Solution Manual for Principles of Corporate Finance 14th Edition Author:Richard Brealey, Stewart Myers, Franklin Allen and Alex Edmans, All Chapters[1-34]Latest Version

+r SOLUTION MANUAL FOR
+r +r




Principles Of Corporate Finance 14
+r +r +r +r




th Edition By Richard Brealey, Stewart Myers,
+r +r +r +r +r +r




ALL Chapters (1 - 34)
+r +r +r +r

, TABLE OF CONTENTS D D



Chapter 1: Introduction to Corporate Finance
+r +r +r +r +r +


Chapter 2: How to Calculate Present Values
r +r +r +r +r +r +r +r


Chapter 3: Valuing Bonds +r +r +r


Chapter 4: Valuing Stocks +r +r +r


Chapter 5: Net Present Value and Other Investment Criteria
+r +r +r +r +r +r +r +r


Chapter 6: Making Investment Decisions with the Net Present Value Rule
+r +r +r +r +r +r +r +r +r +r




Chapter 7: Introduction to Risk, Diversification, and Portfolio Selection Chap
+r +r +r +r +r +r +r +r +r


ter 8: The Capital Asset Pricing Model
+r +r +r +r +r +r


Chapter 9: Risk and the Cost of Capital
+r +r +r +r +r +r +r




Chapter 10: Project Analysis
+r +r +r


Chapter 11: How to Ensure That Projects Truly Have PositiveNPVs
+r +r +r +r +r +r +r +r +r




Chapter 12: Efficient Markets and Behavioral Finance C
+r +r +r +r +r +r +r


hapter 13: An Overview of Corporate Financing Chapter
+r +r +r +r +r +r +r


14: How Corporations Issue Securities
+r +r +r +r +r




Chapter +r 15: Payout Policy+r +r


Chapter +r 16: Does Debt Policy Matter?
+r +r +r +r


Chapter +r 17: How Much Should a Corporation Borrow?
+r +r +r +r +r +r +r


Chapter +r 18: Financing and Valuation
+r +r +r




Chapter 19: Agency Problems and Corporate Governance Cha
+r +r +r +r +r +r +r


pter 20: Stakeholder Capitalism and Responsible Business
+r +r +r +r +r +r




Chapter 21: Understanding Options
+r +r +r +


Chapter 22: Valuing Options Chapt
r +r +r +r +r


er 23: Real Options
+r +r +r




Chapter 24: Credit Risk and the Value of Corporate Debt Chap
+r +r +r +r +r +r +r +r +r +r


ter 25: The Many Different Kinds of Debt
+r +r +r +r +r +r +r


Chapter 26: Leasing +r +r




Chapter 27: Managing Risk +r +r +r


Chapter 28: International Financial Management
+r +r +r +r




Chapter 29: Financial Analysis Cha
+r +r +r +r


pter 30: Financial Planning
+r +r +r


Chapter 31: Working Capital Management
+r +r +r +r




Chapter 32: Mergers +r +r


Chapter 33: Corporate Restructuring
+r +r +r

,Chapter 34: Conclusion: What We Do and Do Not Know about Finance
+r +r +r +r +r +r +r +r +r +r +r




CHAPTER 1 +r


Introduction to Corporate Finance +r +r +r




The values shown in the solutions may be rounded forDdisplayDpurposes. However, the answers
+r +r +r +r +r +r +r +r +r +r +r +r +

rwere derived using a spreadsheet without any intermediate rounding.
+r + r + r +r + r +r + r + r




Answers to Problem Sets
+r +r +r




1. a. real

b. executive airplanes +r




c. brand names +r




d. financial

e. bonds

*f. investment or capital expenditure +r +r +r




*g. capital budgeting or investment
+r +r +r




h. financing

*Note that f and g are interchangeable in the question.
+r +r +r +r +r +r +r +r +r

Est time: 01-05
+r +r




2. A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all rea
+r +r +r +r +r + r + r + r + r +r +r +r +r + r +r + r + r

l a ssets. Real assets are identifiable as items with intrinsic value. The others in the l
+r +r +r +r +r +r +r +r +r +r +r +r + r + r +r +r

ist are fina ncial assets, that is, these assets derive value because of a contractual
+r +r +r + r +r + r + r + r + r + r + r + r + r + r + r

claim.
Est time: 01-05
+r +r




3. a.
Financial assets, such as stocks or bank loans, are claims held by investors.
+r +r +r +r +r +r +r +r +r +r +r +r +r

Corporations sell financial assets to raise the cash to invest in real assets
+ r + r + r + r + r + r + r + r + r + r + r + r +

such a s plant and equipment. Some real assets are intangible.
r + r +r + r +r + r + r + r + r + r + r




b. Capital expenditure means investment in real assets. Financing means raisin
+r +r +r +r +r +r +r +r +r

g the cash for this investment.
+r +r +r + r + r

, c. The shares ofDpublic corporations are traded on stock exchanges and can be
+r +r +r +r +r +r +r +r + r +r +r

+rpurch ased by a wide range of investors. The shares of closely held corpo
+r +r + r + r + r + r + r + r + r + r + r + r + r

rations are not publicly traded and are held by a small group of private in
+ r + r +r + r + r + r + r + r + r + r + r + r + r + r

vestors.

d. Unlimited liability: Investors are responsible for all the firm‘s debts. ADsole pr
+r +r +r +r +r +r + r +r + r + r + r

oprieto r has unlimited liability. Investors in corporations have limited liability. They ca
+r +r +r +r +r +r +r +r +r +r +r +r

n lose their investment, but no more.
+r +r + r + r + r + r

Est time: 01-05
+r +r