### Solution Manual For Corporate Finance A Focused Approach 6th Edition Michael Ehrhardt

#### Solution Manual For Corporate Finance A Focused Approach 6th Edition Michael Ehrhardt

Focus on the financial concepts, skills, and technological applications that are critical for you in today’s workplace with Ehrhardt/Brigham’s CORPORATE FINANCE: A FOCUSED APPROACH 6E. With its relevant and engaging presentation and numerous examples, you will learn the latest financial developments as you also learn how to maximize a firm’s value in today’s changing business environment. You will master the features and functions of spreadsheets by using chapter Excel Tool Kits, Build Model problems, and Mini Cases that encourage “what-if” analysis on a real-time basis.

### Additional ISBNs

1305637100, 1305856813, 1337248649, 9781305637108, 9781305856813, 9781337248648, 9781305983250

**Table of Content**

Endsheet2

Endsheet3

Endsheet4

Title

Statement

Copyright

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: Finance from 40,000 Feet Above

1-3: The Corporate Life Cycle

1-4: Governing a Corporation

1-5: An Overview of Financial Markets

1-6: Claims on Future Cash Flows: Types of Financial Securities

1-7: Claims on Future Cash Flows: The Required Rate of Return (The Cost of Money)

1-8: The Functions of Financial Institutions

1-9: Financial Markets

1-10: Overview of the U.S. Stock Markets

1-11: Trading in the Modern Stock Markets 10

1-12: Finance and the Great Recession of 2007

1-13: The Big Picture

e-Resources

Ch 1: Summary

Ch 1: Questions

Ch 1: 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

Ch 2: Summary

Ch 2: Questions

Ch 2: Sels-Test-Problem

Ch 2: Problems

Ch 2: Spreadsheet Problems

Ch 2: 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

Ch 03: Summary

Ch 03: Questions

Ch 03: Self-Test-Problems

Ch 03: Problems

Ch 03: Spreadsheet Problem

Ch 03: Mini Case

Ch 03: Selected Additional Case

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

4-18: Growing Annuities

Ch 4: Summary

Ch 4: Questions

Ch 4: Self-Test-Problems

Ch 4: Problems

Ch 4: Spreadsheet Problem

Ch 4: Mini Case

Ch 5: Bonds, 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 Risk-Free Interest Rate: Nominal (rRF) and Real (r*)

5-9: The Inflation Premium (IP)

5-10: The Maturity Risk Premium (MRP)

5-11: The Default Risk Premium (DRP)

5-12: The Liquidity Premium (LP)

5-13: The Term Structure of Interest Rates

5-14: Financing with Junk Bonds

5-15: Bankruptcy and Reorganization

Ch 5: Summary

Ch 5: Questions

Ch 5: Self-Test-Problems

Ch 5: Problems

Ch 5: Mini Case

Ch 5: Selected Additional Case

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

Ch 6: Summary

Ch 6: Questions

Ch 6: Self-Test-Problems

Ch 6: Problems

Ch 6: Spreadsheet Problem

Ch 6: Mini Case

Ch 6: Selected Additional Case

Ch 7: Corporate Valuation and Stock Valuation

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—Introducing the Free Cash Flow (FCF) Valuation Model

7-5: The Constant Growth Model: Valuation When Expected Free Cash Flow Grows ata Constant Rate

7-6: The Multistage Model: Valuation when Expected Short-Term Free Cash Flow Growsat a Nonconstant R

7-7: Application of the FCF Valuation Model to MicroDrive

7-8: Do Stock Values Reflect Long-Term or Short-Term Cash Flows?

7-9: Value-Based Management: Using the Free CashFlow Valuation Model to Identify Value Drivers

7-10: Why Are Stock Prices So Volatile?

