社團的財政的基本原則第三個版本（pdf 651）

Contents
SECTION 1 1
How to Value P ERPetu IT IEs 50
How to Value Annu IT IEs 51
Annu IT IEs Due 54
Future Value of an Annu ITy 57
Inflation and the Time Value of Money 61
Real versus Nominal Cash Flows 61
Inflation and Interest Rates 63
Valuing Real Cash Payments 65
Real or Nominal? 67
Effective Annual Interest Rates 67
Summary 69
Related Web Links 69
Key Terms 70
Quiz 70
Practice Problems 72
Challenge Problems 75
Solutions to Self-Test Questions 77
Minicase 79
Finan cial Planning 81
What Is Finan cial Planning? 82
Finan cial Planning Focuses on the big Picture 83
Finan cial Planning Is Not Just Forecasting 84
T HRee R EQuirements for Effective Planning 84
Finan cial Planning Models 86
Components of a Finan cial Planning Model 87
An Example of a Planning Model 88
An Improved Model 89
Planners Beware 93
P ITfalls in Model Design 93
The Assumption in Percentage of Sales Models 94
The Role of Finan cial Planning Models 95
External Finan cing and Growth 96
Summary 100
Related Web Links 101
Key Terms 101
Quiz 101
Practice Problems 102
Challenge Problems 106
Solutions to Self-Test Questions 106
The Firm and the Finan cial
Manager 3
Organizing a Business 4
Sole Propr IEtorships 4
Partnerships 5
Corporations 5
Hybrid Forms of Business Organization 6
The Role of the Finan cial Manager 7
The Cap ITal Budgeting De cision 8
The Financing De cision 9
Finan cial Inst ITutions and Markets 10
Finan cial Inst ITutions 10
Finan cial Markets 11
Other Functions of Finan cial Markets and
Inst ITutions 12
Who Is the Finan cial Manager? 13
Careers in Finance 15
G OAls of the Corporation 17
Shareholders Want Managers to Maximize
Market Value 17
Ethics and Management Objectives 19
Do Managers Really Maximize Firm Value? 21
Snippets of History 25
Summary 25
Related Web Links 28
Key Terms 28
Quiz 28
Practice Problems 29
Solutions to Self-Test Questions 31
The Time Value of Money 33
Future Values and Compound Interest 34
Present Values 38
Finding the Interest Rate 44
Multiple Cash Flows 46
Future Value of Multiple Cash Flows 46
Present Value of Multiple Cash Flows 49
Level Cash Flows: P ERPetuities and Annu IT IEs 50
Finan cial Statement Analysis 133
Finan cial Ratios 134
Leverage Ratios 138
Liquid ITy Ratios 139
Effi ciency Ratios 141
Prof ITa bil ITy Ratios 143
The Du Pont System 145
Other Finan cial Ratios 146
Using Finan cial Ratios 147
Choosing a Benchmark 147
Measuring Company Performance 150
The Role of Finan cial Ratios 151
Summary 153
Related Web Links 155
Key Terms 155
Quiz 155
Practice Problems 157
Challenge Problem 158
Solutions to Self-Test Questions 159
Minicase 160
IV CONTENTS
Accounting and Finance 111
The Balance Sheet 112
Book Values and Market Values 115
The Income Statement 117
Prof ITs versus Cash Flow 118
The Statement of Cash Flows 119
Accounting for Differences 121
Taxes 123
Corporate Tax 123
Personal Tax 125
Summary 126
Related Web Links 127
Key Terms 127
Quiz 127
Practice Problems 128
Challenge Problem 131
Solutions to Self-Test Questions 131
APPENDIX A 109
SECTION 2 163
Working Cap ITal Management and
Short-Term Planning 165
Working Cap ITal 167
The Components of Working Cap ITal 167
Working Cap ITal and the Cash Conversion Cycle 168
The Working Cap ITal Trade-Off 171
Links between Long-Term and Short-Term
Finan cing 172
Tra cing Changes in Cash and Working Cap ITal 175
Cash Budgeting 177
Forecast Sources of Cash 177
Forecast Uses of Cash 179
The Cash Balance 179
A Short-Term Finan cing Plan 180
Options for Short-Term Finan cing 180
Evaluating the Plan 184
Sources of Short-Term Finan cing 185
Bank L OAns 185
Commer cial Paper 186
Secured L OAns 186
The Cost of Bank L OAns 187
Simple Interest 187
