Corporate finance:
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Boston [u.a.]
Pearson
2011
|
| Ausgabe: | 2. ed., global ed. |
| Schriftenreihe: | The Prentice Hall series in finance
|
| Schlagworte: | |
| Online-Zugang: | Inhaltsverzeichnis |
| Beschreibung: | XXXV, 1001, G-18, I-46, C-1 S. graph. Darst. Student access kit |
| ISBN: | 9780132453226 9780273756033 9780132545211 0132453223 9780131372320 0131372327 |
Internformat
MARC
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Datensatz im Suchindex
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|---|---|
| adam_text | Titel: Corporate finance
Autor: Berk, Jonathan B.
Jahr: 2011
Brief Contents
PARTI
INTRODUCTION
Chapter 1 The Corporation
Chapter 2 Introduction to Financial Statement Analysis
2
19
PART II
TOOLS
Chapter 3 Arbitrage and Financial Decision Making
Chapter 4 The Time Value of Money
Chapter 5 Interest Rates
52
86
128
PART III
BASIC VALUATION
Chapter 6 Investment Decision Rules
Chapter 7 Fundamentals of Capital Budgeting
Chapter 8 Valuing Bonds
Chapter 9 Valuing Stocks
156
182
217
251
PART IV
RISK AND RETURN
Chapter 10 Capital Markets and the Pricing of Risk
Chapter 11 Optimal Portfolio Choice and the Capital Asset
Pricing Model
Chapter 12 Estimating the Cost of Capital
Chapter 13 Investor Behavior and Capital Market Efficiency
292
330
377
412
PARTV
CAPITAL STRUCTURE
Chapter 14 Capital Structure in a Perfect Market
Chapter 15 Debt and Taxes
Chapter 16 Financial Distress, Managerial Incentives,
and Information
Chapter 17 Payout Policy
450
478
509
551
PART VI
VALUATION
Chapter 18 Capital Budgeting and Valuation with Leverage
Chapter 19 Valuation and Financial Modeling: A Case Study
594
641
Contents
PART I INTRODUCTION
Chapter 1 The Corporation 2
1.1
1.2
1.3
The FourTypes of Firms 3
Sole Proprietorships 3
Partnerships 4
Limited Liability Companies 5
Corporations 5
Tax Implications for Corporate Entities 6
a INTERVIEW with David Viniar 7
a Corporate Taxation Around the World
8
Ownership Versus Control of
Corporations 8
The Corporate Management Team 9
The Financial Manager 9
The Goal of the Firm 10
Ethics and Incentives within
Corporations 10
W FINANCIAL CRISIS Lehman
Brothers Bankruptcy 13
The Stock Market 13
Primary and Secondary Stock
Markets 13
The Largest Stock Markets 14
NYSE 14
8 INTERVIEW with Jean-Francois
Theodore 15
NASDAQ 16
Reac
16 ^ Key Terms 1
17 « P obiems 17
Chapter 2 Introduction to Financial
Statement Analysis 19
2.1 Firms Disclosure of Financial
Information 20
Preparation of Financial Statements
a International Financial Reporting
Standards 20
a INTERVIEW with Sue Frieden 21
Types of Financial Statements 22
20
2.2 The Balance Sheet 22
Assets 23
Liabilities 24
Shareholders Equity 25
2.3 Balance Sheet Analysis 26
Market-to-Book Ratio 26
Debt-Equity Ratio 26
Enterprise Value 27
Other Balance Sheet Information 28
2.4 The Income Statement 28
Earnings Calculations 28
2.5 Income Statement Analysis 30
Profitability Ratios 30
Working Capital Ratios 31
EBITDA 31
Leverage (Gearing) Ratios 32
Investment Returns 32
The DuPont Identity 32
Valuation Ratios 33
B COMMON MISTAKE Mismatched
Ratios 33
2.6 The Statement of Cash Flows 35
Operating Activity 36
Investment Activity 36
Financing Activity 36
2.7 Other Financial Statement
Information 37
Management Discussion and Analysis
38
Statement of Changes in Shareholders
Equity 38
Notes to the Financial Statements 38
2.8 Financial Reporting in Practice 39
Enron 39
WorldCom 39
Sarbanes-Oxley Act 40
a FINANCIAL CRISIS Bernard
Madoff s Ponzi Scheme 41
Difficulties in International Financial
Statement Analysis 41
Summary 42 « Key Terms 43 ¦
Further Reading 44 m Problems 44
Data Case 49
Contents
