... clearly pays to invest
10 million to avoid a 10 percent probability of a Ơ6.14 billion fall in NPV. You are
ahead by10 .10 6,140 Ơ604 million.
On the other hand, the value of additional information ... open. By displaying the links between today’s and
117 Ϫ 52 ϭϩ65, or $65,000
ϭϩ52, or $52,000
ϩ
.63.81 4102 ϩ .2118024 ϩ .43.412202ϩ .6 1100 24
11 .102
2
NPV ϭϪ250 ϩ
.6 1100 2ϩ .41502
1 .10
ϭϪ550 ϩ
102
1 .10
ϩ
670
11 .102
2
ϭϩ96, ... 1.2 ϫ 100 2ϭϩ660, or $660,000
ϩ 1probability low demand ϫ payoff with
1Probability high demand ϫ payoff with high demand2
CHAPTER 10 A Project Is Not a Black Box 275
19
We are guilty here of assuming...
...
"Yes, Herr Liedenbrock; the labours of MM. Olafsen and Povelsen,pursued
by order of the king, the researches of Troïl the scientificmission of MM.
Gaimard and Robert on the French corvette ... JOURNEY TO THE CENTER OF THE EARTH
JULES VERNE
CHAPTER 10
INTERESTING CONVERSATIONS WITH ICELANDIC SAVANTS
Dinner was ready. Professor Liedenbrock devoured his portionvoraciously, ... little expression
of simplicity; but it looked like adiabolical grin.
[1] _Recherche_ was sent out in 1835 by Admiral Duperré to learn thefate of
the lost expedition of M. de Blosseville...
... a life of five years, and at a discount rate of 6 percent the present value of
the cost of buying and operating it is $500,000.
We begin by converting the $500,000 present value of cost of the ... annual cost 10. 61 10. 61 10. 61 28.37
We calculated the equivalent annual cost by finding the three-year annuity with
the same present value as A’s lifetime costs.
PV of annuity ϭ PV of A’s costs ... estimated its opportunity cost of capital for major business
investments by adding a risk premium of10 percentage points to yields on newly issued
Brealey−Meyers:
Principles of Corporate
Finance,...
... shares of Coca-Cola or
Reebok. You decide that Reebok offers an expected return of 20 percent and Coca-
Cola offers an expected return of10 percent. After looking back at the past vari-
ability of ... portfolio to each of the two factors? What is the expected
risk premium?
c. Suppose you buy $80 of X and $60 of Y and sell $40 of Z. What is the
sensitivity of your portfolio to each of the two factors? ... rate Change in value of dollar relative to basket of currencies
Real GNP Change in forecasts of real GNP
Inflation Change in forecasts of inflation
Brealey−Meyers:
Principles of Corporate
Finance,...
... E
L
2
.01
1Profits Ϫ interest2.01E
L
.01D
L
Both strategies offer the same payoff: 1 percent of the firm’s profits. In well-
functioning markets two investments that offer the same payoff must have ... of
assets
Ϫ
beta of
debt
b

E

A
ϭ a
D
D ϩ E
ϫ 
D
bϩ a
E
D ϩ E
ϫ 
E
b
Beta of
assets
ϭ a
proportion
of debt
ϫ
beta of
debt
bϩ a
proportion
of equity
ϫ
beta of
equity
b
CHAPTER 17
Does Debt ... percent of the equity of A.
a. What profits does X obtain?
b. What alternative strategy would provide the same result?
c. Suppose investor Y purchases 10 percent of the equity of B. What profits...
... the cost of the cash offer?
c. What is the cost of the stock alternative?
d. What is the NPV of the acquisition under the cash offer?
e. What is its NPV under the stock offer?
4. Which of the following ... Destruction of Value,” Journal of Finance,
47 :108 1–1119 (July 1992).
R. Bruner: “An Analysis of Value Destruction and Recovery in the Alliance and Proposed
Merger of Volvo and Renault,” Journal of Financial ... Governance
6
We cover spin-offs in the next chapter.
