Corporate Finance: Theory and Practice, 10th Edition
- Length: 647 pages
- Edition: 10
- Language: English
- Publisher: Cengage Learning EMEA
- Publication Date: 2019-01-15
- ISBN-10: 1473758386
- ISBN-13: 9781473758384
- Sales Rank: #3353909 (See Top 100 Books)
The tenth edition by Steve Lumby and Chris Jones provides a comprehensive insight into the complex and ever-changing area of corporate finance. Covering some of the common financial decisions that face companies including investment, financing, the dividend decision and the management of risk, this text enables students to reflect on how these types of decisions are made. The strong theoretical approach that underpins the text is enhanced with a range of real world examples which help to put the financial models and frameworks into context. Packed with diverse examples and problems, Corporate Finance provides a broad introduction to the subject in an accessible yet rigorous style.
Cover Brief Contents Contents About the Authors Preface Publisher's Acknowledgements Walk-Through Tour Part 1: Introduction Chapter 1: Financial Decision-Making The Nature of Financial Decisions The Decision Process Financial Decision-Making Summary Notes Quiz Questions Chapter 2: Decision Objectives Value Maximization and the Company Ownership and Control Regulation of the Relationship between Directors and Shareholders Incentive Scheme Criteria Conclusion Summary Notes Further Reading Quiz Questions Problems Part 2: Investment Decisions Chapter 3: Traditional Methods of Investment Appraisal Introduction The Payback Method Return on Capital Employed Conclusions Summary Notes Further Reading Quiz Questions Problems Chapter 4: Investment-Consumption Decision Model Introduction to the Model The Time Value of Money The Basic Graphical Analysis Introduction of Capital Markets The Separation Theorem The Conclusions of the Basic Model Payback and ROCE Summary Notes Further Reading Quiz Questions Problems Chapter 5: The Discounted Cash Flow Approach Net Present Value Alternative Interpretations of NPV Internal Rate of Return Discounted Payback Truncated NPV Summary Appendix: Compounding and Discounting Notes Further Reading Quiz Questions Problems Chapter 6: Net Present Value and Internal Rate of Return NPV and Project Interdependence IRR Rule and Interdependent Projects Extending the Time Horizon Multiple IRRs Extended Yield Method Other Problems with the IRR Rule The Modified IRR: MIRR NPV versus IRR: Conclusion The Replacement Cycle Problem Summary Notes Further Reading Quiz Questions Problems Chapter 7: Project Cash Flows Investment Appraisal and Inflation Inflation and the IRR Technique Investment Appraisal and Taxation The Relevant Cash Flows Summary Appendix: A Typical Corporate Tax System Notes Further Reading Quiz Questions Problems Chapter 8: Capital Rationing Introduction Hard and Soft Capital Rationing Single-Period Capital Rationing Multi-Period Capital Rationing Summary Notes Further Reading Quiz Questions Problems Part 3: Risk Analysis Chapter 9: Simple Risk Techniques Risk and Return Expected Net Present Value The Abandonment Decision Sensitivity Analysis The Risk-Adjusted Discount Rate Summary Notes Further Reading Quiz Questions Problems Chapter 10: Risk and Return Introduction to Uncertainty The Expected Utility Model The Approach to Portfolio Theory Summary Notes Further Reading Quiz Questions Problems Chapter 11: Portfolio Theory Two-Asset Portfolios Multi-Asset Portfolios Introduction of a Risk-Free Investment The Capital Market Line Summary Notes Further Reading Quiz Questions Problems Chapter 12: The Capital Asset Pricing Model The Security Market Line The CAPM Expression The Beta Value The Validity of the CAPM Arbitrage Pricing Theory Betas and Project Investment Appraisal Summary Notes Further Reading Quiz Questions Problems Chapter 13: Option Valuation Introduction The Basic Characteristics of Options Option Terminology The Valuation of Options The Black and Scholes Model The Building Blocks of Investment Put-Call Parity Theorem Using Share Options The Option 'Greeks' The Binomial Model Real Options Summary Notes Further Reading Quiz Questions Problems Chapter 14: Interest Rate Risk Introduction The Money Markets Forward Forward Loans Forward Rate Agreements Interest Rate Guarantees Option Contract Markets Interest Rate Futures Caps, Collars and Floors Interest Rate Swaps Summary Notes Further Reading Quiz Questions Problems Part 4: Financing Decisions Chapter 15: Financial Markets Introduction Market Efficiency Market Efficiency and Share Dealing The Empirical Evidence of EMH The Term Structure of Interest Rates Pure Expectations Hypothesis Summary Notes Further Reading Quiz Questions Problems Chapter 16: The Cost of Capital The Financing Decision The Cost of Equity Capital Expected Return, Dividends and Market Price Applying the Dividend Valuation Model CAPM and the Cost of Equity Capital CAPM versus the DVM The Cost of Debt Capital Convertible Debt Summary Notes Further Reading Quiz Questions Problems Chapter 17: Weighted Average Cost of Capital The Project Discount Rate The Calculation of WACC The WACC and Project Risk Summary Notes Further Reading Quiz Questions Problems Chapter 18: Capital Structure in a Simple World An Optimal Capital Structure Business and Financial Risk The Arbitrage Proof Conclusions Summary Notes Further Reading Quiz Questions Problems Chapter 19: Capital Structure in a Complex World Taxation and Capital Structure Using the M and M Equations M and M in the Real World Further Views on Capital Structure Conclusion Capital Structure in Practice Real World Considerations Earnings Per Share and Gearing Degree of Operating Gearing Summary Notes Further Reading Quiz Questions Problems Chapter 20: Investment and Financing Interactions Company Valuation and Investment Appraisal 1. The Dividend and Interest Valuation Model 2. Adjusted Present Value Model 3. The M and M Valuation Model 4. The Traditional Valuation Model Approaches to Investment Appraisal Asset Betas and Gearing Risk-Adjusted WACC Lease or Purchase Decision Summary Notes Further Reading Quiz Questions Problems Chapter 21: The Dividend Decision Dividend Policy in Perfect Capital Markets Traditional View of the Dividend Decision Dividend Policy in an Imperfect Market The Empirical Evidence Conclusion Summary Notes Further Reading Quiz Questions Problems Part 5: International Issues Chapter 22: Foreign Exchange Introduction Exchange Rates Foreign Exchange Markets Exchange Rate Systems Determinants of FX Rates Summary Note Further Reading Quiz Questions Problems Chapter 23: Foreign Exchange Hedging Foreign Exchange Risk Definitions Transaction Risk Hedging Foreign Exchange Futures Contracts Forward versus Futures Foreign Exchange Options Contracts Setting Up an Option Hedge Early Exercise Contingent Exposure to Foreign Exchange Risk Traded Options versus OTC Options Summary Notes Further Reading Quiz Questions Problems Chapter 24: Foreign Direct Investment Introduction Project Cash Flows Project Discount Rate Translation Risk Economic Risk Country/Political Risk Summary Notes Further Reading Quiz Questions Problems Tables Answers to Quiz Questions References for Real World Views Index
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