PART II TOOLS
Chapter 3 Arbitrage and Financial
Decision Making 52
3.1 Valuing Decisions 53
Analyzing Costs and Benefits 53
Using Market Prices to Determine Cash
Values 54
B When Competitive Market Prices Are
Not Available 56
3.2 Interest Rates and theTime Value
of Money 56
The Time Value of Money 56
The Interest Rate: An Exchange Rate
Across Time 56
3.3 Present Value and the NPV Decision
Rule 59
Net Present Value 59
The NPV Decision Rule 60
NPV and Cash Needs 62
3.4 Arbitrage and the Law of One Price
63
Arbitrage 63
¦ NASDAQ SOES Bandits 64
Law of One Price 64
3.5 No-Arbitrage and Security Prices
65
Valuing a Security with the Law of One
Price 65
B An Old Joke 65
The NPV of Trading Securities and Firm
Decision Making 68
Valuing a Portfolio 69
a Stock Index Arbitrage 70
a FINANCIAL CRISIS Liquidity and the
Informational Role of Prices 71
Where Do We Go from Here? 71
Summary 72 ¦ Key Terms 73 m Further
Reading 73 a Problems 74
Appendix The Price of Risk 77
Arbitrage with Transactions Costs 83
Summary 84 * Key Terms 84 ¦
Problems 84
Chapter 4 The Time Value of Money 86
4.1 TheTimeline 87
4.2 TheThree Rules of TimeTravel 88
Rule 1: Comparing and Combining Values
88
Rule 2: Moving Cash Flows Forward in
Time 89
Rule 3: Moving Cash Flows Back in Time
90
Applying the Rules of TimeTravel 92
4.3 Valuing a Stream of Cash Flows 94
4.4 Calculating the Net Present Value 97
4.5 Perpetuities, Annuities, and Other
Special Cases 98
Perpetuities 98
B Historical Examples of Perpetuities 99
Annuities 100
B COMMON MISTAKE Discounting One
Too Many Times 101
Growing Cash Flows 104
4.6 Solving Problems with a
Spreadsheet Program 108
4.7 Solving for Variables OtherThan
Present Value or Future Value 110
Solving for the Cash Flows 111
Internal Rate of Return 113
Solving for the Number of Periods 116
B COMMON MISTAKE Excel s NPV and
IRR Functions 117
8 Rule of 72 118
Summary 119 a Key Terms 120 *
Further Reading 120 « Problems 121
Data Case 126
Chapter 5 Interest Rates 128
5.1 Interest Rate Quotes and
Adjustments 129
The Effective Annual Rate 129
m COMMON MISTAKE Using the Wrong
Discount Rate in the Annuity Formula
130
Annual Percentage Rates 131
5.2 Application: Discount Rates and
Loans 133
Contents
5.3 The Determinants of Interest Rates
134
¦ FINANCIAL CRISIS Teaser Rates and
Subprime Loans 135
Inflation and Real Versus Nominal Rates
135
Investment and Interest Rate Policy 136
The Yield Curve and Discount Rates 137
¦ INTERVIEW with Frederic S. Mishkin
139
The Yield Curve and the Economy 140
¦ COMMON MISTAKE Using the
Annuity Formula When Discount Rates
Vary by Maturity 140
5.4 RiskandTaxes 142
Risk and Interest Rates 143
After-Tax Interest Rates 144
5.5 The Opportunity Cost of Capital 145
Summary 146 ¦ Key Terms 147 ¦
Further Reading 147 m Problems 148
Appendix Continuous Rates and Cash Flows
153
PART III BASIC VALUATION
Chapter 6 Investment Decision Rules 156
6.1 NPV and Stand-Alone Projects 157
Applying the NPV Rule 157
The NPV Profile and IRR 157
Alternative Rules Versus the NPV Rule
158
S INTERVIEW with Dick Grannis 159
6.2 The Internal Rate of Return Rule 160
Applying the IRR Rule 160
Pitfall #1: Delayed Investments 160
Pitfall #2: Multiple IRRs 161
Pitfall #3: Nonexistent IRR 163
¦ COMMON MISTAKE IRR Versus the
IRR Rule 163
6.3 The Payback Rule 164
Applying the Payback Rule 164
Payback Rule Pitfalls in Practice 165
¦ Why Do Rules Other Than the NPV
Rule Persist? 165
6.4 Choosing Between Projects 166
NPV Rule and Mutually Exclusive
Investments 166
IRR Rule and Mutually Exclusive
Investments 167
The Incremental IRR 168
B When Can Returns Be Compared? 170
B COMMON MISTAKE IRR and Project
Financing 171
6.5 Project Selection with Resource
Constraints 171