Discount Interest 188
Interest w ITh Compensating Balances 189
Summary 190
Related Web Links 191
Key Terms 191
Quiz 191
Practice Problems 192
Challenge Problem 194
Solutions to Self-Test Questions 195
Minicase 197
Cash and Inventory Management 201
Cash Collection, Disbursement, and Fl OAt 202
Fl OAt 203
Valuing Fl OAt 204
CONTENTS V
Managing Fl OAt 205
Speeding Up Collections 206
Controlling Disbursements 209
Electronic Funds Transfer 210
Inventor IEs and Cash Balances 211
Managing Inventor IEs 212
Managing Inventor IEs of Cash 215
Uncertain Cash Flows 216
Cash Management in the Largest Corporations 217
Investing Idle Cash: The Money Market 218
Summary 219
Related Web Links 220
Key Terms 220
Quiz 220
Practice Problems 221
Challenge Problem 224
Solutions to Self-Test Questions 224
Cred ITManagement and Collection 227
Terms of Sale 229
Cred ITAgreements 231
Cred ITAnalysis 232
Finan cial Ratio Analysis 233
Numerical Cred ITScoring 233
When to Stop Looking for Clues 234
The Cred ITDe cision 236
Cred ITDe cisions w ITh Repeat Orders 237
Some General Prin ciples 238
Collection Policy 239
Bankruptcy 240
Bankruptcy Procedures 241
The Choice between Liquidation and
Reorganization 242
Summary 244
Related Web Links 245
Key Terms 245
Quiz 245
Practice Problems 246
Challenge Problems 248
Solutions to Self-Test Questions 249
Minicase 250
Valuing Bonds 255
Bond Characteristics 256
Reading the Finan cial Pages 257
Bond Prices and Y IElds 259
How Bond Prices Vary w ITh Interest Rates 260
Yield to Matur ITy versus Current Y IEld 261
Rate of Return 265
Interest Rate Risk 267
The Y IEld Curve 268
Nominal and Real Rates of Interest 268
Default Risk 270
Valuations in Corporate Bonds 273
Summary 273
Related Web Links 274
Key Terms 274
Quiz 274
Practice Problems 275
Challenge Problems 277
Solutions to Self-Test Questions 277
Valuing S TOCks 279
Stocks and the S TOCk Market 280
Reading the S TOCk Market Listings 281
Book Values, Liquidation Values, and Market
Values 283
Valuing Common S TOCks 287
Today’s Price and Tomorrow’s Price 287
The Dividend Discount Model 288
Simplifying the Dividend Discount Model 291
The Dividend Discount Model w ITh No Growth 291
The Constant-Growth Dividend Discount Model 292
Estimating Expected Rates of Return 293
Nonconstant Growth 295
Growth Stocks and Income S TOCks 296
The Price-Earnings Ratio 298
What Do Earnings Mean? 298
Valuing Entire Businesses 301
Summary 301
Related Web Links 302
Key Terms 302
Quiz 302
Practice Problems 303
Challenge Problems 306
Solutions to Self-Test Questions 307
SECTION 3 253
VI CONTENTS
Introduction to Risk, Return, and the
Opportunity Cost of Cap ITal 311
Rates of Return: A Rev IEw 312
Seventy-T HRee Years of Cap ITal Market
History 313
Market Indexes 314
The Historical Record 314
Using Historical Evidence to Estimate Today’s Cost of
Cap ITal 317
Measuring Risk 318
Variance and Standard Deviation 318
A Note on Calculating Variance 322
Measuring the Variation in S TOCk Returns 322
Risk and Diversification 324
Diversification 324
Asset versus Portfolio Risk 325
Market Risk versus Unique Risk 330
Thinking about Risk 331
Message 1: Some Risks Look big and Dangerous but
Really Are Diversifiable 331
Message 2: Market Risks Are Macro Risks 332
Message 3: Risk Can Be Measured 333
Summary 334
Related Web Links 334
Key Terms 334
Quiz 335
Practice Problems 336
Solutions to Self-Test Questions 338
SECTION 4 339
Net Present Value and Other Investment
Cr ITeria 341
Net Present Value 343
A Comment on Risk and Present Value 344
Valuing Long-Lived Projects 345
Other Investment Cr ITeria 349
Internal Rate of Return 349
A Closer Look at the Rate of Return Rule 350
Calculating the Rate of Return for Long-Lived
