Brealey−Meyers: Principles of Corporate Finance, 7th Edition - Chapter 15 docx

... bids. Par- ticular classes of investors, such as existing shareholders or those who submitted CHAPTER 15 How Corporations Issue Securities 415 Brealey−Meyers: Principles of Corporate Finance, ... Executive Officer since that date. He is a past president of the Institute of Brealey−Meyers: Principles of Corporate Finance, Seventh Edition IV. Financial Decisions...

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... ϩ 800 1 .152 ϩ 150 11 .152 2 2 ϩ 150 11 .152 2 3 ϩ 150 11 .152 2 4 ϩ 150 11 .152 2 5 NPV ϭϪ1,000 ϩ 800 .50 ϩ 150 1.502 2 ϩ 150 1.502 3 ϩ 150 1.502 4 ϩ 150 1.502 5 Ϫ 150 1.502 6 ϭ 0 4 By Descartes’s “rule of signs” ... satisfactory way of defining the true rate of re- turn of a long-lived asset. The best available concept is the so-called discounted- cash-flow (DCF)...

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... is 40 percent of the difference between salvage value and depreciated investment. 4. The cost of capital is 20 percent. a. What is the value of a one-year-old plant? Of a two-year-old plant? ... deliver re- wards to investors. Source: C. Loomis, “Mr. Buffett on the Stock Market,” Fortune (November 22, 1999), pp. 110– 115. Brealey−Meyers: Principles of Corporate Finance, Se...

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... what causes them. Value of firm ϭ value if all-equity-financed ϩ PV1tax shield2Ϫ PV 1costs of financial 1distress2 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition V. Dividend Policy ... stream of cash flows of $28 per year. The risk of these flows is likely to be less than the risk of the operating assets of L. The tax shields Brealey−Meyers: Prin...

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... relationship is Value of callϩ present value of exercise price ϭ value of putϩ share price Ϫ present value of dividend. Brealey−Meyers: Principles of Corporate Finance, Seventh Edition VI. Options ... use an up-to-date risk-free interest rate. Brealey−Meyers: Principles of Corporate Finance, Seventh Edition VI. Options 20. Understanding Options © The McGraw−Hil...

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... parity formula from Chapter 20: Value of put ϭ value of call Ϫ value of stock ϩ PV1exercise price2 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition VI. Options 21. Valuing Options © ... each tree we show a histogram of the possible six-month price changes, assuming investors are risk- neutral. Brealey−Meyers: Principles of Corporate Finance, Sev...

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... duration of the 1-year debt is 1 year, and the duration of the 6-year debt is 4.6 years. The dura- tion of the package of 1- and 6-year debt is a weighted average of the durations of the individual ... dealer to swap a a10 million five-year fixed-rate loan for an equivalent floating-rate loan in euros. Brealey−Meyers: Principles of Corporate Finance, Seventh Edition...

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... Sachs, the last of the leading investment-bank part- nerships, issued shares and became a public corporation in 1998. Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I. Value ... overseas invest- ments. We discuss international corporate finance at many different points in the chapters that follow. Brealey−Meyers: Principles of Corporate Finance, Sev...

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... ϭϪ$4,350 PV ϭ 110,000 1 .15 ϭ $95,650 Expected return ϭ expected profit investment ϭ 110 Ϫ 95.65 95.65 ϭ .15, or 15% Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I. Value 2. ... and Ethics: The Case of Salomon Broth- ers,” Journal of Applied Corporate Finance 5 (Summer 1992), pp. 23–28. Brealey−Meyers: Principles of Corporate Finance, Seventh...

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... from the $23,800 calcu- lated in Chapter 2. Since the net present value is positive, you should still go ahead. 4 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I. Value 3. ... three-year annuity factor? e. From your answers to (c) and (d), calculate the three-year discount factor. Visit us at www.mhhe.com/bm7e Brealey−Meyers: Principles of Corporate F...

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