7
In 2000 Ford followed GM by announcing plans to spin off its auto-parts business, Visteon Corporation.
Brealey−Meyers:
Principles of Corporate
Finance,...
... just swaller some of it once you'll see."
So Tom unwound the thread from one of his needles, and each boy pricked
the ball of his thumb and squeezed out a drop of blood. In time, ... beyond. By and by
their pulses slowed down, and Tom whispered:
"Huckleberry, what do you reckon'll come of this?"
"If Doctor Robinson dies, I reckon hanging'll come of ... comes of playing hookey and doing everything a
feller's told not to do. I might a been good, like Sid, if I'd a tried but no, I
wouldn't, of course. But if ever I get off this...
... creativity and passion can be used by today’s and tomor-
row’s marketing managers.
The Scope of Marketing
Marketing people are involved in marketing10 types of entities: goods, services, expe-
riences, ... being a matter of routine.
The ultimate outcome of relationship marketing is the building of a unique com-
pany asset called a marketing network. A marketing network consists of the company and
its ... and Contents of a Marketing Plan
The marketing plan created for each product line or brand is one of the most important
outputs of planning for the marketing process. A typical marketing plan...
... 9 2103 .
â 2009 by Taylor & Francis Group, LLC
185
10
Chemical Substances
and Nephrotoxicity
10. 1 INTRODUCTION
Nephrotoxicity is a renal health disorder due to direct or indirect effects of ...
adversely affected by prolonged periods of exposure to an array of environmental
chemicals. Man is exposed to medicines, industrial and environmental chemicals,
and a variety of naturally occurring ... there-
fore possible to initiate a series of degenerative changes as a result of interfering with
one or more of the normal physiological processes.
The array of industrial chemicals, negligence during...
... Perception
5. The Law of Focus
6. The Law of Exclusivity
7. The Law of the Ladder
8. The Law of Duality
9. The Law of the Opposite
10. The Law of Division
11. The Law of Perspective
12. The Law of Line Extension
13. ... data base software field. (What
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file:///F|/Business /Marketing/ 22 Immutable Laws Of Marketing. html
dealer ... extend
the equity of a brand.
22_12
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...
...
indubitable symptoms of insanity."
"Or of wisdom, my dear baron or of wisdom," said Louis
XVIII., laughing; "the greatest captains of antiquity amused
themselves by casting pebbles ... with a
word his majesty's order; and, in spite of the
protestations which the master of ceremonies made for the
honor of his office and principles, Villefort was
introduced.
The king ...
time, and arrested on the day of my departure. This person,
a sailor, of turbulent character, and whom I suspected of
Bonapartism, has been secretly to the Island of Elba. There
he saw the grand-marshal,...
... naturally
involved in capital budgeting.
Because of the importance of many financial issues, ultimate decisions often rest
by law or by custom with the board of directors. For example, only the board ... Benrud University of Baltimore
Peter Berman University of New Haven
Jean Canil University of Adelaide
Robert Everett Johns Hopkins University
xii PREFACE
BrealeyMeyers:
Principles of Corporate
Finance, ... proportion of profits and dividends. Shareholders
may also include giant pension funds and insurance companies whose invest-
ment may run to millions of shares and hundreds of millions of dollars,...
... now
A
invests $100 in office
building and consumes $114
next year.
106 .54
114
107
Dollars next year
G
invests $100 in office
building, borrows $106 .54, and
consumes that amount now.
100
FIGURE 2.1
The ... percent,
thereby transforming $100 into $106 .54 of
immediate consumption. Because of the
investment, G has $114 next year to pay
off the loan. The investment’s NPV is
106 .54 Ϫ 100 ϭϩ6.54.
Brealey−Meyers: ... (you) making 100 percent of
the investment and receiving 100 percent of the payoffs from the new office build-
ing. In corporations, investments are made on behalf of thousands of shareholders
with...