Solutions Manual - Finance Sixteenth Edition (Global Edition) Chad...

Solutions Manual for Principles of Managerial Finance Sixteenth Edition (Global Edition) Chad J. Zutter Scott B. Smart No Exel Solutions Provided by Author 1 / 4

Contents PART 1 Introduction to Managerial Finance 1

• The Role of Managerial Finance 2
• The Financial Market Environment 17

PART 2 Financial Tools 27

• Financial Statements and Ratio Analysis 28
• Long- and Short-Term Financial Planning 54
• Time Value of Money 76

PART 3 Valuation of Securities 115

• Interest Rates and Bond Valuation 116
• Stock Valuation 146

PART 4 Risk and the Required Rate of Return 162

• Risk and Return 163
• The Cost of Capital 198

PART 5 Long-Term Investment Decisions 220 10 Capital Budgeting Techniques 221 11 Capital Budgeting Cash Flows 250 12 Risk Refinements in Capital Budgeting 277 PART 6 Long-Term Financial Decisions 305 13 Leverage and Capital Structure 306 14 Payout Policy 325 PART 7 Short-Term Financial Decisions 341 15 Working Capital and Current Assets Management 342 16 Current Liabilities Management 356 PART 8 Special Topics in Managerial Finance 371 17 Hybrid and Derivative Securities 372 18 Mergers, LBOs, Divestitures, and Business Failure 390 19 International Managerial Finance 405

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.Part One Introduction to Managerial Finance Chapters in This Part Chapter 1 The Role of Managerial Finance Chapter 2 The Financial Market Environment

Integrative Case 1: Merit Enterprise Corp. 3 / 4

.Chapter 1 The Role of Managerial Finance Instructor’s Resources Chapter Overview This chapter introduces the field of finance through building-block terms and concepts. The chapter starts by explaining what a firm is and discussing the goals that managers of a firm might pursue. The chapter provides a justification for focusing on shareholders rather than stakeholders broadly, but it also discusses other goals that firms might pursue. The opening section concludes with material on the importance of ethical behavior in business.The next section discusses the managerial finance function, the key decisions that financial managers make, and the principles that guide their decisions. The discussion draws out distinctions among the overlapping disciplines of finance, economics, and accounting.The third section describes pros and cons of different legal forms for a business. This section places particular emphasis on differences in taxation of proprietorships, partnerships, and corporations, and it highlights the importance of the marginal tax rate rather than the average tax rate. Next, this section describes the classical principal-agent problem and describes both internal and external corporate governance mechanisms that help manage that problem.This chapter and the ones to follow stress the important role finance vocabulary, concepts, and tools will play in the professional and personal lives of students—even those choosing other majors, such as accounting, economics information systems, management, marketing, or operations. Whenever possible, personal-finance applications are provided to motivate and illustrate topics. This pedagogical approach should inspire students to master chapter content quickly and easily.Suggested Answer to Opener-in-Review The shareholders will be better off as their wealth will increase by 20% immediately. In the beginning, if they hold one share – Wealth = 1 share = ¥2500

After the dividend:

Wealth = Dividend + Ex-dividend share value = ¥1, 500 + ¥1, 500 = ¥3,000 – An increase of ¥500 or 20%.As the wealth created per share will be ¥500 and there are 185 million outstanding shares, the total wealth created will be – 850million x ¥500 = ¥425,000 million or ¥425 Billion.

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