Evaluating Projects with Different
Resource Requirements 171
Profitability Index 172
Shortcomings of the Profitability Index 174
Summary 174 a Key Terms 175 a
Further Reading 175 ¦ Problems 175
Data Case 181
Chapter 7 Fundamentals of Capital
Budgeting 182
7.1 Forecasting Earnings 183
Revenue and Cost Estimates 183
Incremental Earnings Forecast 184
Indirect Effects on Incremental Earnings
186
B COMMON MISTAKE The Opportunity
Cost of an Idle Asset 187
Sunk Costs and Incremental Earnings 188
a The Sunk Cost Fallacy 188
Real-World Complexities 189
7.2 Determining Free Cash Flow and
NPV 190
Calculating Free Cash Flow from Earnings
190
Calculating Free Cash Flow Directly 192
Calculating the NPV 193
7.3 Choosing Among Alternatives 194
Evaluating Manufacturing Alternatives 194
Comparing Free Cash Flows for Cisco s
Alternatives 195
7.4 Further Adjustments to Free Cash
Flow 195
a FINANCIAL CRISIS The American
Recovery and Reinvestment Act of
2009 200
7.5 Analyzing the Project 200
Break-Even Analysis 200
Sensitivity Analysis 201
B INTERVIEW with David Holland 203
Scenario Analysis 204
Summary 205 ¦ Key Terms 206 «
Further Reading 206 ? Problems 206
Data Case 213
Appendix MACRS Depreciation 215
Contents
Chapter 8 Valuing Bonds 217
8.1 Bond Cash Flows, Prices, andYields
218
Bond Terminology 218
Zero-Coupon Bonds 218
m FINANCIAL CRISIS Pure Discount
Bonds Trading at a Premium 220
Coupon Bonds 221
8.2 Dynamic Behavior of Bond Prices
223
Discounts and Premiums 223
Time and Bond Prices 224
Interest Rate Changes and Bond Prices
226
H Clean and Dirty Prices for Coupon
Bonds 227
8.3 The Yield Curve and Bond Arbitrage
229
Replicating a Coupon Bond 229
Valuing a Coupon Bond Using Zero-
Coupon Yields 230
Coupon Bond Yields 231
Treasury Yield Curves 232
8.4 Corporate Bonds 233
Corporate Bond Yields 233
Bond Ratings 235
¦ INTERVIEW with Lisa Black 236
Corporate Yield Curves 237
¦ FINANCIAL CRISIS The Credit Crisis
and Bond Yields 238
Summary 239 ¦ Key Terms 240 ?
Further Reading 240 ¦ Problems 240
Data Case 245
Appendix Forward Interest Rates 247
Key Terms 250 ¦ Problems 250
Chapter 9 Valuing Stocks 251
9.1 The Dividend-Discount Model 252
A One-Year Investor 252
Dividend Yields, Capital Gains, and Total
Returns 253
¦ The Mechanics of a Short Sale 254
A Multiyear Investor 255
The Dividend-Discount Model Equation
256
9.2 Applying the Dividend-Discount
Model 256
Constant Dividend Growth 256
Dividends Versus Investment and Growth
257
H John BurrWilliams Theory of
Investment Value 258
Changing Growth Rates 260
¦ INTERVIEW with Marilyn Fedak 262
Limitations of the Dividend-Discount
Model 262
9.3 Total Payout and Free Cash Flow
Valuation Models 263
Share Repurchases and the Total Payout
Model 263
The Discounted Free Cash Flow Model
265
9.4 Valuation Based on Comparable
Firms 269
Valuation Multiples 269
Limitations of Multiples 271
Comparison with Discounted Cash Flow
Methods 272
Stock Valuation Techniques: The Final Word
273
9.5 Information, Competition, and
Stock Prices 274
Information in Stock Prices 274
Competition and Efficient Markets 275
Lessons for Investors and Corporate
Managers 278
The Efficient Markets Hypothesis Versus
No Arbitrage 279
¦ FINANCIAL CRISIS Kenneth Cole
Productions?What Happened? 279
Summary 280 ¦ Key Terms 282 a
Further Reading 282 m Problems 283
Data Case 288
PART IV RISK AND RETURN
Chapter 10 Capital Markets and the
Pricing of Risk 292
10.1 A First Look at Risk and Return
293
10.2 Common Measures of Risk and
Return 295
Probability Distributions 295
Expected Return 295
Variance and Standard Deviation 296
10.3 Historical Returns of Stocks and
Bonds 298
Computing Historical Returns 298
Xll
Contents
Average Annual Returns 300
