Brealey−Meyers: Principles of Corporate Finance, 7th Edition - Chapter 3 doc

... ϭ 121 3 120 ϩ 10 ϭ 130 121 ϩ 12.1 ϭ 133 .1 4 130 ϩ 10 ϭ 140 133 .1 ϩ 13. 3 ϭ 146.4 10 190 ϩ 10 ϭ 200 236 ϩ 24 ϭ 259 20 290 ϩ 10 ϭ 30 0 612 ϩ 61 ϭ 6 73 50 590 ϩ 10 ϭ 600 10,672 ϩ 1,067 ϭ 11, 739 100 ... r 1 ϩ C 2 11 ϩ r 2 2 2 ϩ C 3 11 ϩ r 3 2 3 ϩ … PV ϭ C 1 1 ϩ r 1 ϩ C 2 11 ϩ r 2 2 2 34 PART I Value Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I. Val...

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... 12.67 15 .38 Depreciation 2.40 3. 10 3. 12 3. 17 3. 26 3. 44 3. 68 Pretax profits 8.08 8.77 4.62 5. 23 6.69 9. 23 11.69 Tax 2. 83 3.07 1.62 1. 83 2 .34 3. 23 4.09 Aftertax profits 5.25 5.70 3. 00 3. 40 4 .35 6.00 ... 20 03 2002 20 03 Cash & securities 3. 12 3. 61 Current liabilities 2.90 3. 20 Other current assets 15.08 16. 93 Net fixed assets 20.75 23. 38 Equity 36...

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... in Chapter 6. Year 1 23 4 5 1. Revenue 180 180 180 180 180 2. Operating costs 70 70 70 70 70 3. Depreciation* 80 80 80 80 80 4. Net income 30 30 30 30 30 5. Start -of- year book value † 400 32 0 ... one we ob- tained earlier. Instead of investing in one unit of project A and one of project D, we are told to take half of project A, all of project B, and three-quarters of...

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... 2.5 2.0 C 4.5 3. 5 Visit us at www.mhhe.com/bm7e 01 2 3 1. Initial investment 100 2. Revenues 100 100 100 3. Cash operating costs 50 50 50 4. Tax depreciation 33 .33 33 .33 33 .33 5. Income ... Net income 10 10 10 8. After-tax salvage 15 9. Cash flow (7 ϩ 8 ϩ 4 Ϫ 1) Ϫ100 ϩ 43. 33 ϩ 43. 33 ϩ58 .33 NPV at 20% ϭ 0 Assumptions: 1. Tax depreciation is straight-line over three ye...

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... for store 1 1,000 833 667 500 33 3 167 2 1,000 833 667 500 33 3 3 1,000 833 667 500 4 1,000 833 667 5 1,000 833 6 1,000 Total book value 1,000 1, 833 2,500 3, 000 3, 333 3, 500 Book ROI for all ... Budgeting Year 1 234 56 Book income for store* 1 Ϫ67 33 ϩ 83 ϩ 131 ϩ 131 ϩ 131 2 Ϫ67 33 ϩ 83 ϩ 131 ϩ 131 3 Ϫ67 33 ϩ 83 ϩ 131 4 Ϫ67 33 ϩ 83 5 Ϫ67 33 6 Ϫ67 Total book incom...

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... 76–89. 32 F. Cornelli and D. Goldreich, “Bookbuilding and Strategic Allocation,” Journal of Finance 56 (Decem- ber 2001), pp. 233 7– 236 9. Brealey−Meyers: Principles of Corporate Finance, Seventh Edition IV. ... Study of the Mexican Treasury Bill Auction,” Journal of Financial Economics 33 (19 93) , pp. 31 3 34 0. 15.4 SECURITY SALES BY PUBLIC COMPANIES For most compan...

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... article “Cor- porate Income Taxes and the Cost of Capital: A Correction,” American Economic Review 53 (June 19 63) , pp. 433 –4 43. Brealey−Meyers: Principles of Corporate Finance, Seventh Edition V. ... 1,1 23 Long-term debt Long-term assets 16 ,32 3 4 ,33 0 Other long-term liabilities 16,076 Equity Total assets $ 21,529 $ 21,529 Total value Market Values Net working capital...

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... use an up-to-date risk-free interest rate. Brealey−Meyers: Principles of Corporate Finance, Seventh Edition VI. Options 20. Understanding Options © The McGraw−Hill Companies, 20 03 CHAPTER 20 ... value Value of call ϩ present value of promised payment to bondholders Value of call ϩ present value of exercise price ϭ value of put ϩ value of share Brealey−Meyers: P...

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... $ 23. 11 from the bank: 3 .5714 shares $ 23. 57 $41.90 Repayment of Ϫ 23. 57 Ϫ 23. 57 Total payoff $ 0 $18 .33 loan ϩ interest Stock Price ϭ $ 73. 33Stock Price ϭ $41.25 Brealey−Meyers: Principles of Corporate ... rise to $ 73. 33 or fall to $41.25. Expected future value 1 ϩ interest rate ϭ 8.49 1.02 ϭ $8 .32 ϭ $8.49 ϭ 1.4 63 ϫ 18 .33 2 ϩ 1. 537 ϫ 02 3Probability of rise...

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... 4:79– 93 (January 1977). D. Galai and M. A. Schneller: “Pricing of Warrants and the Value of the Firm,” Journal of Fi- nance, 33 : 133 3– 134 2 (December 1978). Asquith’s analysis of the effect of call ... the Design of Convertible Debt,” Journal of Applied Corporate Finance, 11:45– 53 (Spring 1998). Visit us at www.mhhe.com/bm7e Brealey−Meyers: Principles of Corpo...

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