Fundamentals of Corporate Finance, 10th Edition
- Length: 798 pages
- Edition: 10
- Language: English
- Publisher: McGraw-Hill Education
- Publication Date: 2019-05-06
- ISBN-10: 1260566099
- ISBN-13: 9781260566093
- Sales Rank: #34820 (See Top 100 Books)
Brealey, Fundamentals of Corporate Finance, 10e, is an introduction to corporate finance and focuses on how companies invest in real assets, how they raise the money to pay for the investments, and how those assets ultimately affect the value of the firm. It also provides a broad overview of the financial landscape. The book offers a framework for systematically thinking about most of the important financial problems that both firms and individuals are likely to confront.
Fundamentals is organized around the key concepts of modern finance. These concepts, properly explained, simplify the subject. They are also practical. The tools of financial management are easier to grasp and use effectively when presented in a consistent conceptual framework. This text provides that framework.
Cover Title Copyright About The Authors Preface Acknowledgments Contents in Brief Contents Part One: Introduction Chapter 1 Goals and Governance of the Corporation 1.1 Investment and Financing Decisions The Investment (Capital Budgeting) Decision The Financing Decision 1.2 What Is a Corporation? Other Forms of Business Organization 1.3 Who Is the Financial Manager? 1.4 Goals of the Corporation Shareholders Want Managers to Maximize Market Value 1.5 Agency Problems, Executive Compensation, and Corporate Governance Executive Compensation Corporate Governance 1.6 The Ethics of Maximizing Value 1.7 Careers in Finance 1.8 Preview of Coming Attractions 1.9 Snippets of Financial History Summary Questions and Problems Chapter 2 Financial Markets and Institutions 2.1 The Importance of Financial Markets and Institutions 2.2 The Flow of Savings to Corporations The Stock Market Other Financial Markets Financial Intermediaries Financial Institutions Total Financing of U.S. Corporations 2.3 Functions of Financial Markets and Intermediaries Transporting Cash across Time Risk Transfer and Diversification Liquidity The Payment Mechanism Information Provided by Financial Markets 2.4 The Crisis of 2007–2009 Summary Questions and Problems Chapter 3 Accounting and Finance 3.1 The Balance Sheet Book Values and Market Values 3.2 The Income Statement Income versus Cash Flow 3.3 The Statement of Cash Flows Free Cash Flow 3.4 Accounting Practice and Malpractice 3.5 Taxes Corporate Tax Personal Tax Summary Questions and Problems Chapter 4 Measuring Corporate Performance 4.1 How Financial Ratios Relate to Shareholder Value 4.2 Measuring Market Value and Market Value Added 4.3 Economic Value Added and Accounting Rates of Return Accounting Rates of Return Problems with EVA and Accounting Rates of Return 4.4 Measuring Efficiency 4.5 Analyzing the Return on Assets: The Du Pont System The Du Pont System 4.6 Measuring Financial Leverage Leverage and the Return on Equity 4.7 Measuring Liquidity 4.8 Interpreting Financial Ratios 4.9 The Role of Financial Ratios Summary Questions and Problems Minicase Part Two: Value Chapter 5 The Time Value of Money 5.1 Future Values and Compound Interest 5.2 Present Values Finding the Interest Rate 5.3 Multiple Cash Flows Future Value of Multiple Cash Flows Present Value of Multiple Cash Flows 5.4 Reducing the Chore of the Calculations: Part 1 Using Financial Calculators to Solve Simple Time-Value-of-Money Problems Using Spreadsheets to Solve Simple Time-Value-of-Money Problems 5.5 Level Cash Flows: Perpetuities and Annuities How to Value Perpetuities How to Value Annuities Future Value of an Annuity Annuities Due 5.6 Reducing the Chore of the Calculations: Part 2 Using Financial Calculators to Solve Annuity Problems Using Spreadsheets to Solve Annuity Problems 5.7 Effective Annual Interest Rates 5.8 Inflation and the Time Value of Money Real versus Nominal Cash Flows Inflation and Interest Rates Valuing Real Cash Payments Real or Nominal? Summary Questions and Problems Minicase Chapter 6 Valuing Bonds 6.1 The Bond Market Bond Characteristics 6.2 Interest Rates and Bond Prices How Bond Prices Vary with Interest Rates Interest