The Variance and Volatility of Returns 301
Estimation Error: Using Past Returns to
Predict the Future 303
¦ Arithmetic Average Returns Versus
Compound Annual Returns 305
10.4 The Historical Trade-Off Between
Risk and Return 305
The Returns of Large Portfolios 306
The Returns of Individual Stocks 307
10.5 Common Versus Independent Risk
308
Theft Versus Earthquake Insurance: An
Example 308
The Role of Diversification 309
10.6 Diversification in Stock Portfolios
311
Firm-Specific Versus Systematic Risk 311
No Arbitrage and the Risk Premium 313
¦ FINANCIAL CRISIS Diversification
Benefits During Market Crashes 314
¦ COMMON MISTAKE A Fallacy of
Long-Run Diversification 316
10.7 Measuring Systematic Risk 316
Identifying Systematic Risk: The Market
Portfolio 316
Sensitivity to Systematic Risk: Beta 317
10.8 Beta and the Cost of Capital 319
Estimating the Risk Premium 319
¦ COMMON MISTAKE Beta Versus
Volatility 319
¦ INTERVIEW with Randall Lert 320
The Capital Asset Pricing Model 322
Summary 322 m Key Terms 324 ?
Further Reading 324 a Problems 324
Data Case 328
Chapter 11 Optimal Portfolio Choice
and the Capital Asset Pricing
Model 330
11.1 The Expected Return of a Portfolio
331
11.2 The Volatility of a Two-Stock
Portfolio 332
Combining Risks 332
Determining Covariance and Correlation
333
¦ COMMON MISTAKE Computing
Variance, Covariance, and Correlation in
Excel 335
Computing a Portfolio s Variance and
Volatility 336
11.3 The Volatility of a Large Portfolio
338
Large Portfolio Variance 338
Diversification with an Equally Weighted
Portfolio 339
Diversification with General Portfolios 341
11.4 Risk Versus Return: Choosing an
Efficient Portfolio 341
Efficient Portfolios with Two Stocks 342
The Effect of Correlation 344
Short Sales 345
Efficient Portfolios with Many Stocks 346
¦ NOBEL PRIZES Harry Markowitz and
James Tobin 347
11.5 Risk-Free Saving and Borrowing
349
Investing in Risk-Free Securities 349
Borrowing and Buying Stocks on Margin
350
Identifying the Tangent Portfolio 351
11.6 The Efficient Portfolio and Required
Returns 353
Portfolio Improvement: Beta and the
Required Return 353
Expected Returns and the Efficient
Portfolio 355
11.7 The Capital Asset Pricing Model
357
The CAPM Assumptions 357
Supply, Demand, and the Efficiency of the
Market Portfolio 358
Optimal Investing: The Capital Market Line
358
11.8 Determining the Risk Premium 359
Market Risk and Beta 359
¦ NOBEL PRIZE William Sharpe on the
CAPM 361
The Security Market Line 362
Beta of a Portfolio 362
Summary of the Capital Asset Pricing
Model 364
Summary 364 m Key Terms 367 ¦
Further Reading 367 ¦ Problems 367
Data Case 373
Appendix The CAPM with Differing Interest
Rates 375
Contents
Chapter 12 Estimating the Cost of Capital
377
12.1 The Equity Cost of Capital 378
12.2 The Market Portfolio 379
Constructing the Market Portfolio 379
Market Indexes 379
B Value-Weighted Portfolios and
Rebalancing 380
The Market Risk Premium 381
12.3 Beta Estimation 383
Using Historical Returns 383
Identifying the Best-Fitting Line 385
Using Linear Regression 386
ffi Why Not Estimate Expected Returns
Directly? 387
12.4 The Debt Cost of Capital 387
Debt Yields 387
m COMMON MISTAKE Using the Debt
Yield as Its Cost of Capital 388
Debt Betas 389
12.5 A Project s Cost of Capital 390
All-Equity Comparables 390
Levered Firms as Comparables 391
The Unlevered Cost of Capital 391
Industry Asset Betas 393
12.6 Project Risk Characteristics and
Financing 395
Differences in Project Risk 395
¦ COMMON MISTAKE Adjusting for
Execution Risk 397
Financing and the Weighted Average Cost
of Capital 397
12.7 Final Thoughts on Using the CAPM
399
¦ INTERVIEW with Shelagh Glaser
400
Summary 401 ¦ Key Terms 402 «
