Tampa Manufacturing Ebit

Determining Risk-Adjusted Discount

Rates (RADRs) 465 in practice Focus on Ethics: Environmental Compliance: Honesty Is the Best Policy 46S

Applying RADRs 468 Portfolio Effects 470 RADRs in Practice 472 Review Questions 473

10.5 Capital Budgeting Refinements 473

Comparing Projects with

Unequal Lives 473 Recognizing Real Options 477 Capital Rationing 479 Review Questions 482

Summary 482

Self-Test Problem 484

Warm-Up Exercises 484

Problems 486

Chapter 10 Case: Evaluating Cherone Equipment's Risky Plans for Increasing Its Production Capacity 495

Spreadsheet Exercise 497

Croup Exercise 498

Web Exercise 498

Integrative Case 3: Lasting Impressions Company 499

Part Four

Chapter 11 The Cost of Capital page 502

Long-Term Financial Decisions 501

United Airlines-Taking Off Again page 503

11.1 Overview of the Cost of Capital 504

Some Key Assumptions 504 The Basic Concept 504 in practice Focus on Ethics: The Asbestos Penalty 505

Specific Sources of Capital 506 Review Questions 507

11.2 Cost of Long-Term Debt 507

Net Proceeds 507 Before-Tax Cost of Debt 508 After-Tax Cost of Debt 510 Review Questions 511

11.3 Cost of Preferred Stock 511

Preferred Stock Dividends 511 Calculating the Cost of Preferred Stock 511 Review Question 512

11.4 Cost of Common Stock 512

Finding the Cost of Common Stock Equity 512

Cost of Retained Earnings 515 Cost of New Issues of

Common Stock 515 Review Questions 517

11.5 Weighted Average Cost of Capital 517

Calculating Weighted Average Cost of Capital (WACC) 517 Weighting Schemes 518 Review Questions 520

11.6 Marginal Cost and Investment Decisions 520

Weighted Marginal Cost of Capital (WMCC) 520 in practice Focus on Practice: EVAlue Creation 521

Investment Opportunities Schedule

(IOS) 524 Using the WMCC and IOS to Make Financing/Investment Decisions 524 Review Questions 526 Summary 526 Self-Test Problem 528

Warm-Up Exercises 530 Spreadsheet Exercise 541

Problems 530 Group Exercise 542

Chapter 11 Case: Making Star Web Exercise 543

Products' Financing/Investment Decision 539

Chapter 12 Leverage and Capital Structure page 544

Leverage And Capital Structure
CVS/Caremark Corporation-Optimizing Its Capital Structure page 545

12.1 Leverage 546 Breakeven Analysis 547 Operating Leverage 550

IN, ffRACTiCE Focus on Practice: Adobe's Leverage 553

Financial Leverage 554

Total Leverage 557

IN PRACTICE Focus on Ethics: The Buyout Binge 560

Review Questions 560

12.2 The Firm's Capital Structure 561

Types of Capital 561 External Assessment of Capital

Structure 562 Capital Structure of Non-U.S.

Firms 563 Capital Structure Theory 564 Optimal Capital Structure 572 Review Questions 574

12.3 EBIT-EPS Approach to Capital Structure 574

Presenting a Financing Plan

Graphically 575 Comparing Alternative Capital Structures 575

Considering Risk in EBIT-EPS

Analysis 577 Basic Shortcoming of EglT-EPS

Analysis 577 Review Question 577

12.4 Choosing the Optimal Capital Structure 578

Linkage 578 Estimating Value 578 Maximizing Value versus Maximizing EPS 579 Some Other Important Considerations 580 Review Questions 580 Summary 581 Self-Test Problems 583 Warm-Up Exercises 584 Problems 585

Chapter 12 Case: Evaluating Tampa Manufacturing's Capital Structure 595

Spreadsheet Exercise 596

Group Exercise 597

Web Exercise 597

Chapter 13

Dividend Policy page 598

Microsoft Corporation-Giving Back to the Shareholders page 599

13.1 Dividend Fundamentals 600

Cash Dividend Payment

Procedures 600 Tax Treatment of Dividends 602 in practice Focus on Practice: Capital Gains and Dividend Tax Treatment Extended to 2010 602

Dividend Reinvestment Plans 603 Review Questions 603

13.2 Relevance of Dividend Policy 603

Residual Theory of Dividends 604 Arguments for Dividend

Irrelevance 606 Arguments for Dividend

Relevance 607 Review Questions 607

13.3 Factors Affecting Dividend Policy 607

Legal Constraints 608 Contractual Constraints 609 Internal Constraints 609 Growth Prospects 609 Owner Considerations 609 Market Considerations 610 Review Question 670

13.4 Types of Dividend Policies 611

Constant-Payout-Ratio Dividend

Policy 611 Regular Dividend Policy 611 low-Regular-and-Extra Dividend

Policy 612 Review Question 613

13.5 Other Forms of Dividends 613

Stock Dividends 613 Stock Splits 615 Stock Repurchases 616 IN PRACTICE Focus on Ethics: Are Buyfaacks Really a Bargain? 618

Review Questions 619

Summary 619

Self-Test Problem 621

Warm-Up Exercises 621

Problems 622

Chapter 13 Case: Establishing General Access Company's Dividend Policy and Initial Dividend 629

Spreadsheet Exercise 630

Group Exercise 631

Web Exercise 631

Integrative Case 4: O'Grady Apparel Company 632 ■

Part Five

Short-Term Financial Decisions 635

Chapter 14

Working Capital and Current Assets Management page 636

AT&T—Outsourdng Is in the Cards page 637

14.1 Net Working Capital Fundamentals 638

Short-Term Financial

Management 638 Net Working Capital 638 The Tradeoff between Profitability and Risk 639 Review Questions 640

