brealey−meyers principles of corporate finance 7th edition chapter 9

... they were also marrying The Principles of Corporate Finance Richard A Brealey Stewart C Myers Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value Finance and the Financial ... the last of the leading investment-bank partnerships, issued shares and became a public corporation in 199 8 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value Finance and ... tax on profits paid out as dividends Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value Finance and the Financial Manager CHAPTER © The McGraw−Hill Companies, 2003 Finance...

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... “Economics and Ethics: The Case of Salomon Brothers,” Journal of Applied Corporate Finance (Summer 199 2), pp 23–28 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value Present Value ... opportunity cost of capital Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value Present Value and the Opportunity Cost of Capital © The McGraw−Hill Companies, 2003 CHAPTER Present ... pessimistic Forecasts of expected payoffs are correct on average 15 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 16 PART I I Value Present Value and the Opportunity Cost of Capital ©...

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... 20 Annual inflation, percent 15 10 –5 –10 –15 193 0 194 0 195 0 196 0 197 0 198 0 199 0 FIGURE 3.4 Annual rates of inflation in the United States from 192 6 to 2000 Source: Ibbotson Associates, Inc., ... Find out in the next episode of The Jones Family, Incorporated Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value How to Calculate Present Values CHAPTER © The McGraw−Hill ... ϩ300,000 ϩ261 ,90 0 Total ϭ NPV ϭ $18,400 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value How to Calculate Present Values © The McGraw−Hill Companies, 2003 CHAPTER How to...

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... 146.41 — 4.35 8.51 12.48 16. 29 — 95 .65 91 . 49 87.52 83.71 100 100 100 100 100 11. 79 30.58 533. 59 62,6 39. 15 10 20 50 100 2 59. 37 672.75 11,7 39. 09 1,378,061.23 35. 89 58. 89 89. 17 98 .83 64.11 41.11 10.83 ... and profitability in Chapter 12 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value The Value of Common Stocks CHAPTER © The McGraw−Hill Companies, 2003 The Value of Common ... Estimates of the Cost of Equity Capital—A Case Study,” Financial Markets, Institutions and Instruments, 3 :9 45 (August 199 4) Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I...

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... and E Solomon, “The Arithmetic of Capital Budgeting,” Journal of Business 29 (April 195 6), pp 124–1 29 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition I Value © The McGraw−Hill ... Arithmetic of Capital Budgeting Decisions,” Journal of Business, 29: 124–1 29 (April 195 6) Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 112 PART I I Value © The McGraw−Hill Companies, ... 2 29 171 114 57 7% 8.2% 9. 8% 12.2% 16.4% 24.6% For simplicity we have ignored taxes There will be plenty about taxes in Chapter 49. 1% Brealey−Meyers: Principles of Corporate Finance, Seventh Edition...

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... 32.00 19. 20 11.52 11.52 5.76 14. 29 24. 49 17. 49 12. 49 8 .93 8 .93 8 .93 4.45 10.00 18.00 14.40 11.52 9. 22 7.37 6.55 6.55 6.55 6.55 3. 29 5.00 9. 50 8.55 7.70 6 .93 6.23 5 .90 5 .90 5 .90 5 .90 5 .90 5 .90 5 .90 ... 12,887 7,7 29 1,210 3,200 748 32,610 19, 552 1,331 1 ,92 0 9, 807 48 ,90 1 29, 345 1,464 1,152 16 ,94 0 35,834 21, 492 1,611 1,152 11,5 79 19, 717 11,830 1,772 576 5,5 39 1 ,94 9† Ϫ1,400 Ϫ1,580 262 3,432 5 ,92 9 4,053 ... Ϫ1,580 12,887 7,7 29 1,210 262 32,610 19, 552 1,331 3,432 48 ,90 1 29, 345 1,464 5 ,92 9 35,834 21, 492 1,611 4,053 19, 717 11,830 1,772 1 ,93 9 682 93 4 Ϫ550 3,686 Ϫ7 39 8, 295 Ϫ1 ,97 2 12,163 Ϫ1,6 29 8,678 1,307...

