Focus on the financial concepts, skills, and technological applications that are most critical for MBA students in today’s workplace with Ehrhardt/Brigham’s CORPORATE FINANCE: A FOCUSED APPROACH 5E. The text provides an in-depth treatment of essential corporate finance topics within a streamlined presentation that can be completed in a single semester. With its relevant and engaging presentation and numerous examples, students will learn the latest financial developments as they also learn how to maximize a firm’s value in today’s changing business world. Students will master the many features and functions of spreadsheets with chapter Excel Tool Kits, Build Model problems, and Mini Cases that encourage what-if analysis on a real-time basis. Students will also gain hands-on experience using Thomson ONE Business School Edition, which gives students access to the same Thomson Reuters Financial database that business professionals use every day.

**Table of Content**

Brief Contents

Contents

Preface

Part 1: The Company and Its Environment

Ch 1: An Overview of Financial Management and the Financial Environment

1-1: The Five-Minute MBA

1-2: The Corporate Life Cycle

1-3: The Primary Objective of the Corporation: Value Maximization

1-4: An Overview of the Capital Allocation Process

1-5: Financial Securities

1-6: The Cost of Money

1-7: Financial Institutions

1-8: Financial Markets

1-9: Trading Procedures in Financial Markets

1-10: Types of Stock Market Transactions

1-11: The Secondary Stock Markets

1-12: Stock Market Returns

1-13: The Global Economic Crisis

1-14: The Big Picture

1-15: e-Resources

Summary

Questions

Mini Case

Ch 2: Financial Statements, Cash Flow, and Taxes

2-1: Financial Statements and Reports

2-2: The Balance Sheet

2-3: The Income Statement

2-4: Statement of Stockholders’ Equity

2-5: Statement of Cash Flows

2-6: Net Cash Flow

2-7: Free Cash Flow: The Cash Flow Available for Distribution to Investors

2-8: Performance Evaluation

2-9: The Federal Income Tax System

Summary

Questions

Self-Test Problem: Solution Appears in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problems

Thomson One: Business School Edition Problem

Mini Case

Ch 3: Analysis of Financial Statements

3-1: Financial Analysis

3-2: Liquidity Ratios

3-3: Asset Management Ratios

3-4: Debt Management Ratios

3-5: Profitability Ratios

3-6: Market Value Ratios

3-7: Trend Analysis, Common Size Analysis, and Percentage Change Analysis

3-8: Tying the Ratios Together: The DuPont Equation

3-9: Comparative Ratios and Benchmarking

3-10: Uses and Limitations of Ratio Analysis

3-11: Looking beyond the Numbers

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problems

Thomson One: Business School Edition Problem

Mini Case

Selected Additional Cases

Part 2: Fixed Income Securities

Ch 4: Time Value of Money

4-1: Time Lines

4-2: Future Values

4-3: Present Values

4-4: Finding the Interest Rate, I

4-5: Finding the Number of Years, N

4-6: Perpetuities

4-7: Annuities

4-8: Future Value of an Ordinary Annuity

4-9: Future Value of an Annuity Due

4-10: Present Value of Ordinary Annuities and Annuities Due

4-11: Finding Annuity Payments, Periods, and Interest Rates

4-12: Uneven, or Irregular, Cash Flows

4-13: Future Value of an Uneven Cash Flow Stream

4-14: Solving for I with Irregular Cash Flows

4-15: Semiannual and Other Compounding Periods

4-16: Fractional Time Periods

4-17: Amortized Loans

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Mini Case

Ch 5: Bond, Bond Valuation, and Interest Rates

5-1: Who Issues Bonds?

