Principles of Corporate Finance

This book describes the theory and practice of corpo-rate finance. We hardly need to explain why financial managers  have  to  master  the  practical  aspects  of  their  job, but we should spell out why down-to-earth manag-ers need to bother with theory.Managers  learn  from  experience  how  to  cope  with  routine problems. But the best managers are also able to respond to change. To do so you need more than time-honored rules of thumb; you must understand why com-panies and financial markets behave the way they do. In other words, you need a theory of finance

Principles of Corporate Finance

Richard A.Brealey, Stewart C. Myers, Franklin Allen

McGraw-Hill Education

2020

Abstract

Principles of Corporate Finance, 13e, describes the theory and practice of corporate finance. We hardly need to explain why financial managers have to master the practical aspects of their job, but we should spell out why down-to-earth managers need to bother with theory. Throughout this book, we show how managers use financial theory to solve practical problems. Much of this book is concerned with understanding what financial managers do and why. But we also say what financial managers should do to increase company value.

Some of the biggest changes in this edition were prompted by the tax changes enacted in the U.S. Tax Cuts and Jobs Act passed in December 2017. In the current edition, we have also continued to augment the international content as well as a number of chapters that have been thoroughly rewritten. For example, the material on agency issues in Chapter 12 has been substantially revised. Chapter 13 on market efficiency and behavioral finance is now fresher and more up to date. Chapter 23 on credit risk focuses more on the practical issues of forecasting default probabilities.

This book may be your first view of the world of modern finance. If so, you will read first for new ideas, for an understanding of how finance theory translates into practice, and occasionally, we hope, for entertain-ment. But eventually you will be in a position to make financial decisions, not just study them. At that point, you can turn to this book as a reference and guide.

Managers learn from experience how to cope with routine problems. But the best managers are also able to respond to change. To do so you need more than timehonored rules of thumb; you must understand why companies and financial markets behave the way they do. In other words, you need a theory of finance.

The book includes:

Part One: Value

• 1 Introduction to Corporate Finance
• 2 How to Calculate Present Values ​​
• 3 Valuing Bonds
• 4 The Value of Common Stocks
• 5 Net Present Value and Other Investment Criteria
• 6 Making Investment Decisions with the Net Present Value Rule

Part Two: Risk

• 7 Introduction to Risk and Return
• 8 Portfolio Theory and the Capital Asset Pricing Model
• 9 Risk and the Cost of Capital

Part Three: Best Practices in Capital Budgeting

• 10 Project Analysis
• 11 How to Ensure that Projects Truly Have Positive NPVs
• 12 Agency Problems and Investment

Part Four: Financing Decisions and Market Efficiency

• 13 Efficient Markets and Behavioral Finance
• 14 An Overview of Corporate Financing
• 15 How Corporations Issue Securities

Part Five: Payment Policy and Capital Structure

• 16 Payment Policy
• 17 Does Debt Policy Matter?
• 18 How Much Should a Corporation Borrow?
• 19 Financing and Valuation

Part Six: Options

• 20 Understanding Options
• 21 Valuing Options
• 22 Real Options

Part Seven: Debt Financing

• 23 Credit Risk and the Value of Corporate Debt
• 24 The Many Different Kinds of Debt
• 25 Leasing

Part Eight: Risk Management

• 26 Managing Risk
• 27 Managing International Risks

Part Nine: Financial Planning and Working Capital Management

• 28 Financial Analysis
• 29 Financial Planning
• 30 Working Capital Management

Part Ten: Mergers, Corporate Control, and Governance

• 31 Mergers
• 32 Corporate Restructuring
• 33 Governance and Corporate Control around the World

Part Eleven: Conclusion

Citation

Richard A.Brealey, Stewart C. Myers, Franklin Allen, Principles of Corporate Finance, McGraw-Hill Education, 2020

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