Further Reading 403 ¦ Problems 403
Data Case 407
Appendix Practical Considerations When
Forecasting Beta 408
¦ COMMON MISTAKE Changing the
Index to Improve the Fit 411
Key Terms 411 m Data Case 411
Chapter 13 Investor Behavior and Capital
Market Efficiency 412
13.1 Competition and Capital Markets
413
Identifying a Stock s Alpha 413
Profiting from Non-Zero Alpha Stocks 414
13.2 Information and Rational
Expectations 415
Informed Versus Uninformed Investors
415
Rational Expectations 416
13.3 The Behavior of Individual
Investors 417
Underdiversification and Portfolio Biases
417
Excessive Trading and Overconfidence 418
9 INTERVIEW with Jonathan Clements
420
Individual Behavior and Market Prices 421
13.4 SystematicTrading Biases 421
Hanging on to Losers and the Disposition
Effect 421
9 NOBEL PRIZE Kahneman and
Tversky s Prospect Theory 422
Investor Attention, Mood, and Experience
422
Herd Behavior 423
Implications of Behavioral Biases 423
13.5 The Efficiency of the Market
Portfolio 424
Trading on News or Recommendations
424
The Performance of Fund Managers 426
The Winners and Losers 427
13.6 Style-Based Anomalies and the
Market Efficiency Debate 429
Size Effects 429
Momentum 432
Implications of Positive-Alpha Trading
Strategies 432
¦ Market Efficiency and the Efficiency of
the Market Portfolio 433
13.7 Multifactor Models of Risk 435
Using Factor Portfolios 435
Selecting the Portfolios 436
The Cost of Capital with Fama-French-
Carhart Factor Specification 437
13.8 Methods Used in Practice 439
Contents
Summary 440 * Key Terms 442 ¦
Further Reading 442 ¦ Problems 443
Appendix Building a Multifactor Model 448
PARTV CAPITAL STRUCTURE
Chapter 14 Capital Structure in a Perfect
Market 450
14.1 Equity Versus Debt Financing 451
Financing a Firm with Equity 451
Financing a Firm with Debt and Equity
452
The Effect of Leverage on Risk and Return
453
14.2 Modigliani-Miller I: Leverage,
Arbitrage, and Firm Value 455
MM and the Law of One Price 455
Homemade Leverage 455
¦ MM and the Real World 456
The Market Value Balance Sheet 457
Application: A Leveraged Recapitalization
458
14.3 Modigliani-Miller II: Leverage, Risk,
and the Cost of Capital 460
Leverage and the Equity Cost of Capital
460
Capital Budgeting and the Weighted
Average Cost of Capital 461
¦ COMMON MISTAKE Is Debt Better
Than Equity? 464
Computing the WACC with Multiple
Securities 464
Levered and Unlevered Betas 464
14.4 Capital Structure Fallacies 466
Leverage and Earnings per Share 466
Equity Issuances and Dilution 469
14.5 MM: Beyond the Propositions 469
« NOBEL PRIZES Franco Modigliani
and Merton Miller 470
Summary 471 * Key Terms 472 «
Further Reading 472 a Problems 473
Data Case 477
Chapter 15 Debt and Taxes 478
15.1 The Interest Tax Deduction 479
15.2 Valuing the Interest Tax Shield 481
The Interest Tax Shield and Firm Value 481
The Interest Tax Shield with Permanent
Debt 482
¦ Pizza and Taxes 483
The Weighted Average Cost of Capital
with Taxes 483
The Interest Tax Shield with a Target Debt-
Equity Ratio 484
15.3 Recapitalizing to Capture theTax
Shield 486
TheTax Benefit 486
The Share Repurchase 487
No Arbitrage Pricing 487
Analyzing the Recap: The Market Value
Balance Sheet 488
15.4 Personal Taxes 489
Including Personal Taxes in the Interest Tax
Shield 489
Valuing the Interest Tax Shield with
Personal Taxes 492
Determining the Actual Tax Advantage
of Debt 493
¦ Cutting the Dividend Tax Rate 494
15.5 Optimal Capital Structure with
Taxes 494
Do Firms Prefer Debt? 494
Limits to the Tax Benefit of Debt 497
¦ INTERVIEW with Andrew Balson 498
Growth and Debt 499
Other Tax Shields 500
The Low Leverage Puzzle 500
¦ Employee Stock Options 502
Summary 502 ¦ Key Terms 503 ?