14.2 Cash Conversion Cycle 641

Calculating the Cash

Conversion Cycle 641 Funding Requirements of the

Cash Conversion Cycle 642 Strategies for Managing the

Cash Conversion Cycle 645 Review Questions 645

14.3 Inventory Management 64S

Differing Viewpoints about

Inventory Level 646 Common Techniques for Managing Inventory 646 in practice Focus on Practice: RFID: The Wave of the Future 651

International Inventory Management 651 Review Questions 652

14.4 Accounts Receivable Management 652

Credit Selection and Standards 652 Credit Terms 657 Credit Monitoring 65.9 Review Questions 661

14.5 Management of Receipts and Disbursements 661

Float 662

Speeding Up Collections 662 Slowing Down Payments 663 Cash Concentration 663 in practice Focus on Ethics: Stretching Accounts Payable-ls It a Good Policy? 664

Zero-Balance Accounts 665 Investing in Marketable

Securities 666 Review Questions 668

Summary 668

Self-Test Problems 670

Warm-Up Exercises 671

Problems 671

Chapter 14 Case: Assessing Roche Publishing Company's Cash Management Efficiency 677

Spreadsheet Exercise 678

Croup Exercise 679

Web Exercise 679

Chapter 15 Current Liabilities Management page 680

Memorial Sloan-Kettering Cancer Center-Reducing Accounts Payable Expenses page 681

15.1 Spontaneous Liabilities 682

Accounts Payable Management 682 Accruals 686 Review Questions 687

15.2 Unsecured Sources of Short-Term Loans 687

Bank Loans 687

in practice Focus on Ethics: Loan Fraud 688

Commercial Paper 693

rN practice Focus on Practice: Commercial Paper Boom to Continue after Depressed Start to the Decade 694

International Loans 695

Review Questions 696

15.3 Secured Sources of Short-Term Loans 697

Characteristics of Secured Short-Term Loans 697

Use of Accounts Receivable as Collateral 698 Use of Inventory as Collateral 700 Review Questions 702 Summary 702 Self-Test Problem 706 Warm-Up Exercises 706 Problems 707

Chapter 15 Case: Selecting Kanton Company's Financing Strategy and Unsecured Short-Term Borrowing Arrangement 713

Spreadsheet Exercise 714

Croup Exercise 715

Web Exercise 715

Integrative Case 5: Casa de Diseño 716

Part Six

Chapter 16

Hybrid and

Derivative

Securities page 720

Boeing—"We Will Build the Dreamliner; Others Will Lease If page 721

Special Topics in Managerial Finance 719

16.1 Overview of Hybrids and Derivatives 722

Review Question 722

16.2 Leasing 722 Types of Leases 722 Leasing Arrangements 723

Lease-versus-Purchase Decision 724 in practice Focus on Practice: Leases to Airlines End on a Sour Note 725

Effects of Leasing on Future

Financing 729 Advantages and Disadvantages of Leasing 730 Review Questions 730

16.3 Convertible Securities 731

Types of Convertible Securities 731 General Features of Convertibles 732 Financing with Convertibles 733 Determining the Value of a Convertible Bond 735 Review Questions 737

16.4 Stock Purchase Warrants 737

Key Characteristics 738 Implied Price of an Attached Warrant 739

Value of Warrants 740 Review Questions 742

16.5 Options 742 Calls and Puts 742 Options Markets 743 Options Trading 743 Role of Call and Put Options in Fund Raising 744 Hedging Foreign-Currency

Exposures with Options 744 in practice Focus on Ethics: Options Backdating 745

Review Questions 746 Summary 746 Self-Test Problems 748 Warm-Up Exercises 749 Problems 750

Chapter 16 Case: Financing L Rashid Company's Chemical Waste Disposal System 756

Spreadsheet Exercise 758

Group Exercise 758

Web Exercise 759

Chapter 17

Mergers, LBOs,

Divestitures, and Business Failure page 760

Sprint Nextel—Growing by Merging page 761

17.1 Merger Fundamentals 762

Terminology 762 Motives for Merging 764 Types of Mergers 766 Review Questions 767

17.2 LBOs and Divestitures 767

Leveraged Buyouts (LBOs) 767 Divestitures 768 Review Questions 770

17.3 Analyzing and Negotiating Mergers 770

Valuing the Target Company 770 Stock Swap Transactions 772 Merger Negotiation Process 778 Holding Companies 780 International Mergers 782 Review Questions 783 in practice Global Focus: International Mergers 784

17.4 Business Failure Fundamentals 784

Types of Business Failure 784 Major Causes of Business Failure 785

Voluntary Settlements 786 Review Questions 787

17.5 Reorganization and Liquidation in Bankruptcy 787

Bankruptcy Legislation 787 in practice Focus on Ethics: Is It Unethical to Declare Bankrupcy? 788

Reorganization in Bankruptcy

(Chapter U) 788 Liquidation in Bankruptcy

(Chapter 7) 790 Review Questions 792 Summary 792 Self-Test Problems 794 Warm-Up Exercises 795 Problems 796

Chapter 17 Case: Deciding Whether to Acquire or Liquidate Procras Corporation 802

Spreadsheet Exercise 804

Group Exercise 805

Web Exercise 805

Chapter 18

International

Managerial

Finance page 806

General Electric Co-Establishing a Presence in China page 807

18.1 The Multinational Company and Its Environment 808

Key Trading Blocs 808 GATT and the WTO 810 Legal Forms of Business

Organization 810 Taxes 811

Financial Markets 813 in practice Focus on Ethics: Cracking Down on Bribery for Business 814

Review Questions 815

18.2 Financial Statements

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  • caitlin
    How to solve integrative case 3 lasting impressions company?
    7 years ago

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