paris to Value a Government Bond

Back to the United States: Semiannual Coupons and Bond Prices

3-2 How Bond Prices Vary with Yields

Duration and Interest-Rate Sensitivity

3-3 The Term Structure of Interest Rates

Spot Rates, Bond Prices, and the Law of One Price

Measuring the Term Structure

Why the Discount Factor Declines as Futurity Increases

3-4 Explaining the Term Structure

Expectations Theory of the Term Structure

Interest Rate Risk

Inflation Risk

3-5 Real and Nominal Interest Rates

Indexed Bonds and the Real Rate of Interest

What Determines the Real Rate of Interest?

Inflation and Nominal Interest Rates

3-6 The Risk of Default

Corporate Bonds and Default Risk

Sovereign Bonds and Default Risk

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

4 Valuing Stocks

4-1 How Stocks Are Traded

Trading Results for Cummins

Market Price vs. Book Value

4-2 Valuation by Comparables

4-3 Dividends and Stock Prices

Dividends and Capital Gains

Two Versions of the Dividend Discount Model

4-4 Dividend Discount Model Applications

Using the Constant-Growth DCF Model to Set Water, Gas, and Electricity Prices

DCF Models with Two or More Stages of Growth

4-5 Income Stocks and Growth Stocks

Calculating the Present Value of Growth Opportunities for Establishment Electronics

4-6 Valuation Based on Free Cash Flow

Valuing the Concatenator Business

Valuation Format

Estimating Horizon Value

Key Takeaways

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

Mini-Case: Reeby Sports

5 Net Present Value and Other Investment Criteria

5-1 A Review of the Net Present Value Rule

Net Present Value’s Competitors

Five Points to Remember about NPV

5-2 The Payback and Accounting Rate of Return Rules

The Payback Rule

Accounting Rate of Return

5-3 The Internal Rate of Return Rule

Calculating the IRR

The IRR Rule

Pitfall 1—Lending or Borrowing?

Pitfall 2—Multiple Rates of Return

Pitfall 3—Mutually Exclusive Projects

Pitfall 4—What Happens When There Is More Than One Opportunity Cost of Capital

The Verdict on IRR

5-4 Choosing Capital Investments When Resources Are Limited

How Important Is Capital Rationing in Practice?

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Mini-Case: Vegetron’s CFO Calls Again

6 Making Investment Decisions with the Net Present Value Rule

6-1 Forecasting a Project’s Cash Flows

Rule 1: Discount Cash Flows, Not Profits

Rule 2: Discount Incremental Cash Flows and Ignore Non-Incremental Cash Flows

Rule 3: Treat Inflation Consistently

Rule 4: Separate Investment and Financing Decisions

Rule 5: Forecast Cash Flows after Taxes

6-2 Corporate Income Taxes

Depreciation Deductions

Tax on Salvage Value

Tax Loss Carry-Forwards

6-3 A Worked Example of a Project Analysis

The Three Components of Project Cash Flows

Cash Flow from Capital Investment

Operating Cash Flow

Investment in Working Capital

How to Construct a Set of Cash Flow Forecasts: An Example

Capital Investment

Operating Cash Flow

Investment in Working Capital

Accelerated Depreciation and First-Year Expensing

Project Analysis

6-4 How to Choose between Competing Projects

Problem 1: The Investment Timing Decision

Problem 2: The Choice between Long- and Short-Lived Equipment

Problem 3: When to Replace an Old Machine

Problem 4: Cost of Excess Capacity

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Mini-Case: New Economy Transport (A)

New Economy Transport (B)

Part Two: Risk

7 Introduction to Risk, Diversification, and Portfolio Selection

7-1 The Relationship between Risk and Return

Over a Century of Capital Market History

Using Historical Evidence to Evaluate Today’s Cost of Capital

7-2 How to Measure Risk

Variance and Standard Deviation

Calculating Risk

Estimating Future Risk

7-3 How Diversification Reduces Risk

Specific and Systematic Risk

Diversification with Many Stocks

7-4 Systematic Risk Is Market Risk

Portfolio Choice with Borrowing and Lending

Market Risk

7-5 Should Companies Diversify?

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

8 The Capital Asset Pricing Model

8-1 Market Risk Is Measured by Beta

The Market Portfolio

Why Betas Determine Portfolio Risk

8-2 The Relationship between Risk and Return

What If a Stock Did Not Lie on the Security Market Line?

The Capital Market Line and the Security Market Line

The Logic behind the Capital Asset Pricing Model

Intuition: Why Do High Beta and High Returns Go Together?

Applying the Capital Asset Pricing Model

8-3 Does the CAPM Hold in the Real World?

How Large Is the Return for Risk?

Are Returns Unrelated to All Other Characteristics?