Further Reading 503 » Problems 504
Data Case 508
Chapter 16 Financial Distress, Managerial
Incentives, and Information 509
16.1 Default and Bankruptcy in a Perfect
Market 510
Armin Industries: Leverage and the Risk of
Default 510
Bankruptcy and Capital Structure 511
16.2 The Costs of Bankruptcy and
Financial Distress 512
The Bankruptcy Code 513
Direct Costs of Bankruptcy 513
Indirect Costs of Financial Distress 514
¦ FINANCIAL CRISIS The Chrysler
Prepack 517
Contents
16.3 Financial Distress Costs and Firm
Value 518
Armin Industries: The Impact of Financial
Distress Costs 518
Who Pays for Financial Distress Costs?
518
16.4 Optimal Capital Structure:The
Trade-OffTheory 520
The Present Value of Financial Distress
Costs 520
Optimal Leverage 521
16.5 Exploiting Debt Holders:The
Agency Costs of Leverage 523
Excessive Risk-Taking and Asset
Substitution 523
Debt Overhang and Under-lnvestment
524
¦ FINANCIAL CRISIS Bailouts, Distress
Costs, and Debt Overhang 525
Agency Costs and the Value of Leverage
526
Debt Maturity and Covenants 527
m FINANCIAL CRISIS Moral Hazard and
the Government Bailout 528
16.6 Motivating Managers:The Agency
Benefits of Leverage 528
Concentration of Ownership 528
Reduction of Wasteful Investment 529
¦ Excessive Perks and Corporate
Scandals 530
Leverage and Commitment 531
16.7 Agency Costs and theTrade-Off
Theory 532
The Optimal Debt Level 532
Debt Levels in Practice 533
16.8 Asymmetric Information and
Capital Structure 533
Leverage as a Credible Signal 534
Issuing Equity and Adverse Selection
535
¦ NOBEL PRIZE The 2001 Nobel Prize
in Economics 536
Implications for Equity Issuance 537
Implications for Capital Structure 539
16.9 Capital Structure: The Bottom Line
541
Summary 542 ¦ Key Terms 543 ¦
Further Reading 543 ¦ Problems 544
Chapter 17 Payout Policy 551
17.1 Distributions to Shareholders 552
Dividends 552
Share Repurchases 554
17.2 Comparison of Dividends and
Share Repurchases 555
Alternative Policy 1: Pay Dividend with
Excess Cash 555
Alternative Policy 2: Share Repurchase (No
Dividend) 556
¦ COMMON MISTAKE Repurchases
and the Supply of Shares 557
Alternative Policy 3: High Dividend (Equity
Issue) 558
Modigliani?Miller and Dividend Policy
Irrelevance 559
¦ COMMON MISTAKE The Bird in the
Hand Fallacy 560
Dividend Policy with Perfect Capital
Markets 560
17.3 TheTax Disadvantage of Dividends
560
Taxes on Dividends and Capital Gains 561
Optimal Dividend Policy with Taxes 562
17.4 Dividend Capture andTax Clienteles
564
The Effective Dividend Tax Rate 564
Tax Differences Across Investors 565
Clientele Effects 566
17.5 Payout Versus Retention of Cash
569
Retaining Cash with Perfect Capital
Markets 569
Taxes and Cash Retention 570
Adjusting for Investor Taxes 571
Issuance and Distress Costs 572
Agency Costs of Retaining Cash 573
17.6 Signaling with Payout Policy 575
Dividend Smoothing 575
Dividend Signaling 576
¦ Royal SunAlliance s Dividend Cut
577
Signaling and Share Repurchases 577
17.7 Stock Dividends, Splits, and Spin-
Offs 579
Stock Dividends and Splits 579
¦ INTERVIEW with John Connors 580
Contents
¦ Berkshire Hathaway s A B Shares
582
Spin-Offs 582
Summary 584 ¦ Key Terms 585 ¦
Further Reading 585 ¦ Problems 586
Data Case 590
PARTVI VALUATION
Chapter 18 Capital Budgeting and
Valuation with Leverage 594
18.1 Overview of Key Concepts 595
