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Solutions Manual For Fundamentals of Corporate Finance, 13th Edition by Ross, Westerfield, and Jordan, Verified Chapters 1 - 27, Complete Newest Version $16.29   Add to cart

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Solutions Manual For Fundamentals of Corporate Finance, 13th Edition by Ross, Westerfield, and Jordan, Verified Chapters 1 - 27, Complete Newest Version

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Solutions Manual For Fundamentals of Corporate Finance, 13th Edition by Ross, Westerfield, and Jordan, Verified Chapters 1 - 27, Complete Newest Version Solutions Manual For Fundamentals of Corporate Finance, 13th Edition by Ross, Westerfield, and Jordan, Verified Chapters 1 - 27, Complete Newest V...

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  • Fundamentals Of Corporate Finance, 13e
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Solutions Manual Fundamentals of Corporate Finance
13th Edition Ross, Westerfield, and Jordan
Chapters 1 - 27

,CHAPTERe1:eIntroductionetoeCorporateeFinance

CHAPTERe2:eFinancialeStatements,eTaxes,eAndeCasheFlow

CHAPTERe3:eWorkingewitheFinancialeStatements

CHAPTERe4:eLong-TermeFinancialePlanningeandeGrowth

CHAPTERe5:eIntroductionetoeValuation:eTheeTimeeValueeofeMoney

CHAPTERe6:eDiscountedeCasheFloweValuation

CHAPTERe7:eInteresteRateseandeBondeValuation

CHAPTERe8:eStockeValuation

CHAPTERe9:eNetePresenteValueeandeOthereInvestmenteCriteria

CHAPTERe10:eMakingeCapitaleInvestmenteDecisions

CHAPTERe11:eProjecteAnalysiseandeEvaluation

CHAPTERe12:eSomeeLessonsefromeCapitaleMarketeHistory

CHAPTERe13:eReturn,eRisk,eAndetheeSecurityeMarketeLine

CHAPTERe14:eCosteofeCapital

CHAPTERe15:eRaisingeCapital

CHAPTERe16:eFinancialeLeverageeandeCapitaleStructureePolicy

CHAPTERe17:eDividendseandePayoutePolicy

CHAPTERe18:eShort-TermeFinanceeandePlanning

CHAPTERe19:eCasheandeLiquidityeManagement

CHAPTERe20:eCrediteandeInventoryeManagement

CHAPTERe21:eInternationaleCorporateeFinance

CHAPTERe22:eBehavioraleFinance:eImplicationseforeFinancialeManage

CHAPTERe23:eEnterpriseeRiskeManagement

CHAPTERe24:OptionseandeCorporateeFinance

CHAPTERe25:eOptioneValuation

CHAPTERe26:eMergerseandeAcquisitions

CHAPTERe27:eLeasing

,CHAPTER 1 e



INTRODUCTION TO CORPORATE e e e



FINANCE
AnswersetoeConceptseRevieweandeCriticaleThinkingeQuestions

1. Capitalebudgetinge(decidingewhetheretoeexpandeaemanufacturingeplant),ecapitalestructuree(decidingewh
etheretoeissueeneweequityeandeuseetheeproceedsetoeretireeoutstandingedebt),eandeworkingecapitalemanag
emente(modifyingetheefirm’secreditecollectionepolicyewitheitsecustomers).

2. Disadvantages:eunlimitedeliability,elimitedelife,edifficultyeinetransferringeownership,ehardetoeraiseecapi
talefunds.eSomeeadvantages:esimpler,elesseregulation,etheeownerseareealsoetheemanagers,esometimesepe
rsonaletaxerateseareebetterethanecorporateetaxerates.

3. Theeprimaryedisadvantageeofetheecorporateeformeisetheedoubleetaxationetoeshareholderseofedistributedee
arningseandedividends.eSomeeadvantageseinclude:elimitedeliability,eeaseeofetransferability,eabilityetoera
iseecapital,eunlimitedelife,eandesoeforth.

4. IneresponseetoeSarbanes-
Oxley,esmallefirmsehaveeelectedetoegoedarkebecauseeofetheecostseofecompliance.eTheecostsetoecomplye
witheSarboxecanebeeseveralemillionedollars,ewhichecanebeeaelargeepercentagee ofe ae smalle firmse profits.
e Ae majore coste ofe goinge darke ise lesse accesse toe capital.e Sincee theefirmeisenoelongerepubliclyetraded,eitec

anenoelongereraiseemoneyeinetheepublicemarket.eAlthoughetheecompanyewillestillehaveeaccessetoebankel
oanseandetheeprivateeequityemarket,etheecostseassociatedewitheraisingefundseinetheseemarketseareeusuall
yehigherethanetheecostseoferaisingefundseinetheepublicemarket.

5. Thee treasurer’se officee ande thee controller’se officee aree thee twoe primarye organizationale groupse thate
reportedirectlyetoetheechiefefinancialeofficer.eTheecontroller’seofficeehandlesecosteandefinancialeaccounti
ng,etaxemanagement,eandemanagementeinformationesystems,ewhileetheetreasurer’seofficeeiseresponsibl
ee fore cashe ande credite management,e capitale budgeting,e ande financiale planning.e Therefore,etheestudye
ofecorporateefinanceeiseconcentratedewithinetheetreasuryegroup’sefunctions.

