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Fundamentals of Corporate Finance, Canadian Edition, by Jonathan Berk EBOOK PDF Instant Download
Table of Contents
- Title Page
- Copyright Page
- Contents
- About the Authors
- Preface
- PART 1 Introduction
- 1 Corporate Finance and the Financial Manager
- INTERVIEW WITH Amy Kwan, Certified Management Accountants of Ontario
- 1.1 Why Study Finance?
- 1.2 The Three Types of Firms
- Corporate Taxation Around the World
- 1.3 The Financial Manager
- 1.4 The Financial Manager’s Place in the Corporation
- 1.5 The Stock Market
- 1.6 Financial Institutions
- MyFinanceLab: Summary
- Problems
- 2 Introduction to Financial Statement Analysis
- INTERVIEW WITH Fatoumata Diané, CIBC World Markets
- 2.1 Firms’ Disclosure of Financial Information
- International Financial Reporting Standards
- 2.2 The Balance Sheet
- 2.3 Balance Sheet Analysis
- 2.4 The Income Statement
- 2.5 Income Statement Analysis
- COMMON MISTAKE: Mismatched Ratios
- 2.6 The Statement of Cash Flows
- 2.7 Other Financial Statement Information
- 2.8 Financial Reporting in Practice
- PRACTITIONER INTERVIEW WITH Sue Frieden, Ernst & Young
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- PART 2 Interest Rates and Valuing Cash Flows
- 3 The Valuation Principle: The Foundation of Financial Decision Making
- INTERVIEW WITH Karrilyn Wilcox, Marshall & Stevens Valuation Consulting
- 3.1 Managerial Decision Making
- Your Personal Financial Decisions
- 3.2 Cost-Benefit Analysis
- 3.3 Valuation Principle
- When Competitive Market Prices Are Not Available
- 3.4 The Time Value of Money and Interest Rates
- 3.5 The NPV Decision Rule
- 3.6 The Law of One Price
- An Old Joke
- Transactions Costs
- MyFinanceLab: Summary
- Review Questions
- Problems
- 4 NPV and the Time Value of Money
- INTERVIEW WITH Amanda Wittick, Investors Group
- 4.1 The Timeline
- 4.2 Valuing Cash Flows at Different Points in Time
- COMMON MISTAKE: Summing Cash Flows Across Time
- Rule of 72
- Using a Financial Calculator: Solving for Present and Future Values
- 4.3 Valuing a Stream of Cash Flows
- 4.4 The Net Present Value of a Stream of Cash Flows
- 4.5 Perpetuities, Annuities, and Other Special Cases
- Historical Examples of Perpetuities
- COMMON MISTAKE: Discounting One Too Many Times
- 4.6 Solving for Variables Other Than Present Value or Future Value
- Solving for n Using Logarithms
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- Chapter 4 Appendix: Using a Financial Calculator
- 5 Interest Rates
- INTERVIEW WITH Erica Pimentel, Ernst & Young
- 5.1 Interest Rate Quotes and Adjustments
- COMMON MISTAKE: Using the APR or EAR in the Annuity Formula
- 5.2 Application: Discount Rates and Loans
- 5.3 The Determinants of Interest Rates
- COMMON MISTAKE: Using the Annuity Formula When Discount Rates Vary
- 5.4 The Opportunity Cost of Capital
- Interest Rates, Discount Rates, and the Cost of Capital
- MyFinanceLab: Summary
- Review Questions
- Problems
- 6 Bonds
- INTERVIEW WITH Shaun O’Malley, RBC Dominion Securities
- 6.1 Bond Terminology
- 6.2 Zero-Coupon Bonds
- 6.3 Coupon Bonds
- Finding Bond Prices on the Web
- 6.4 Why Bond Prices Change
- 6.5 Corporate Bonds
- PRACTITIONER INTERVIEW WITH Lisa Black, Teachers Insurance and Annuity Association
- The Credit Crisis and Bond Yields
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- Chapter 6 Appendix A: Solving for the Yield to Maturity of a Bond Using a Financial Calculator
- Chapter 6 Appendix B: The Yield Curve and the Law of One Price
- PART 3 Valuation and the Firm
- 7 Investment Decision Rules
- INTERVIEW WITH Jeff Blake, Porter Airlines, Inc.