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... Risk, Return, and the Opportunity Cost of Capital Period Market Standard Deviation (␴m) 192 6– 193 0 193 1– 194 0 194 1– 195 0 195 1– 196 0 196 1– 197 0 197 1– 198 0 198 1– 199 0 199 1–2000 165 21.7 37.8 14.0 12.1 13.0 ... Aug -96 Jan -97 Jan -98 Jan -99 Jan-00 Jan-01 Jan -98 Jan -99 Jan-00 Jan-01 Jan -98 Jan -99 Jan-00 Jan-01 85 Return, percent 65 45 25 -15 Reebok -35 Aug -96 Jan -97 65 45 25 -15 Portfolio -35 Aug -96 Jan -97 ... rates of return from 199 6 to 2000 Rates of return on the S&P 500 are given for comparison 199 6 Mr Interchange S&P 500 199 7 199 8 199 9 2000 ϩ16.1 ϩ23.1 ϩ28.4 ϩ33.4 ϩ25.1 ϩ28.6 ϩ14.3 ϩ21.0 Ϫ6.0 9. 1...

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... and Return CHAPTER Risk and Return Dollars (log scale) 100 High minus low book-to-market 10 Small minus large 0.1 193 2 193 7 194 2 194 7 195 2 195 7 196 2 196 7 197 2 197 7 198 2 198 7 199 2 199 7 Year FIGURE ... review of the evidence on the CAPM, see J H Cochrane, “New Facts in Finance, ” Journal of Economic Perspectives 23 ( 199 9), pp 36–58 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition ... percent market risk premium in Figure 8 .9 and the 9. 1 percent premium reported in Table 7.1 15 199 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 200 II Risk © The McGraw−Hill...

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... Capital for Multinational Firms,” Journal of Applied Corporate Finance (Fall 199 5), pp 95 –102 233 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 234 II Risk Capital Budgeting and ... Flow (CEQt ) Ratio of CEQt to Ct 100 100 100 94 .6 89. 6 84.8 94 6 896 ϭ 94 62 848 ϭ 94 63 241 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 242 PART II II Risk Capital Budgeting ... Measures of Systematic Risk: Some Further Evidence,” Journal of Financial and Quantitative Analysis 10 (June 197 9), pp 231–284 237 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition...

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... the cost of capital was percent in nominal terms 283 Visit us at www.mhhe.com/bm7e Brealey−Meyers: Principles of Corporate Finance, Seventh Edition Brealey−Meyers: Principles of Corporate Finance, ... “Abandonment Value in Capital Budgeting,” Journal of Finance 22 (December 196 7), pp 577– 590 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition III Practical Problems in Capital Budgeting ... C Myers, “Determinants of Corporate Borrowing,” Journal of Financial Economics (November 197 7), pp 146–175 273 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 274 PART III III...

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... with Multiple Short-Term Contracts,” Review of Financial Studies 12 ( 199 9), pp 4 29 4 59 11 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition III Practical Problems in Capital Budgeting ... resulting spread of $ .95 per 12 This is a true story, but names and details have been changed to protect the innocent 293 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 294 III Practical ... After reading Chapter 27, check out E S Schwartz, “The Stochastic Behavior of Commodity Prices: Implications for Valuation and Hedging,” Journal of Finance 52 (July 199 7), pp 92 3 97 3; and A J...

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... 2003 CHAPTER 12 Making Sure Managers Maximize NPV Start of Year Market Value 10 11 12 13 14 15 16 19. 69 17 .99 16. 79 15.78 14. 89 14. 09 13.36 12.68 12.05 11.46 10 .91 10. 39 9 .91 9. 44 9. 01 8. 59 Cash ... rate of return (figures in $ millions) Visit us at www.mhhe.com/bm7e Brealey−Meyers: Principles of Corporate Finance, Seventh Edition Brealey−Meyers: Principles of Corporate Finance, Seventh Edition ... for $ 19. 69 million at the start of year and sold it a year later, your total profit would be 17 .99 ϩ 3.67 Ϫ 19. 69 ϭ $1 .97 million, 10 percent of the purchase cost.) Many airlines write off their...

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... Analysis of Decision under Risk,” Econometrica 47 ( 197 9), pp 263– 291 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition IV Financial Decisions and Market Efficiency 13 Corporate ... Pressure and the Effects of Information on Share Prices,” Journal of Business 45 (April 197 2), pp 1 79 211 3 69 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 370 IV Financial ... CHAPTER 13 Corporate Financing and the Six Lessons of Market Efficiency 355 Returns, percent 40 35 30 25 20 15 10 –5 –10 –15 –20 Funds Market –25 –30 –35 196 2 196 7 197 2 197 7 Year 198 2 198 7 199 2...