5-2: Key Characteristics of Bonds

5-3: Bond Valuation

5-4: Changes in Bond Values over Time

5-5: Bonds with Semiannual Coupons

5-6: Bond Yields

5-7: The Pre-Tax Cost of Debt: Determinants of Market Interest Rates

5-8: The Real Risk-Free Rate of Interest, r*

5-9: The Inflation Premium (IP)

5-10: The Nominal, or Quoted, Risk-Free Rate of Interest, rRF

5-11: The Default Risk Premium (DRP)

5-12: The Liquidity Premium (LP)

5-13: The Maturity Risk Premium (MRP)

5-14: The Term Structure of Interest Rates

5-15: Financing with Junk Bonds

5-16: Bankruptcy and Reorganization

Summary

Questions

Self-Test Problem: Solution Appears in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problems

Mini Case

Selected Additional Cases

Part 3: Stocks and Options

Ch 6: Risk and Return

6-1: Investment Returns and Risk

6-2: Measuring Risk for Discrete Distributions

6-3: Risk in a Continuous Distribution

6-4: Using Historical Data to Estimate Risk

6-5: Risk in a Portfolio Context

6-6: The Relevant Risk of a Stock: The Capital Asset Pricing Model (CAPM)

6-7: The Relationship between Risk and Return in the Capital Asset Pricing Model

6-8: The Efficient Markets Hypothesis

6-9: The Fama-French Three-Factor Model

6-10: Behavioral Finance

6-11: The CAPM and Market Efficiency: Implications for Corporate Managers and Investors

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Thomson One: Business School Edition Problem

Mini Case

Selected Additional Cases

Ch 7: Valuation of Stocks and Corporations

7-1: Legal Rights and Privileges of Common Stockholders

7-2: Types of Common Stock

7-3: Stock Market Reporting

7-4: Valuing Common Stocks

7-5: Valuing a Constant Growth Stock

7-6: Valuing Nonconstant Growth Stocks

7-7: The Free Cash Flow Valuation Model

7-8: Market Multiple Analysis

7-9: Preferred Stock

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problems

Thomson One: Business School Edition Problem

Mini Case

Selected Additional Cases

Ch 8: Financial Options and Applications in Corporate Finance

8-1: Overview of Financial Options

8-2: The Single-Period Binomial Option Pricing Approach

8-3: The Single-Period Binomial Option Pricing Formula

8-4: The Multi-Period Binomial Option Pricing Model

8-5: The Black-Scholes Option Pricing Model (OPM)

8-6: The Valuation of Put Options

8-7: Applications of Option Pricing in Corporate Finance

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problems

Mini Case

Part 4: Projects and Their Valuation

Ch 9: The Cost of Capital

9-1: The Weighted Average Cost of Capital

9-2: Choosing Weights for the Weighted Average Cost of Capital

9-3: After-Tax Cost of Debt: rd(1 – T) and rstd(1 – T)

9-4: Cost of Preferred Stock, rps

9-5: Cost of Common Stock: The Market Risk Premium, RPM

9-6: Using the CAPM to Estimate the Cost of Common Stock, rs

9-7: Dividend-Yield-Plus-Growth-Rate, or Discounted Cash Flow (DCF), Approach

9-8: The Weighted Average Cost of Capital (WACC)

9-9: Adjusting the Cost of Equity for Flotation Costs

9-10: Privately Owned Firms and Small Businesses

9-11: Managerial Issues and the Cost of Capital

9-12: Four Mistakes to Avoid

Summary

Questions

Self-Test Problem: Solution Appears in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Thomson One: Business School Edition Problem

Mini Case

Selected Additional Cases

Ch 10: The Basics of Capital Budgeting: Evaluating Cash Flows

10-1: An Overview of Capital Budgeting

10-2: The First Step in Project Analysis

10-3: Net Present Value (NPV)

10-4: Internal Rate of Return (IRR)

10-5: Modified Internal Rate of Return (MIRR)

10-6: Profitability Index (PI)

10-7: Payback Period

10-8: How to Use the Different Capital Budgeting Methods

10-9: Other Issues in Capital Budgeting

Summary

Questions

Self-Test Problem: Solution Appears in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Mini Case

Selected Additional Cases

Ch 11: Cash Flow Estimation and Risk Analysis

11-1: Identifying Relevant Cash Flows

11-2: Analysis of an Expansion Project

11-3: Risk Analysis in Capital Budgeting

11-4: Measuring Stand-Alone Risk

11-5: Sensitivity Analysis

11-6: Scenario Analysis

11-7: Monte Carlo Simulation

11-8: Project Risk Conclusions

11-9: Replacement Analysis

11-10: Real Options

11-11: Phased Decisions and Decision Trees

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Mini Case

Selected Additional Cases

Appendix 11A: Tax Depreciation

Part 5: Corporate Valuation and Governance

Ch 12: Corporate Valuation and Financial Planning

12-1: Overview of Financial Planning

12-2: Financial Planning at MicroDrive, Inc.