- 7.1 Using the NPV Rule
- 7.2 Alternative Decision Rules
- COMMON MISTAKE: IRR Versus the IRR Rule
- Why Do Rules Other Than the NPV Rule Persist?
- 7.3 Choosing Between Projects
- PRACTITIONER INTERVIEW WITH Dick Grannis, Qualcomm, Inc.
- 7.4 Evaluating Projects with Different Lives
- 7.5 Choosing Among Projects When Resources Are Limited
- 7.6 Putting It All Together
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- Chapter 7 Appendix: Using Excel to Make an NPV Profile
- 8 Fundamentals of Capital Budgeting
- INTERVIEW WITH Miriam Waldman, TD Commercial Banking
- 8.1 The Capital Budgeting Process
- 8.2 Forecasting Incremental Earnings
- 8.3 Determining Incremental Free Cash Flow
- 8.4 Other Effects on Incremental Free Cash Flows
- COMMON MISTAKE: The Opportunity Cost of an Idle Asset
- COMMON MISTAKE: The Sunk Cost Fallacy
- 8.5 Analyzing the Project
- 8.6 Real Options in Capital Budgeting
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- Chapter 8 Appendix A: Using Excel for Capital Budgeting
- 9 Valuing Stocks
- INTERVIEW WITH Christopher Ellis-Ferrara, AllianceBersntein
- 9.1 Stock Basics
- 9.2 The Dividend-Discount Model
- 9.3 Estimating Dividends in the Dividend-Discount Model
- COMMON MISTAKE: The First Dividend
- 9.4 Limitations of the Dividend-Discount Model
- 9.5 Share Repurchases and the Total Payout Model
- 9.6 The Discounted Free Cash Flow Model
- 9.7 Valuation Based on Comparable Firms
- PRACTITIONER INTERVIEW WITH Marilyn Fedak, Vice Chair, Investment Services
- 9.8 Information, Competition, and Stock Prices
- 9.9 Individual Biases and Trading
- MyFinanceLab: Summary
- Critical Thinking
- Problems
- Data Case
- Part 3 Integrative Case
- PART 4 Risk and Return
- 10 Risk and Return in Capital Markets
- INTERVIEW WITH Manmeet Bhatia, OceanRock Investments
- 10.1 A First Look at Risk and Return
- 10.2 Historical Risks and Returns of Stocks
- Arithmetic Average Returns Versus Compound Annual Returns
- COMMON MISTAKE: Mistakes When Computing Standard Deviation
- 10.3 The Historical Tradeoff Between Risk and Return
- 10.4 Common Versus Independent Risk
- 10.5 Diversification in Stock Portfolios
- COMMON MISTAKE: A Fallacy of Long-Run Diversification
- MyFinanceLab: Summary
- Review Questions
- Problems
- 11 Systematic Risk and the Equity Risk Premium
- INTERVIEW WITH Alexander Morgan, Pantheon Ventures
- 11.1 The Expected Return of a Portfolio
- 11.2 The Volatility of a Portfolio
- NOBEL PRIZE: Harry Markowitz
- 11.3 Measuring Systematic Risk
- Index Funds
- COMMON MISTAKE: Mixing Standard Deviation and Beta
- 11.4 Putting It All Together: The Capital Asset Pricing Model
- Why Not Estimate Expected Returns Directly?
