Fundamentals of Corporate Finance. Ninth Edition. Shefrin. Behavioral Corporate Finance: Decisions That. Create Value. First Edition. White. Fundamentals of Corporate Finance By Ross 9th Edition (Standard Edition).pdf Concise Fundamentals of Corporate Finance Fifth Edition First Edition Ninth. Corporate Finance. Ninth Edition. Ross, Westerfield, Jaffe, and Jordan. Corporate Finance: Core Principles and. Applications. Second Edition.
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Access Principles of Corporate Finance 9th Edition solutions now. Our solutions are written by Chegg experts so you can be assured of the highest quality!. Fundamentals of Corporate Finance, Third Edition by Richard A. Brealey, Stewart C. Essentials of Corporate Finance, Second Edition by Stephen A. Ross. Corporate Finance. Ninth Edition. Ross, Westerfield, Jaffe, and Jordan. Corporate Finance: Core Principles and Applications. Second Edition.
The future value factor for an annuity: Annuity FV factor Future value factor [ 1 r t 1] r 3. Annuity due value 1 r 1 r [6. Present value for a perpetuity: PV for a perpetuity 5. The dividend payout ratio: Dividend payout ratio Cash dividends Net income [4.
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Effective annual rate EAR , where m is the number of times the interest is compounded during the year: EAR [1 Quoted rate m ]m 1 8. Effective annual rate EAR , where q stands for the continuously compounded quoted rate: EAR eq 1.
Protability index: Bottom-up approach to operating cash ow OCF: Top-down approach to operating cash ow OCF: Tax shield approach to operating cash ow OCF: Sales Costs Depreciation. Bond value if bond has 1 a face value of F paid at maturity, 2 a coupon of C paid per period, 3 t periods to maturity, and 4 a yield of r per period: Bond value C [1 1 1 Bond value Present value of the coupons 2.
The Fisher effect: Accounting break-even level: Relationship between operating cash ow OCF and sales volume: Cash break-even level: Financial break-even level:. The dividend growth model: Required return: Variance of returns, Var R or 2: Standard deviation of returns, SD R or: SD R Var R.
Payback period: Payback period Number of years that pass before the sum of an investments cash ows equals the cost of the investment 3. Discounted payback period: Discounted payback period Number of years that pass before the sum of an investments discounted cash ows equals the cost of the investment 4. The average accounting return AAR: Internal rate of return IRR: IRR Discount rate of required return such that the net present value of an investment is zero.
Risk premium: Risk premium Expected return Risk-free rate 2. Expected return on a portfolio: Required return on equity, RE dividend growth model: The operating cycle: Operating cycle Inventory period Accounts receivable period 2. The cash cycle: Cash cycle Operating cycle Accounts payable period [ Required return on preferred stock, RP: The weighted average cost of capital WACC: Float measurement: Average daily oat: Average daily oat b.
Average daily oat Average daily receipts Weighted average delay 2. Opportunity costs: Trading costs: Trading costs c. Total cost: Total cost Opportunity costs Trading costs d.
The optimal initial cash balance: The Miller-Orr model: The optimal cash balance: Rights offerings: Number of new shares: Number of rights needed:. Value of a right: Value of a right Rights-on price Ex-rights price. Derivatives markets: Financing could flow through an intermediary, for example. Investors can download shares in a private corporation, for example. Foreign exchange trading takes place in the over-the-counter market.
The cost of capital is an opportunity cost determined by expected rates of return in the financial markets. Investor A downloads shares in a mutual fund, which downloads part of a new stock issue by a rapidly growing software company.
Investor B downloads shares issued by the Bank of New York, which lends money to a regional department store chain. Investor C downloads part of a new stock issue by the Regional Life Insurance Company, which invests in corporate bonds issued by Neighborhood Refineries, Inc.
download shares in a mutual fund.
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Mutual funds pool savings from many individual investors and then invest in a diversified portfolio of securities. Yes, an insurance company is a financial intermediary.
Insurance companies sell policies and then invest part of the proceeds in corporate bonds and stocks and in direct loans to corporations. The returns from these investments help pay for losses incurred by policyholders.
As a percentage of all investors, households are the largest investor in equities. Pension funds. Banks own almost no corporate equities, but instead rely on fixed- income investments. Commercial banks.
In contrast, investment banks raise money for corporations. Exchange traded funds ETFs are portfolios of stocks that can be bought or sold in a single trade. Hedge funds may provide diversification, but usually have very high fees. Insurance policy premiums are used to pay claims, create reserves and provide financing for company operations.
The size of the pension investment is variable, depending on market conditions, while the amount contributed is somewhat fixed. Liquidity is important because investors want to be able to convert their investments into cash quickly and easily when it becomes necessary or desirable to do so. Should personal circumstances or investment considerations lead an investor to conclude that it is desirable to sell a particular investment, the investor prefers to be able to sell the investment quickly and at a price that does not require a significant discount from market value.
Liquidity is also important to mutual funds. In order to maintain liquidity for its shareholders, the mutual fund requires liquid securities. Commercial banks accept deposits and provide financing primarily for businesses. Investment banks do not accept deposits and do not loan money to businesses and individuals. Investment banks may make bridge loans as temporary financing for a takeover or acquisition.
In addition, investment banks trade many different financial contracts, such as bonds and options, while providing investment advice and portfolio management for institutional and individual investors. Mutual funds collect money from small investors and invest the money in corporate stocks or bonds, thus channeling savings from investors to corporations. For individuals, the advantages of mutual funds are diversification, professional investment management, and record keeping.
Chapter 11 - Fundamentals of Corporate Finance 9th Edition - Test Bank
Financial markets and financial intermediaries channel savings to real investments. They also channel money from individuals who want to save for the future to those who need cash to spend today.
A third function of financial markets is to allow individuals and businesses to adjust their risk. Financial markets provide other mechanisms for sharing risks. For example, a wheat farmer and a baker may use the commodity markets to reduce their exposure to wheat prices.
Key Equations Fundamentals of Corporate Finance 9th edition Ross, Westerfield, and Jordan
Financial markets and intermediaries allow investors to turn an investment into cash when needed. For example, the shares of public companies are 5.
Banks are the main providers of payment services by offering checking accounts and electronic transfers. Finally, financial markets provide information.
For example, the CFO of a company that is contemplating an issue of debt can look at the yields on existing bonds to gauge how much interest the company will need to pay. The major functions of financial markets and institutions in a modern financial system are: The savings of individual investors are made available for real investments by corporations and other business entities by way of financial markets and institutions.
Savers can save money now to be withdrawn and spent at a later time, while borrowers can borrow cash today, in effect spending today income to be earned in the future. Insurance companies allow individuals and business firms to transfer risk to the insurance company, for a price.
The net present value of the project is negative and equal to the initial investment. The payback period is exactly equal to the life of the project. The net present value of the project is equal to zero.
Which of the following characteristics relate to the cash break-even point for a given project? The project never pays back. The IRR equals the required rate of return.
The NPV is negative and equal to the initial cash outlay. The operating cash flow is equal to the depreciation expense. II and IV only C.
When the operating cash flow of a project is equal to zero, the project is operating at the: A.Times interest earned ratio Rights offerings: Bounds on the value of a call option: Net Present Value is difference between the present value of cash inflows and initial investment. Now customize the name of a clipboard to store your clips. The payback period is exactly equal to the life of the project. The third learning objective of this chapter is an explanation of the functions of financial markets and institutions.
It is one of the discounted cash flow techniques. Total asset turnover NPV of switching credit terms:
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