12-3: Forecasting Operations

12-4: Projecting MicroDrive’s Financial Statements

12-5: Analysis and Revision of the Preliminary Plan

12-6: Additional Funds Needed (AFN) Equation Method

12-7: Forecasting When the Ratios Change

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problems

Thomson One: Business School Edition Problem

Mini Case

Selected Additional Cases

Ch 13: Agency Conflicts and Corporate Governance

13-1: Agency Conflicts

13-2: Corporate Governance

13-3: Employee Stock Ownership Plans (ESOPs)

Summary

Questions

Mini Case

Part 6: Cash Distributions and Capital Structure

Ch 14: Distributions to Shareholders: Dividends and Repurchases

14-1: An Overview of Cash Distributions

14-2: Procedures for Cash Distributions

14-3: Cash Distributions and Firm Value

14-4: Clientele Effect

14-5: Information Content, or Signaling, Hypothesis

14-6: Implications for Dividend Stability

14-7: Setting the Target Distribution Level: The Residual Distribution Model

14-8: The Residual Distribution Model in Practice

14-9: A Tale of Two Cash Distributions: Dividends versus Stock Repurchases

14-10: The Pros and Cons of Dividends and Repurchases

14-11: Other Factors Influencing Distributions

14-12: Summarizing the Distribution Policy Decision

14-13: Stock Splits and Stock Dividends

14-14: Dividend Reinvestment Plans

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Thomson One: Business School Edition Problem

Mini Case

Selected Additional Cases

Ch 15: Capital Structure Decisions

15-1: An Overview of Capital Structure

15-2: Business Risk and Financial Risk

15-3: Capital Structure Theory

15-4: Capital Structure Evidence and Implications

15-5: Estimating the Optimal Capital Structure

15-6: Anatomy of a Recapitalization

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Thomson One: Business School Edition Problem

Mini Case

Selected Additional Cases

Part 7: Managing Global Operations

Ch 16: Supply Chains and Working Capital Management

16-1: Overview of Working Capital Management

16-2: Using and Financing Operating Current Assets

16-3: The Cash Conversion Cycle

16-4: The Cash Budget

16-5: Cash Management and the Target Cash Balance

16-6: Cash Management Techniques

16-7: Inventory Management

16-8: Receivables Management

16-9: Accruals and Accounts Payable (Trade Credit)

16-10: Managing Short-Term Investments

16-11: Short-Term Financing

16-12: Short-Term Bank Loans

16-13: Commercial Paper

16-14: Use of Security in Short-Term Financing

Summary

Questions

Self-Test Problems: Solutions Appear in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Mini Case

Selected Additional Cases

Ch 17: Multinational Financial Management

17-1: Multinational, or Global, Corporations

17-2: Multinational versus Domestic Financial Management

17-3: Exchange Rates

17-4: Exchange Rates and International Trade

17-5: The International Monetary System and Exchange Rate Policies

17-6: Trading in Foreign Exchange

17-7: Interest Rate Parity

17-8: Purchasing Power Parity

17-9: Inflation, Interest Rates, and Exchange Rates

17-10: International Money and Capital Markets

17-11: Multinational Capital Budgeting

17-12: International Capital Structures

17-13: Multinational Working Capital Management

Summary

Questions

Self-Test Problem: Solution Appears in Appendix A

Problems: Answers Appear in Appendix B

Spreadsheet Problem

Mini Case

Selected Additional Cases

Appendix A: Solutions to Self-Test Problems

Appendix B: Answers to End-of-Chapter Problems

Appendix C: Selected Equations

Appendix D: Values of the Areas under the Standard Normal Distribution Function

Glossary

Name Index

Subject Index

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