Rate Risk 6.3 Yield to Maturity Calculating the Yield to Maturity 6.4 Bond Rates of Return 6.5 The Yield Curve Nominal and Real Rates of Interest 6.6 Corporate Bonds and the Risk of Default Protecting against Default Risk Not All Corporate Bonds Are Plain Vanilla Summary Questions and Problems Chapter 7 Valuing Stocks 7.1 Stocks and the Stock Market Reading Stock Market Listings 7.2 Market Values, Book Values, and Liquidation Values 7.3 Valuing Common Stocks Valuation by Comparables Price and Intrinsic Value The Dividend Discount Model 7.4 Simplifying the Dividend Discount Model Case 1: The Dividend Discount Model with No Growth Case 2: The Dividend Discount Model with Constant Growth Case 3: The Dividend Discount Model with Nonconstant Growth 7.5 Valuing a Business by Discounted Cash Flow Valuing the Concatenator Business Repurchases and the Dividend Discount Model 7.6 There Are No Free Lunches on Wall Street Random Walks and Efficient Markets 7.7 Market Anomalies and Behavioral Finance Market Anomalies Bubbles and Market Efficiency Behavioral Finance Summary Questions and Problems Minicase Chapter 8 Net Present Value and Other Investment Criteria 8.1 Net Present Value A Comment on Risk and Present Value Valuing Long-Lived Projects Choosing between Alternative Projects 8.2 The Internal Rate of Return Rule A Closer Look at the Rate of Return Rule Calculating the Rate of Return for Long-Lived Projects A Word of Caution Some Pitfalls with the Internal Rate of Return Rule 8.3 The Profitability Index Capital Rationing Pitfalls of the Profitability Index 8.4 The Payback Rule Discounted Payback 8.5 More Mutually Exclusive 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 8.6 A Last Look Summary Questions and Problems Minicase Appendix: More on the IRR Rule Using the IRR to Choose between Mutually Exclusive Projects Using the Modified Internal Rate of Return When There Are Multiple IRRs Chapter 9 Using Discounted Cash-Flow Analysis to Make Investment Decisions 9.1 Identifying Cash Flows Discount Cash Flows, Not Profits Discount Incremental Cash Flows Discount Nominal Cash Flows by the Nominal Cost of Capital Separate Investment and Financing Decisions 9.2 Corporate Income Taxes 9.3 An Example—Blooper Industries Forecasting Blooper's Cash Flows Calculating the NPV of Blooper's Mine Further Notes and Wrinkles Arising from Blooper's Project Summary Questions and Problems Minicase Chapter 10 Project Analysis 10.1 How Firms Organize the Investment Process to Draw on Their Competitive Strengths The Capital Budget Problems and Some Solutions 10.2 Reducing Forecast Bias 10.3 Some "What-If" Questions Sensitivity Analysis Scenario Analysis 10.4 Break-Even Analysis Accounting Break-Even Analysis NPV Break-Even Analysis Operating Leverage 10.5 Real Options and the Value of Flexibility The Option to Expand A Second Real Option: The Option to Abandon A Third Real Option: The Timing Option A Fourth Real Option: Flexible Production Facilities Summary Questions and Problems Minicase Part Three: Risk Chapter 11 Introduction to Risk, Return, and the Opportunity Cost of Capital 11.1 Rates of Return: A Review 11.2 A Century of Capital Market History Market Indexes The Historical Record Using Historical Evidence to Estimate Today's Cost of Capital 11.3 Measuring Risk Variance and Standard Deviation A Note on Calculating Variance Measuring the Variation in Stock Returns 11.4 Risk and Diversification Diversification Asset versus Portfolio Risk Market Risk versus Specific Risk 11.5 Thinking about Risk Message 1: Some Risks Look Big and Dangerous but Really Are Diversifiable Message 2: Market Risks Are Macro Risks Message 3: Risk Can Be Measured Summary Questions and Problems Chapter 12 Risk, Return, and Capital Budgeting 12.1 Measuring Market Risk Measuring Beta Betas for Ford and PG&E Total Risk and Market Risk 12.2 What Can You Learn from Beta? Portfolio Betas The Portfolio Beta Determines the Risk of a Diversified Portfolio 12.3 Risk and Return Why the CAPM Makes Sense The Security Market Line Using the CAPM to Estimate Expected Returns How Well Does the CAPM Work? 12.4 The CAPM and the Opportunity Cost of Capital The Company Cost of Capital What Determines Project Risk? Don't