Projects 351
A Word of Caution 352
Payback 352
Book Rate of Return 355
Investment Cr ITeria When Projects Interact 356
Mutually Exclusive Projects 356
Investment Timing 357
Long- versus Short-Lived EQuipment 359
Repla cing an Old Machine 361
Mutually Exclusive Projects and the IRR Rule 361
Other P ITfalls of the IRR Rule 363
Cap ITal Rationing 365
Soft Rationing 365
Hard Rationing 366
Pitfalls of the Prof ITa bil ITy Index 3667
Summary 367
Related Web Links 368
Key Terms 368
Quiz 368
Practice Problems 369
Challenge Problems 373
Solutions to Self-Test Questions 373
Using Discounted Cash-Flow Analysis to
Make Investment De cisions 377
Discount Cash Flows, Not Prof ITs 379
Discount Incremental Cash Flows 381
Include All Indirect Effects 381
Forget Sunk Costs 382
Include Opportun ITy Costs 382
Recognize the Investment in Working Cap ITal 383
Beware of Allocated Overhead Costs 384
Discount Nominal Cash Flows by the Nominal Cost
of Cap ITal 385
Separate Investment and Financing De cisions 386
Calculating Cash Flow 387
Cap ITal Investment 387
Investment in Working Cap ITal 387
Cash Flow from Operations 388
Example: Blooper Industr IEs 390
Calculating Blooper’s Project Cash Flows 391
Calculating the NPV of Blooper’s Project 392
Further Notes and Wrinkles Arising from Blooper’s
Project 393
Summary 397
Related Web Links 398
Key Terms 398
Quiz 398
CONTENTS VII
Practice Problems 200
Challenge Problems 402
Solutions to Spreadsheet Model Questions 403
Solutions to Self-Test Questions 404
Minicase 405
Risk, Return, and Cap ITal Budgeting 407
Measuring Market Risk 408
Measuring Beta 409
Betas for M ciWorldCom and Exxon 411
Portfolio Betas 412
Risk and Return 414
Why the CAPM Works 416
The Secur ITy Market Line 417
How Well Does the CAPM Work? 419
Using the CAPM to Estimate Expected Returns 420
Cap ITal Budgeting and Project Risk 422
Company versus Project Risk 422
Determinants of Project Risk 423
Don’t Add Fudge Factors to Discount Rates 424
Summary 425
Related Web Links 426
Key Terms 426
Quiz 426
Practice Problems 427
Challenge Problem 432
Solutions to Self-Test Questions 432
The Cost of Cap ITal 435
Geothermal’s Cost of Cap ITal 436
Calculating the Weighted-Average Cost of
Cap ITal 438
Calculating Company Cost of Cap ITal as a Weighted
Average 440
Market versus Book Weights 441
Taxes and the Weighted-Average Cost of Cap ITal 442
What If There Are T HRee (or More) Sources of
Finan cing? 443
Wrapping Up Geothermal 444
Checking Our Logic 445
Measuring Cap ITal Structure 446
Calculating R EQuired Rates of Return 447
The Expected Return on Bonds 448
The Expected Return on Common S TOCk 448
The Expected Return on Preferred S TOCk 449
big Oil’s Weighted-Average Cost of Cap ITal 450
Real Oil Company WACCs 450
Int ERPreting the Weighted-Average Cost of
Cap ITal 451
When You Can and Can’t Use WACC 451
Some Common Mistakes 452
How Changing Cap ITal Structure Affects Expected
Returns 452
What Happens When the Corporate Tax Rate Is Not
Zero 453
Flotation Costs and the Cost of Cap ITal 454
Summary 454
Related Web Links 455
Key Terms 455
Quiz 455
Practice Problems 456
Challenge Problems 458
Solutions to Self-Test Questions 458
Minicase 459
SECTION 5 463
Project Analysis 465
How Firms Organize the Investment Process 466
Stage 1: The Cap ITal Budget 467
Stage 2: Project Authorizations 467
Problems and Some Solutions 468
Some “What-If ” Questions 469
Sensitiv ITy Analysis 469
Scenario Analysis 472
Break-Even Analysis 473
Accounting Break-Even Analysis 474
NPV Break-Even Analysis 475
Operating Leverage 478
Flexi bility in Cap ITal Budgeting 481
De cision Trees 481
The Option to Expand 482
Abandonment Options 483
Flexible Production Fa cil IT IEs 484