6. Toemaximizeetheecurrentemarketevaluee(shareeprice)eofetheeequityeofetheefirme(whethereit’sepublicly-
etradedeorenot).



7. Inetheecorporateeformeofeownership,etheeshareholderseareetheeownerseofetheefirm.eTheeshareholderseele
ctetheedirectorseofetheecorporation,ewhoeineturneappointetheefirm’semanagement.eThiseseparationeofeow
nershipefromecontroleinetheecorporateeformeofeorganizationeisewhatecauseseagencyeproblemsetoeexist.e
Managementemayeacteineitseowneoresomeoneeelse’sebesteinterests,eratherethanethoseeofetheeshareholders
.eIfesucheeventseoccur,etheyemayecontradictetheegoaleofemaximizingetheeshareepriceeofetheeequityeofethee
firm.

8. Aeprimaryemarketetransaction.

, B-2e SOLUTIONS


9. IneauctionemarketselikeetheeNYSE,ebrokerseandeagentsemeeteateaephysicalelocatione(theeexchange)etoem
atchebuyerseandesellerseofeassets.eDealeremarketselikeeNASDAQeconsisteofedealerseoperatingeatedisper
sedelocalesewhoebuyeandeselleassetsethemselves,ecommunicatingewitheotheredealerseeithereelectronicall
yeoreliterallyeover-the-counter.

10. Sucheorganizationsefrequentlyepursueesocialeorepoliticalemissions,esoemanyedifferentegoalseareeconceiv
able.eOneegoalethateiseoftenecitedeiserevenueeminimization;ei.e.,eprovideewhateveregoodseandeservicesea
reeofferedeatetheelowestepossibleecostetoesociety.eAebettereapproachemightebeetoeobserveethateeveneaenot
-for-
profitebusinessehaseequity.eThus,eoneeanswereisethatetheeappropriateegoaleise toemaximizeetheevalueeofet
heeequity.

11. Presumably,etheecurrentestockevalueereflectsetheerisk,etiming,eandemagnitudeeofeallefutureecasheflows,e
botheshort-termeandelong-term.eIfethiseisecorrect,ethenetheestatementeisefalse.

12. Aneargumentecanebeemadeeeithereway.eAtetheeoneeextreme,eweecouldeargueethateineaemarketeeconomy,e
alleofetheseethingseareepriced.eThereeisethuseaneoptimaleleveleof,eforeexample,eethicaleand/oreillegalebeh
avior,eandetheeframeworkeofestockevaluationeexplicitlyeincludesethese.eAtetheeothereextreme,eweecoulde
argueethatetheseeareenon-
economicephenomenaeandeareebestehandledethroughetheepoliticaleprocess.eAeclassice(andehighlyereleva
nt)ethoughtequestionethateillustratesethisedebateegoesesomethingelikeethis:e“Aefirmehaseestimatedethateth
eecosteofeimprovingetheesafetyeofeoneeofeitseproductseise$30emillion.eHowever,etheefirmebelievesethatei
mprovingetheesafetyeofetheeproductewilleonlyesavee$20emillioneineproducteliabilityeclaims.eWhateshoul
detheefirmedo?”

13. Theegoalewillebeetheesame,ebutetheebestecourseeofeactionetowardethategoalemayebeedifferentebecauseeofe
differingesocial,epolitical,eandeeconomiceinstitutions.

14. Theegoaleofemanagementeshouldebeetoemaximizeetheeshareepriceeforetheecurrenteshareholders.eIfemana
gementebelievesethateitecaneimproveetheeprofitabilityeofetheefirmesoethatetheeshareepriceewilleexceede$3
5,ethenetheyeshouldefightetheeofferefrometheeoutsideecompany.eIfemanagementebelievesethatethisebiddere
oreothereunidentifiedebiddersewilleactuallyepayemoreethane$35epereshareetoeacquireetheecompany,ethenet
heyeshouldestillefightetheeoffer.eHowever,eifetheecurrentemanagementecannoteincreaseetheevalueeofetheef
irmebeyondetheebideprice,eandenoeotherehigherebidsecomeein,ethenemanagementeisenoteactingeinetheeinte
restseofetheeshareholdersebyefightingetheeoffer.eSinceecurrentemanagerseofteneloseetheirejobsewhenetheec
orporationeiseacquired,epoorlyemonitoredemanagersehaveeaneincentiveetoefightecorporateetakeoverseines
ituationsesucheasethis.

15. Weewouldeexpecteagencyeproblemsetoebeelessesevereeineotherecountries,eprimarilyedueetoetheerelativelye
smallepercentageeofeindividualeownership.eFewereindividualeownerseshouldereduceetheenumbereofedive
rseeopinionseconcerningecorporateegoals.eTheehighepercentageeofeinstitutionaleownershipemighteleadeto
eaehigheredegreeeofeagreementebetweeneownerseandemanagerseonedecisionseconcerningeriskyeprojects.e

Ineaddition,einstitutionsemayebeebettereableetoeimplementeeffectiveemonitoringemechanismseonemanag
ersethanecaneindividualeowners,ebasedeonetheeinstitutions’edeepereresourceseandeexperiencesewithetheir
eownemanagement.eTheeincreaseeineinstitutionaleownershipeofestockeinetheeUnitedeStateseandetheegrowi

ngeactivismeofetheseelargeeshareholderegroupsemayeleadetoeaereductioneineagencyeproblemseforeU.S.eco
rporationseandeaemoreeefficientemarketeforecorporateecontrol.

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