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... Overview of Corporate Financing Debt ratio, percent 60 Debt versus total assets 50 40 30 20 Debt versus total long-term financing 10 195 4 195 8 196 2 196 6 197 0 197 4 197 8 198 2 198 6 199 0 199 4 199 8 2001 ... investment 199 0 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 14 An Overview of Corporate Financing © The McGraw−Hill Companies, 2003 Brealey−Meyers: Principles of Corporate Finance, ... 78.6% 21.4% $ 7 89 22.4% 100.0% 77.6% 199 5 9. 2% 19. 7% 89. 5% 10.5% $ 755 12.4% 100.0% 87.6% 199 6 Ϫ13.0% 30.3% 82.7% 17.3% $ 880 19. 0% 100.0% 81.0% 199 7 13.4% 100.0% 86.6% 2000 72.1% 27 .9% Ϫ14.3% 37.6%...

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... Private partnerships 40,000 30,000 20,000 10,000 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 2000 FIGURE 15.1 U.S venture capital disbursements by type of fund Source: Venture Economics/National Venture ... Securities CHAPTER 15 How Corporations Issue Securities Total direct costs (%) 20 IPOs SEOs 15 Convertibles Bonds 10 50 0– up 20 0– 49 99 10 0– 19 99 80 9 99 99 60 –7 99 –5 40 20 –3 99 10 –1 99 2– 99 ... Examination of Voluntary versus Involuntary Issuances by Commercial Banks,” Journal of Financial Economics 35 ( 199 4), pp 99 –122 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition IV...

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... Dividend 198 3 198 4 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 2000 17 19 21 27 37 51 63 76 92 1.56 1.44 1. 19 1.32 1.56 1.87 2.15 2.45 2 .90 08 09 09 11 14 22 28 32 39 46 ... 1, 2001 140 Dividends 100 80 60 40 20 198 2 198 4 198 6 198 8 199 0 Year 199 2 199 4 199 6 199 8 Repurchases are like bumper dividends; they cause large amounts of cash to be paid to investors But they ... Dividend Policies of Japanese and U.S Firms,” Journal of Finance 53 (June 199 8), pp 8 79 90 4 4 39 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition V Dividend Policy and Capital Structure...

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... Conference on Research in Business Finance, National Bureau of Economic Research, New York, 195 2 465 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 466 PART V V Dividend Policy ... rigorous analysis of the conditions under which a policy of maximizing the value of the firm is also best for the stockholders Brealey−Meyers: Principles of Corporate Finance, Seventh Edition V Dividend ... Interest 01 1Profits Ϫ interest2 01 Profits Both strategies offer the same payoff: percent of the firm’s profits In wellfunctioning markets two investments that offer the same payoff must have...

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... “Debt and Taxes,” Journal of Finance 32 (May 197 7), pp 261–276 10 That is, 11 Ϫ 33 ϫ 3.71 ϭ 2. 49 percent 495 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 496 PART V V Dividend ... 48: 297 –356 (March 199 1) S C Myers: “Capital Structure,” Journal of Economic Perspectives, 15:81–102 (Spring 2000) The Spring 199 3 and Winter 199 5 issues of the Journal of Applied Corporate Finance ... profits and the existence of noninterest tax shields See J R Graham, “How Big Are the Tax Benefits of Debt?” Journal of Finance 55 (October 2000), pp 190 1– 194 1 497 Brealey−Meyers: Principles of...

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... Ruback, “The Valuation of Cash Flow Forecasts: An Empirical Analysis,” Journal of Finance 50 (September 199 5), pp 10 59 1 093 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition V Dividend ... www.mhhe.com/bm7e Brealey−Meyers: Principles of Corporate Finance, Seventh Edition Brealey−Meyers: Principles of Corporate Finance, Seventh Edition 552 V Dividend Policy and Capital Structure 19 Financing ... MA, 197 9 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition V Dividend Policy and Capital Structure © The McGraw−Hill Companies, 2003 19 Financing and Valuation CHAPTER 19 Financing...

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... Scholes, in “The Pricing of Options and Corporate Liabilities,” Journal of Political Economy 81 (May–June 197 3), pp 637–654 Brealey−Meyers: Principles of Corporate Finance, Seventh Edition VI Options ... relationship is Value of call ϩ present value of exercise price ϭ value of put ϩ share price Ϫ present value of dividend Brealey−Meyers: Principles of Corporate Finance, Seventh Edition VI Options ... shows the payoffs from a combination of the purchase and the sale—exactly the same as the payoffs from one of Ms Higden’s tickets Brealey−Meyers: Principles of Corporate Finance, Seventh Edition...

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