- NOBEL PRIZE: William Sharpe
- MyFinanceLab: Summary
- Review Questions
- Problems
- Chapter 11 Appendix: Alternative Models of Systematic Risk
- 12 Determining the Cost of Capital
- INTERVIEW WITH Elizabeth Anton, RBC
- 12.1 A First Look at the Weighted Average Cost of Capital
- 12.2 The Firm’s Costs of Debt and Equity Capital
- COMMON MISTAKE: Using the Coupon Rate as the Cost of Debt
- 12.3 A Second Look at the Weighted Average Cost of Capital
- 12.4 Using the WACC to Value a Project
- 12.5 Project-Based Costs of Capital
- 12.6 When Raising External Capital Is Costly
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- Part 4 Integrative Case
- PART 5 Long-Term Financing
- 13 Raising Equity Capital
- INTERVIEW WITH Zeke Purves-Smith, McMillan LLP
- 13.1 Equity Financing for Private Companies
- 13.2 Taking Your Firm Public: The Initial Public Offering
- Google’s IPO
- 13.3 IPO Puzzles
- 2008–09: A Very Cold IPO Market
- 13.4 Raising Additional Capital: The Seasoned Equity Offering
- MyFinanceLab: Summary
- Review Questions
- Problems
- 14 Debt Financing
- INTERVIEW WITH Damian Creber, RBC Capital Markets
- 14.1 Corporate Debt
- Debt Financing at Hertz: Bank Loans
- Debt Financing at Hertz: Private Placements
- Debt Financing at Hertz: Public Debt
- 14.2 Bond Covenants
- 14.3 Repayment Provisions
- MyFinanceLab: Summary
- Review Questions
- Problems
- Chapter 14 Appendix: Using a Financial Calculator to Calculate Yield to Call
- Part 5 Integrative Case
- PART 6 Capital Structure and Payout Policy
- 15 Capital Structure
- INTERVIEW WITH Eric Hassberger, Strategic Hotels & Resorts
- 15.1 Capital Structure Choices
- 15.2 Capital Structure in Perfect Capital Markets
- COMMON MISTAKE: Capital Structure Fallacies
- NOBEL PRIZE: Franco Modigliani and Merton Miller
- 15.3 Debt and Taxes
- 15.4 The Costs of Bankruptcy and Financial Distress
- Bankruptcy Can Be Expensive
- 15.5 Optimal Capital Structure: The Tradeoff Theory
- 15.6 Additional Consequences of Leverage: Agency Costs and Information
- Airlines Use Financial Distress to Their Advantage
- Financial Distress and Rolling the Dice, Literally
- 15.7 Capital Structure: Putting It All Together
- MyFinanceLab: Summary
- Review Questions
- Problems
- Chapter 15 Appendix: The Bankruptcy Code
- 16 Payout Policy
- INTERVIEW WITH Paul Asmundson, TD Securities Inc.
- 16.1 Distributions to Shareholders
- 16.2 Dividends Versus Share Repurchases in a Perfect Capital Market
- COMMON MISTAKE: Repurchases and the Supply of Shares
- COMMON MISTAKE: The Bird in the Hand Fallacy
- 16.3 The Tax Disadvantage of Dividends
- 16.4 Payout Versus Retention of Cash
- 16.5 Signalling with Payout Policy
- Royal & SunAlliance’s Dividend Cut
- PRACTITIONER INTERVIEW WITH John Connors, Microsoft
- 16.6 Stock Dividends, Splits, and Spinoffs
- Berkshire Hathaway’s A and B Shares
- 16.7 Advice for the Financial Manager
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- Part 6 Integrative Case
- PART 7 Financial Planning and Forecasting
- 17 Financial Modelling and Pro Forma Analysis
- INTERVIEW WITH Dennis NG, PhD Student, University of Manitoba
- 17.1 Goals of Long-Term Financial Planning
- 17.2 Forecasting Financial Statements: The Percent of Sales Method
- COMMON MISTAKE: Confusing Stockholders’ Equity with Retained Earnings