Add Fudge Factors to Discount Rates Summary Questions and Problems Chapter 13 The Weighted-Average Cost of Capital and Company Valuation 13.1 Geothermal's Cost of Capital 13.2 The Weighted-Average Cost of Capital Calculating Company Cost of Capital as a Weighted Average Use Market Weights, Not Book Weights Taxes and the Weighted-Average Cost of Capital What If There Are Three (or More) Sources of Financing? The NPV of Geothermal's Expansion Checking Our Logic 13.3 Interpreting the Weighted-Average Cost of Capital When You Can and Can't Use WACC Some Common Mistakes How Changing Capital Structure Affects Expected Returns What Happens When the Corporate Tax Rate Is Not Zero 13.4 Practical Problems: Measuring Capital Structure 13.5 More Practical Problems: Estimating Expected Returns The Expected Return on Bonds The Expected Return on Common Stock The Expected Return on Preferred Stock Adding It All Up Real-Company WACCs 13.6 Valuing Entire Businesses Calculating the Value of the Deconstruction Business Summary Questions and Problems Minicase Part Four: Financing Chapter 14 Introduction to Corporate Financing 14.1 Creating Value with Financing Decisions 14.2 Patterns of Corporate Financing Are Firms Issuing Too Much Debt? 14.3 Common Stock Ownership of the Corporation Voting Procedures Classes of Stock 14.4 Preferred Stock 14.5 Corporate Debt Debt Comes in Many Forms Innovation in the Debt Market 14.6 Convertible Securities Summary Questions and Problems Chapter 15 How Corporations Raise Venture Capital and Issue Securities 15.1 Venture Capital Venture Capital Companies 15.2 The Initial Public Offering Arranging a Public Issue Other New-Issue Procedures The Underwriters 15.3 General Cash Offers by Public Companies General Cash Offers and Shelf Registration Costs of the General Cash Offer Market Reaction to Stock Issues 15.4 The Private Placement Summary Questions and Problems Minicase Appendix: Hotch Pot's New-Issue Prospectus Part Five: Debt and Payout Policy Chapter 16 Debt Policy 16.1 How Borrowing Affects Value in a Tax-Free Economy MM's Argument—A Simple Example How Borrowing Affects Earnings per Share How Borrowing Affects Risk and Return 16.2 Debt and the Cost of Equity No Magic in Financial Leverage 16.3 Debt, Taxes, and the Weighted-Average Cost of Capital Debt and Taxes at River Cruises How Interest Tax Shields Contribute to the Value of Stockholders' Equity Corporate Taxes and the Weighted-Average Cost of Capital The Implications of Corporate Taxes for Capital Structure 16.4 Costs of Financial Distress Bankruptcy Costs Costs of Bankruptcy Vary with Type of Asset Financial Distress without Bankruptcy 16.5 Explaining Financing Choices The Trade-Off Theory A Pecking Order Theory The Two Faces of Financial Slack Is There a Theory of Optimal Capital Structure? Summary Questions and Problems Minicase Appendix: Bankruptcy Procedures Chapter 17 Payout Policy 17.1 How Corporations Pay Out Cash to Shareholders How Firms Pay Dividends Limitations on Dividends Stock Dividends and Stock Splits Stock Repurchases 17.2 The Information Content of Dividends and Repurchases 17.3 Dividends or Repurchases? The Payout Controversy Dividends or Repurchases? An Example Repurchases and the Dividend Discount Model Dividends and Share Issues 17.4 Why Dividends May Increase Value 17.5 Why Dividends May Reduce Value Taxation of Dividends and Capital Gains under Current Tax Law Taxes and Payout—A Summary 17.6 Payout Policy and the Life Cycle of the Firm Summary Questions and Problems Minicase Part Six: Financial Analysis and Planning Chapter 18 Long-Term Financial Planning 18.1 What Is Financial Planning? Why Build Financial Plans? 