8-4 Some Alternative Theories

Arbitrage Pricing Theory

A Comparison of the Capital Asset Pricing Model and Arbitrage Pricing Theory

The Three-Factor Model

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

9 Risk and the Cost of Capital

9-1 Company and Project Costs of Capital

Company Cost of Capital for CSX

Three Warnings

What about Investments That Are Not Average Risk?

Perfect Pitch and the Cost of Capital

9-2 Estimating Beta and the Company Cost of Capital

Estimating Beta

Portfolio Betas

9-3 Analyzing Project Risk

1. The Determinants of Asset Betas

2. Don’t Be Fooled by Diversifiable Risk

3. Avoid Fudge Factors in Discount Rates

Discount Rates for International Projects

9-4 Certainty Equivalents

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

Mini-Case: The Jones Family Incorporated

Part Three: Best Practices in Capital Budgeting

10 Project Analysis

10-1 Sensitivity and Scenario Analysis

Value of Information

Limits to Sensitivity Analysis

Stress Tests and Scenario Analysis

10-2 Break-Even Analysis and Operating Leverage

Break-Even Analysis

Operating Leverage

10-3 Real Options and the Value of Flexibility

The Option to Expand

The Option to Abandon

Production Options

Timing Options

More on Decision Trees

Pro and Con Decision Trees

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Mini-Case: Waldo County

11 How to Ensure That Projects Truly Have Positive NPVs

11-1 Behavioral Biases in Investment Decisions

11-2 Avoiding Forecast Errors

11-3 How Competitive Advantage Translates into Positive NPVs

11-4 Marvin Enterprises Decides to Exploit a New Technology—An Example

Forecasting Prices of Gargle Blasters

The Value of Marvin’s New Expansion

Alternative Expansion Plans

The Value of Marvin Stock

The Lessons of Marvin Enterprises

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Mini-Case: Ecsy-Cola

Part Four: Financing Decisions and Market Efficiency

12 Efficient Markets and Behavioral Finance

12-1 Differences between Investment and Financing Decisions

NPV Matters for Both Investment and Financing Decisions

The NPV of Financing Decisions Is Zero in Efficient Markets

The NPV of Financing Decisions in Inefficient Markets

12-2 The Efficient Market Hypothesis

Forms of Market Efficiency

Why Do We Expect Markets to Be Efficient?

12-3 Implications of Market Efficiency

What Market Efficiency Does Not Imply

What if Markets Are Not Efficient? Implications for the Financial Manager

12-4 Are Markets Efficient? The Evidence

Weak-Form Efficiency

Semistrong-Form Efficiency

Strong-Form Efficiency

12-5 Behavioral Finance

Sentiment

Limits to Arbitrage

Agency and Incentive Problems

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

13 An Overview of Corporate Financing

13-1 Patterns of Corporate Financing

How Much Do Firms Borrow?

13-2 Equity

Ownership of the Corporation

Preferred Stock

13-3 Debt

The Different Kinds of Debt

A Debt by Any Other Name

13-4 The Role of the Financial System

The Payment Mechanism

Borrowing and Lending

Pooling Risk

Information Provided by Financial Markets

13-5 Financial Markets and Intermediaries

Financial Intermediaries

Investment Funds

Financial Institutions

13-6 Financial Markets and Intermediaries around the World

Conglomerates and Internal Capital Markets

13-7 The Fintech Revolution

Payment Systems

Person-to-Person Lending

Crowdfunding

AI/ML Credit Scoring

Distributed Ledgers and Blockchains

Cryptocurrencies

Initial Coin Offerings

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

14 How Corporations Issue Securities

14-1 Venture Capital

The Venture Capital Market

14-2 The Initial Public Offering

The Public-Private Choice

Arranging an Initial Public Offering

The Sale of Marvin Stock

The Underwriters

Costs of a New Issue

Underpricing of IPOs

Hot New-Issue Periods

The Long-Run Performance of IPO Stocks

Alternative Issue Procedures

Types of Auction: A Digression

14-3 Security Sales by Public Companies

Public Offers

The Costs of a Public Offer

Rights Issues

Market Reaction to Stock Issues

14-4 Private Placements

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

Appendix: Marvin’s New-Issue Prospectus

Part Five: Payout Policy and Capital Structure

15 Payout Policy

15-1 Facts about Payout

How Firms Pay Dividends

How Firms Repurchase Stock

The Information Content of Dividends

The Information Content of Share Repurchases

15-2 Dividends or Repurchases? Does the Choice Affect Shareholder Value?

Dividends or Repurchases? An Example

Stock Repurchases and DCF Valuation Models

Dividends and Share Issues

15-3 Dividend Clienteles

15-4 Taxes and Payout Policy

Empirical Evidence on Payout Policies and Taxes

Alternatives to the U.S. Tax System

15-5 Payout Policy and the Life Cycle of the Firm

The Agency Costs of Idle Cash

Payout and Corporate Governance

Key Takeaways

Further Reading

Problem Sets

Solutions to Self-Test Questions

Finance on the Web

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Tags: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans, Corporate Finance