Investment Timing Options 484
Summary 485
Related Web Links 485
Key Terms 485
VIII CONTENTS
Quiz 485
Practice Problems 486
Challenge Problems 489
Solutions to Self-Test Questions 489
Minicase 491
An Overv IEw of Corporate
Finan cing 493
Common S TOCk 494
Book Value versus Market Value 496
Dividends 497
S TOCkholders’ Rights 497
Voting Procedures 497
Classes of S TOCk 498
Corporate Governance in the Un ITed States and
Elsewhere 498
Preferred S TOCk 499
Corporate Debt 500
Debt Comes in Many Forms 501
Innovation in the Debt Market 504
Convertible Secur IT IEs 507
Patterns of Corporate Finan cing 508
Do Firms Rely Too Heavily on Internal Funds? 508
External Sources of Cap ITal 510
Summary 511
Related Web Links 512
Key Terms 512
Quiz 512
Practice Problems 513
Solutions to Self-Test Questions 514
How Corporations Issue Secur IT IEs 517
Venture Cap ITal 519
The In ITial Public Offering 520
Arranging a Public Issue 521
The Underwr ITers 526
Who Are the Underwr ITers? 526
General Cash Offers by Public Compan IEs 528
General Cash Offers and Shelf Registration 528
Costs of the General Cash Offer 529
Market Reaction to S TOCk Issues 530
The Private Placement 531
Summary 532
Related Web Links 533
Key Terms 533
Quiz 534
Practice Problems 534
Challenge Problem 536
Solutions to Self-Test Questions 537
Minicase 537
Appendix: Hotch Pot’s New Issue Prospectus 539
Leasing 547
Leasing versus Buying 548
Operating Leases 548
Finan cial Leases 549
Tax-Or IEnted Leases 549
Leveraged Leases 550
Sale and Leaseback Agreements 550
Accounting and Leasing 550
Taxes, the IRS, and Leases 552
The Cash Flows from Leasing 553
The Incremental Cash Flows 553
A Note on Taxes 554
Lease or Buy? 555
A Preliminary Analysis 555
T HRee Potential P ITfalls 555
NPV Analysis 556
A Misconception 556
Leverage and Cap ITal Structure
559
The Cap ITal Structure Question 560
The Effect of Finan cial Leverage 560
The Impact of Finan cial Leverage 560
Finan cial Leverage, EPS, and ROE:
An Example 561
EPS versus E biT 561
APPENDIX B 545
CONTENTS IX
Mergers, Acquis ITions, and Corporate
Control 567
22.1 The Market for Corporate Control 569
Method 1: Proxy Contests 569
Method 2: Mergers and Acquis ITions 570
Method 3: Leveraged Buyouts 571
Method 4: Divest ITures and Spin-offs 571
22.2 Sensible Motives for Mergers 572
Econom IEs of Scale 573
Econom IEs of Vertical Integration 573
Com bining Complementary Resources 574
Mergers as a Use for Surplus Funds 574
22.3 Du bious Reasons for Mergers 575
Diversification 575
The Bootstrap Game 575
22.4 Evaluating Mergers 577
Mergers Financed by Cash 577
Mergers Financed by S TOCk 579
A Warning 580
Another Warning 580
22.5 Merger Tactics 582
Who Gets the Gains? 584
22.6 Leveraged Buyouts 585
Barbarians at the Gate? 587
22.7 Mergers and the Economy 588
Merger Waves 588
Do Mergers Generate Net Benef ITs? 589
22.8 Summary 590
Related Web Links 592
Key Terms 592
Quiz 592
Practice Problems 593
Challenge Problems 594
Solutions to Self-Test Questions 595
Minicase 595
International Finan cial
Management 597
23.1 Foreign Exchange Markets 598
23.2 Some Basic Relationships 602
Exchange Rates and Inflation 602
Inflation and Interest Rates 606
Interest Rates and Exchange Rates 608
The Forward Rate and the Expected Spot Rate 609
Some Implications 610
23.3 Hedging Exchange Rate Risk 612
23.4 International Cap ITal Budgeting 613
Net Present Value Analysis 613
The Cost of Cap ITal for Foreign Investment 615
Avoiding Fudge Factors 616
23.5 Summary 617
Related Web Links 618
Key Terms 618
Quiz 618
Practice Problems 619
Challenge Problem 621
Solutions to Self-Test Questions 621
Minicase 623
Glossary 635
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