18.2 Financial Planning Models Components of a Financial Planning Model 18.3 A Long-Term Financial Planning Model for Dynamic Mattress Pitfalls in Model Design Choosing a Plan 18.4 External Financing and Growth Summary Questions and Problems Minicase Chapter 19 Short-Term Financial Planning 19.1 Links between Long-Term and Short-Term Financing Tax Strategies Reasons to Hold Cash 19.2 Tracing Changes in Cash 19.3 Cash Budgeting Preparing the Cash Budget 19.4 Dynamic's Short-Term Financial Plan Dynamic Mattress's Financing Plan Evaluating the Plan A Note on Short-Term Financial Planning Models Summary Questions and Problems Minicase Chapter 20 Working Capital Management 20.1 Working Capital Components of Working Capital Working Capital and the Cash Cycle 20.2 Accounts Receivable and Credit Policy Terms of Sale Credit Agreements Credit Analysis The Credit Decision Collection Policy 20.3 Inventory Management 20.4 Cash Management Check Handling and Float Other Payment Systems Electronic Funds Transfer International Cash Management 20.5 Investing Idle Cash: The Money Market Money Market Investments Calculating the Yield on Money Market Investments Yields on Money Market Investments The International Money Market 20.6 Managing Current Liabilities: Short-Term Debt Bank Loans Commercial Paper Summary Questions and Problems Minicase Part Seven: Special Topics Chapter 21 Mergers, Acquisitions, and Corporate Control 21.1 Sensible Motives for Mergers Economies of Scale Economies of Vertical Integration Combining Complementary Resources Mergers as a Use for Surplus Funds Eliminating Inefficiencies Industry Consolidation Taxes and Cross-Border Mergers 21.2 Dubious Reasons for Mergers Diversification The Bootstrap Game 21.3 The Mechanics of a Merger The Form of Acquisition Mergers, Antitrust Law, and Popular Opposition 21.4 Evaluating Mergers Mergers Financed by Cash Mergers Financed by Stock A Warning Another Warning 21.5 The Market for Corporate Control 21.6 Method 1: Proxy Contests 21.7 Method 2: Takeovers 21.8 Method 3: Leveraged Buyouts Barbarians at the Gate? 21.9 Method 4: Divestitures, Spin-Offs, and Carve-Outs 21.10 The Benefits and Costs of Mergers Merger Waves Summary Questions and Problems Minicase Chapter 22 International Financial Management 22.1 Foreign Exchange Markets Spot Exchange Rates Forward Exchange Rates 22.2 Some Basic Relationships Exchange Rates and Inflation Real and Nominal Exchange Rates Inflation and Interest Rates The Forward Exchange Rate and the Expected Spot Rate Interest Rates and Exchange Rates 22.3 Hedging Currency Risk Transaction Risk Economic Risk 22.4 International Capital Budgeting Net Present Values for Foreign Investments Political Risk The Cost of Capital for Foreign Investment Avoiding Fudge Factors Summary Questions and Problems Minicase Chapter 23 Options 23.1 Calls and Puts Selling Calls and Puts Payoff Diagrams Are Not Profit Diagrams Financial Alchemy with Options Some More Option Magic 23.2 What Determines Option Values? Upper and Lower Limits on Option Values The Determinants of Option Value Option-Valuation Models 23.3 Spotting the Option Options on Real Assets Options on Financial Assets Summary Questions and Problems Chapter 24 Risk Management 24.1 Why Hedge? The Evidence on Risk Management 24.2 Reducing Risk with Options 24.3 Futures Contracts The Mechanics of Futures Trading Commodity and Financial Futures 24.4 Forward Contracts 24.5 Swaps Interest Rate Swaps Currency Swaps And Some Other Swaps 24.6 Innovation in the Derivatives Market 24.7 Is "Derivative" a Four-Letter Word? Summary Questions and Problems Part Eight: Conclusion 25 What We Do and Do Not Know about Finance 25.1 What We Do Know: The Six Most Important Ideas in Finance Net Present Value (Chapter 5) Risk and Return (Chapters 11 and 12) Efficient Capital Markets (Chapter 7) MM's Irrelevance Propositions (Chapters 16 and 17) Option Theory (Chapter 23) Agency Theory 25.2 What We Do Not Know: Nine Unsolved Problems in Finance What Determines Project Risk and Present Value? Risk and Return—Have We Missed Something? Are There Important Exceptions to the Efficient-Market Theory? Is Management an Off-Balance-Sheet Liability? How Can We Explain Capital Structure? How Can We Resolve the Payout Controversy? How Can We Explain Merger Waves? What Is the Value of Liquidity? Why Are Financial Systems Prone to Crisis? 25.3 A Final Word Questions and Problems Appendix A: Present Value and Future Value Tables Glossary A B C D E F G H I J L M N O P Q R S T U V W X Y Z Index A B C D E F G H I J K L M N O P Q R S T U V W Y Z
Donate to keep this site alive
1. Disable the AdBlock plugin. Otherwise, you may not get any links.
2. Solve the CAPTCHA.
3. Click download link.
4. Lead to download server to download.