18.2 The Weighted Average Cost of
Capital Method 596
Using the WACC to Value a Project 597
Summary of the WACC Method 598
Implementing a Constant Debt-Equity
Ratio 599
18.3 The Adjusted Present Value Method
601
The Unlevered Value of the Project 601
Valuing the Interest Tax Shield 602
Summary of the APV Method 603
18.4 The Flow-to-Equity Method 604
Calculating the Free Cash Flow to Equity
605
Valuing Equity Cash Flows 606
Summary of the Flow-to-Equity Method
606
¦ What Counts as Debt ? 607
18.5 Project-Based Costs of Capital 608
Estimating the Unlevered Cost of Capital
608
Project Leverage and the Equity Cost of
Capital 609
Determining the Incremental Leverage of
a Project 610
¦ COMMON MISTAKE Re-Levering the
WACC 611
18.6 APV with Other Leverage Policies
612
Constant Interest Coverage Ratio 613
Predetermined Debt Levels 614
A Comparison of Methods 615
18.7 Other Effects of Financing 616
Issuance and Other Financing Costs 616
Security Mispricing 617
Financial Distress and Agency Costs 618
I FINANCIAL CRISIS Government Loan
Guarantees 618
18.8 Advanced Topics in Capital
Budgeting 619
Periodically Adjusted Debt 619
Leverage and the Cost of Capital 622
The WACC or FTE Method with Changing
Leverage 623
Personal Taxes 625
Summary 627 ¦ Key Terms 628 ¦
Further Reading 628 h Problems 629
Data Case 635
Appendix Foundations and Further Details
637
Chapter 19 Valuation and Financial
Modeling: A Case Study
641
19.1 Valuation Using Comparables 642
19.2 The Business Plan 644
Operational Improvements 644
Capital Expenditures: A Needed
Expansion 645
Working Capital Management 646
Capital Structure Changes: Levering Up
646
19.3 Building the Financial Model 647
Forecasting Earnings 647
Working Capital Requirements 649
Forecasting Free Cash Flow 650
The Balance Sheet and Statement of Cash
Flows (Optional) 652
19.4 Estimating the Cost of Capital 654
CAPM-Based Estimation 654
Unlevering Beta 655
Ideko s Unlevered Cost of Capital 656
19.5 Valuing the Investment 657
The Multiples Approach to Continuation
Value 657
Contents
The Discounted Cash Flow Approach to
Continuation Value 658
APV Valuation of Ideko s Equity 660
B COMMON MISTAKE Continuation
Values and Long-Run Growth 660
¦ COMMON MISTAKE Missing Assets
or Liabilities 662
A Reality Check 662
IRR and Cash Multiples 663
M INTERVIEW with Joseph L. Rice, III
664
19.6 Sensitivity Analysis 665
Summary 666 ¦ Key Terms 666 ¦
Further Reading 666 ¦ Problems 667
Appendix Compensating Management 669
Glossary G-1
Index 1-1
Credits C-1
|
| any_adam_object | 1 |
| author | Berk, Jonathan B. 1962- DeMarzo, Peter M. |
| author_GND | (DE-588)11200881X (DE-588)112327796 |
| author_facet | Berk, Jonathan B. 1962- DeMarzo, Peter M. |
| author_role | aut aut |
| author_sort | Berk, Jonathan B. 1962- |
| author_variant | j b b jb jbb p m d pm pmd |
| building | Verbundindex |
| bvnumber | BV036426764 |
| callnumber-first | H - Social Science |
| callnumber-label | HG4026 |
| callnumber-raw | HG4026 |
| callnumber-search | HG4026 |
| callnumber-sort | HG 44026 |
| callnumber-subject | HG - Finance |
| classification_rvk | QP 700 |
| classification_tum | WIR 680f |
| ctrlnum | (OCoLC)608627499 (DE-599)BVBBV036426764 |
| dewey-full | 658.15 |
| dewey-hundreds | 600 - Technology (Applied sciences) |
| dewey-ones | 658 - General management |
| dewey-raw | 658.15 |