- 17.3 Forecasting a Planned Expansion
- 17.4 Growth and Firm Value
- 17.5 Valuing the Planned Expansion
- COMMON MISTAKE: Confusing Total and Incremental Net Working Capital
- MyFinanceLab: Summary
- Review Questions
- Problems
- Chapter 17 Appendix: The Balance Sheet and Statement of Cash Flows
- 18 Working Capital Management
- INTERVIEW WITH Jessica Rempel, Commercial Banking
- 18.1 Overview of Working Capital
- 18.2 Trade Credit
- COMMON MISTAKE: Using APR Instead of EAR to Compute the Cost of Trade Credit
- 18.3 Receivables Management
- The 5 C’s of Credit
- 18.4 Payables Management
- 18.5 Inventory Management
- Inventory Management Adds to the Bottom Line at Gap
- 18.6 Cash Management
- Cash Balances
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- 19 Short-Term Financial Planning
- INTERVIEW WITH Elysse Dalla-Longa, GE Capital
- 19.1 Forecasting Short-Term Financing Needs
- 19.2 The Matching Principle
- 19.3 Short-Term Financing with Bank Loans
- 19.4 Short-Term Financing with Commercial Paper
- 19.5 Short-Term Financing with Secured Financing
- A 17th-Century Financing Solution
- 19.6 Putting It All Together: Creating a Short-Term Financial Plan
- MyFinanceLab: Summary
- Review Questions
- Problems
- Part 7 Integrative Case
- PART 8 Special Topics
- 20 Option Applications and Corporate Finance
- INTERVIEW WITH John Lundy, Clariter Poland sp. z o.o.
- 20.1 Option Basics
- Options Are for More Than Just Stocks
- 20.2 Option Payoffs and Profits at Expiration
- 20.3 Factors Affecting Option Prices
- 20.4 The Black-Scholes Option Pricing Formula
- 20.5 Put-Call Parity
- 20.6 Options and Corporate Finance
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- 21 Risk Management
- INTERVIEW WITH Ashlea Ochsner, Scotiabank
- 21.1 Insurance
- 21.2 Commodity Price Risk
- Hedging Strategy Leads to Promotion . . . Sometimes
- COMMON MISTAKE: Mistakes When Hedging Risk
- Differing Hedging Strategies at U.S. Airlines
- 21.3 Interest Rate Risk
- MyFinanceLab: Summary
- Review Questions
- Problems
- 22 International Corporate Finance
- INTERVIEW WITH Dave Vogt, Albert’s Controls
- 22.1 Currency Exchange Rates
- 22.2 Exchange Rate Risk
- 22.3 Internationally Integrated Capital Markets
- 22.4 Valuation of Foreign Currency Cash Flows
- 22.5 Valuation and International Taxation
- 22.6 Internationally Segmented Capital Markets
- 22.7 Capital Budgeting with Exchange Rate Risk
- MyFinanceLab: Summary
- Review Questions
- Problems
- Data Case
- 23 Leasing
- INTERVIEW WITH Rennie Zegalski, CB Richard Ellis Manitoba
- 23.1 The Basics of Leasing
- Calculating Auto Lease Payments
- 23.2 Accounting, Tax, and Legal Consequences of Leasing
- Synthetic Leases
- 23.3 The Leasing Decision
- 23.4 Reasons for Leasing
- MyFinanceLab: Summary
- Review Questions
- Problems
- 24 Mergers and Acquisitions
- INTERVIEW WITH George Yao, Morgan Stanley
- 24.1 Background and Historical Trends
- 24.2 Market Reaction to a Takeover
- 24.3 Reasons to Acquire
- 24.4 The Takeover Process
- 24.5 Takeover Defences
- Weyerhaeuser’s Hostile Bid for Willamette Industries
- 24.6 Who Gets the Value Added from a Takeover?
- The Leveraged Buyout of RJR Nabisco by KKR
- PRACTITIONER INTERVIEW WITH Dan MacDonald, CEO of InNOVAcorp.
- MyFinanceLab: Summary
- Review Questions
- Problems
- Index