Fundamentals of Corporate Finance, 2nd Edition
September 2011, ©2012
Authors Robert Parrino, David Kidwell, and Thomas Bates believe that students who understand the intuition underlying the basic concepts of finance are better able to develop the critical judgments necessary to apply financial tools in real decision- making situations.
Their text develops intuitive thinking while simultaneously helping students develop problem solving and computational skills. It then shows students how to apply intuition and analytical skills to decision making while integrating it all with valuation and building shareholder value.
PART 1 INTRODUCTION
1 The Financial Manager and the Firm 1
PART 2 FOUNDATIONS
2 The Financial System and the Level of Interest Rates 27
3 Financial Statements, Cash Flows, and Taxes 48
4 Analyzing Financial Statements 81
PART 3 VALUATION OF FUTURE CASH FLOWS AND RISK
5 The Time Value of Money 124
6 Discounted Cash Flows and Valuation 159
7 Risk and Return 200
8 Bond Valuation and the Structure of Interest Rates 238
9 Stock Valuation 270
PART 4 CAPITAL BUDGETING DECISIONS
10 The Fundamentals of Capital Budgeting 301
11 Cash Flows and Capital Budgeting 341
12 Evaluating Project Economics and Capital Rationing 380
13 The Cost of Capital 409
PART 5 WORKING CAPITAL MANAGEMENT AND FINANCING DECISIONS
14 Working Capital Management 441
15 How Firms Raise Capital 472
16 Capital Structure Policy 504
17 Dividends, Stock Repurchases, and Payout Policy 561
PART 6 BUSINESS FORMATION, VALUATION, AND FINANCIAL PLANNING
18 Business Formation, Growth, and Valuation 569
19 Financial Planning and Forecasting 606
PART 7 OPTIONS IN CORPORATE FINANCE AND INTERNATIONAL DECISIONS
20 Options and Corporate Finance 641
21 International Financial Management 671
• New Content: a new section on cash flows to investors has been added to Chapter 3, designed to help students develop an understanding of the sources and uses of investor cash flows. A discussion of the Sharpe Ratio has being incorporated into Section 7.4 to help students develop a stronger intuition about the relation between risk and return. The discussion of options in Chapter 20 has been extended to include different types of options embedded in debt and equity securities.
• Current Financial Information: All financial information for which more current data are available have been updated, providing timely examples of how the material covered in the chapter is relevant to financial decision-making.
• Refined and Extended Problem Sets: Examples are current and clearly presented. New questions and problems have been added to ensure appropriate coverage of key concepts at all levels of difficulty.
• Updated Ethics Cases: a new case concerning the Unilever Global Sustainable Living Plan has been added.
• Learning by Doing applications contain quantitative problems with step-by-step solutions to help students better understand how to apply their intuition and analytical skills to solve problems. This unique feature takes the stepped-out problem beyond other texts by offering "approaches" students can take to solve each problem.
• Decision-Making Examples emphasize the decision-making process along with computation and provide students at all levels with experience in financial decision-making.
• Learning Objectives identify the most important material for students to understand while reading the chapter.
• Chapter Opener Vignettes describe a real company application to illustrate concepts that will be presented in the chapter. These current vignettes are from international news highlighting domestic and global companies, reflecting the real world of business today.
• Before You Go On self-study questions throughout each chapter serve as a checkpoint at which students can test their understanding of the materials in that section.
Extensive End-of-Chapter Problems and Questions
In addition to the many numerical examples that are solved in the text of each chapter, Fundamentals of Corporate Finance has more than 1,000 end-of-chapter problems which have been written with Bloom's Taxonomy in mind. Solutions for these problems and charts showing how they relate to the levels in Bloom's Taxonomy are provided in the Instructor's Manual.
• Problems w/Detailed Solutions to reinforce the methods used to solve problems discussed in the chapter. • Critical Thinking Questions require students to think through their understanding of the basic concepts and apply those concepts to a problem.
• Questions and Problems provide a broad range of questions and problems, including sample problems from CFA Institute, covering a range of difficulty levels to help students solidify their understanding of the concepts. Excel Problems are identified for selected Problems that can be solved using Excel templates at the student website.
• Sample Test Problems call for straightforward applications of the chapter concepts and gives students a sense of comfort in test preparation.
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