| dewey-search | 658.15 |
| dewey-sort | 3658.15 |
| dewey-tens | 650 - Management and auxiliary services |
| discipline | Wirtschaftswissenschaften |
| edition | 2. ed., global ed. |
| format | Book |
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| genre_facet | Lehrbuch |
| id | DE-604.BV036426764 |
| illustrated | Illustrated |
| indexdate | 2024-07-09T22:39:08Z |
| institution | BVB |
| isbn | 9780132453226 9780273756033 9780132545211 0132453223 9780131372320 0131372327 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-020299446 |
| oclc_num | 608627499 |
| open_access_boolean | |
| owner | DE-N2 DE-355 DE-BY-UBR DE-384 DE-706 DE-11 DE-19 DE-BY-UBM DE-188 DE-91 DE-BY-TUM DE-Aug4 DE-703 |
| owner_facet | DE-N2 DE-355 DE-BY-UBR DE-384 DE-706 DE-11 DE-19 DE-BY-UBM DE-188 DE-91 DE-BY-TUM DE-Aug4 DE-703 |
| physical | XXXV, 1001, G-18, I-46, C-1 S. graph. Darst. Student access kit |
| publishDate | 2011 |
| publishDateSearch | 2011 |
| publishDateSort | 2011 |
| publisher | Pearson |
| record_format | marc |
| series2 | The Prentice Hall series in finance |
| spelling | Berk, Jonathan B. 1962- Verfasser (DE-588)11200881X aut Corporate finance Jonathan Berk ; Peter Demarzo 2. ed., global ed. Boston [u.a.] Pearson 2011 XXXV, 1001, G-18, I-46, C-1 S. graph. Darst. Student access kit txt rdacontent n rdamedia nc rdacarrier The Prentice Hall series in finance Corporations Finance Corporate Finance (DE-588)4269795-5 gnd rswk-swf Kapitalgesellschaft (DE-588)4129472-5 gnd rswk-swf Finanzierung (DE-588)4017182-6 gnd rswk-swf Finanzmanagement (DE-588)4139075-1 gnd rswk-swf (DE-588)4123623-3 Lehrbuch gnd-content Corporate Finance (DE-588)4269795-5 s Finanzmanagement (DE-588)4139075-1 s DE-604 Finanzierung (DE-588)4017182-6 s Kapitalgesellschaft (DE-588)4129472-5 s 1\p DE-604 DeMarzo, Peter M. Verfasser (DE-588)112327796 aut HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=020299446&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis 1\p cgwrk 20201028 DE-101 https://d-nb.info/provenance/plan#cgwrk |
| spellingShingle | Berk, Jonathan B. 1962- DeMarzo, Peter M. Corporate finance Corporations Finance Corporate Finance (DE-588)4269795-5 gnd Kapitalgesellschaft (DE-588)4129472-5 gnd Finanzierung (DE-588)4017182-6 gnd Finanzmanagement (DE-588)4139075-1 gnd |
| subject_GND | (DE-588)4269795-5 (DE-588)4129472-5 (DE-588)4017182-6 (DE-588)4139075-1 (DE-588)4123623-3 |
| title | Corporate finance |
| title_auth | Corporate finance |
| title_exact_search | Corporate finance |
| title_full | Corporate finance Jonathan Berk ; Peter Demarzo |
| title_fullStr | Corporate finance Jonathan Berk ; Peter Demarzo |
| title_full_unstemmed | Corporate finance Jonathan Berk ; Peter Demarzo |
| title_short | Corporate finance |
| title_sort | corporate finance |
| topic | Corporations Finance Corporate Finance (DE-588)4269795-5 gnd Kapitalgesellschaft (DE-588)4129472-5 gnd Finanzierung (DE-588)4017182-6 gnd Finanzmanagement (DE-588)4139075-1 gnd |
| topic_facet | Corporations Finance Corporate Finance Kapitalgesellschaft Finanzierung Finanzmanagement Lehrbuch |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=020299446&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
| work_keys_str_mv | AT berkjonathanb corporatefinance AT demarzopeterm corporatefinance |