7-11: Valuing Common Stocks with the Dividend Growth Model

7-12: The Market Multiple Method

7-13: Comparing the FCF Valuation Model, the Dividend Growth Model, and the Market Multiple Method

7-14: Preferred Stock

Ch 7: Summary

Ch 7: Questions

Ch 7: Self-Test-Problems

Ch 7: Problems

Ch 7: Spreadsheet Problem

Ch 7: Mini Case

Ch 7: Selected Additional Case

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

Ch 8: Summary

Ch 8: Questions

Ch 8: Self-Test-Problems

Ch 8: Problems

Ch 8: Spreadsheet Problem

Ch 8: 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: Using the Dividend Growth Approach to Estimate the Cost of Common Stock

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: The Divisional Cost of Capital

9-12: Estimating the Cost of Capital for Individual Projects

9-13: Managerial Issues and the Cost of Capital

Ch 9: Summary

Ch 9: Questions

Ch 9: Self-Test-Problems

Ch 9: Problems

Ch 9: Spreadsheet Problem

Ch 9: Mini Case

Ch 9: Selected Additional Case

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

Ch 10: Summary

Ch 10: Questions

Ch 10: Self-Test-Problems

Ch 10: Problems

Ch 10: Spreadsheet Problem

Ch 10: Mini Case

Ch 10: Selected Additional Case

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

Ch 11: Summary

Ch 11: Questions

Ch 11: Self-Test-Problems

Ch 11: Problems

Ch 11: Spreadsheet Problem

Ch 11: Mini Case

Ch 11: Selected Additional Case

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: Evaluating MicroDrive’s Strategic Initiatives

12-5: Projecting MicroDrive’s Financial Statements

12-6: Analysis and Selection of a Strategic Plan

12-7: The CFO’s Model

12-8: Additional Funds Needed (AFN) Equation Method

12-9: Forecasting When the Ratios Change

Ch 12: Summary

Ch 12: Questions

Ch 12: Self-Test-Problems

Ch 12: Problems

Ch 12: Spreadsheet Problem

Ch 12: Mini Case

Ch 12: Selected Additional Case

Ch 13: Corporate Governance

13-1: Agency Conflicts

13-2: Corporate Governance

13-3: Employee Stock Ownership Plans (ESOPs)

Ch 13: Summary

Ch 13: Questions

Ch 13: 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: 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

Ch 14: Summary

Ch 14: Questions

Ch 14: Self-Test-Problems

Ch 14: Problems

Ch 14: Spreadsheet Problem

Ch 14: Mini Case

Ch 14: Selected Additional Case

Ch 15: Capital Structure Decisions

15-1: An Overview of Capital Structure

15-2: Business Risk and Financial Risk

15-3: Capital Structure Theory: The Modigliani and Miller Models

15-4: Capital Structure Theory: Beyond the Modigliani and Miller Models

15-5: Capital Structure Evidence and Implications

15-6: Estimating the Optimal Capital Structure

15-7: Anatomy of a Recapitalization

15-8: Risky Debt and Equity as an Option

15-9: Managing the Maturity Structure of Debt

Ch 15: Summary

Ch 15: Questions

Ch 15: Self-Test-Problems

Ch 15: Problems

Ch 15: Spreadsheet Problem

Ch 15: Mini Case

Ch 15: Selected Additional Case

Part 7: Managing Global Operations

Ch 16: Supply Chains and Working Capital Management

16-1: Overview of Supply Chain Management

16-2: Using and Financing Operating Current Assets

16-3: The Cash Conversion Cycle

16-4: Inventory Management

16-5: Receivables Management

16-6: Accruals and Accounts Payable (Trade Credit)

16-7: The Cash Budget

16-8: Cash Management and the Target Cash Balance

16-9: Cash Management Techniques

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

Ch 16: Summary

Ch 16: Questions

Ch 16: Self-Test-Problems

Ch 16: Problems

Ch 16: Spreadsheet Problem

Ch 16: Mini Case

Ch 16: Selected Additional Case

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

Ch 17: Summary

Ch 17: Questions

Ch 17: Self-Test-Problems

Ch 17: Problems

Ch 17: Spreadsheet Problem

Ch 17: Mini Case

Ch 17: Selected Additional Case

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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