CHAPTER 1 Introduction 1
1.1 The Form of Business Organization 2
1.2 The Goal of the Corporate Finance 5
1.3 Financial Markets 9
Questions and Problems 11
CHAPTER 2 Accounting Statements and Cash Flow 13
2.1 The Balance Sheet 13
2.2 The Income Statement 15
2.3 Net Working Capital 17
2.4 Financial Cash Flows 17
2.5 The Statement of Cash Flows 18
2.6 Financial Reporting in Practice 20
Questions and Problems 21
CHAPTER 3 Net Present Value:First Principles of Finance 23
3.1 Making Consumption Choices over Time 23
3.2 The Basic Principle of Investment Decision Making 25
3.3 Illustrating the Investment Decision 26
Questions and Problems 27
CHAPTER 4 Net Present Value 29
4.1 The One-period Case 29
4.2 The Multi-period Case 33
4.3 Compounding Periods 37
4.4 Simplifications 40
4.5 Enterprise Value 45
Questions and Problems 46
CHAPTER 5 Some Alternative Investment Rules 49
5.1 Why Use Net Present Value？ 49
5.2 The Payback Period Rule 50
5.3 The Discounted Payback Period Rule 52
5.4 The Internal Rate of Return 53
5.5 The Profitability Index 59
5.6 The Practice of Capital Budgeting 60
Questions and Problems 61
CHAPTER 6 Net Present Value and Capital Budgeting 67
6.1 Incremental Cash Flows 67
6.2 The Baldwin Company:An Example 72
6.3 Inflation and Capital Budgeting 75
6.4 The Equivalent Annual Cost Method 77
Questions and Problems 79
CHAPTER 7 Risk Analysis and Project Evaluation 83
7.1 Decision Trees 83
7.2 Real Options 86
7.3 Sensitivity Analysis 93
7.4 Scenario Analysis 96
7.5 Monte Carlo Simulation 98
7.6 Break-even Analysis 100
Questions and Problems 103
CHAPTER 8 Capital Market Theory:An Overview 105
8.1 Return Basics 106
8.2 Return Statistics 109
8.3 Risk 110
8.4 Capital Market Theory 111
Questions and Problems 115
CHAPTER 9 Corporate-financing Decisions and Efficient Capital Markets 117
9.1 Can Financing Decisions Create Value？ 117
9.2 A Description of Efficient Capital Markets 118
9.3 The Different Types of Efficiency 121
9.4 The Evidence of Efficient Market Hypothesis 123
9.5 Criticism and Behavior Finance 127
9.6 Empirical Challenges to Market Efficiency 128
9.7 Implications for Corporate Finance 130
Questions and Problems 130
CHAPTER 10 Long-term Financing:An Introduction 133
10.1 Common Stock 133
10.2 The Basics of Corporate Long-term Debt 139
10.3 Preferred Stock 143
10.4 Patterns of Financing 144
10.5 Recent Trends in Capital Structure 145
Questions and Problems 146
CHAPTER 11 Capital Structure:Basic Concepts 147
11.1 The Capital-structure Question and the Pie Theory 147
11.2 Firm Value versus Stockholder Interests 148
11.3 Financial Leverage and FirmValue 149
11.4 Modigliani andMiller:Proposition Ⅰ and Ⅱ（No Taxes） 153
11.5 Modigliani andMiller:Proposition Ⅰ and Ⅱ（Taxes） 155
Questions and Problems 158
CHAPTER 12 Capital Structure:Limits to the Use of Debt 159
12.1 Costs of Financial Distress 159
12.2 Can Costs of Debt Be Reduced？ 163
12.3 Optimal Capital Structure:The Trade-off Theory 163
12.4 The Agency Benefits of Leverage 165
12.5 Asymmetric Information and Capital Structure 166
12.6 The Pecking-order Theory 168
12.7 Growth and the Debt-equity Ratip 169
12.8 The Miller Model with Personal Taxes 170
12.9 How Firms Establish Capital Structure 172
Questions and Problems 173
CHAPTER 13 Valuation and Capital Budgeting for the Levered Firm 175
13.1 Adjusted-present-value Approach 175
13.2 Flows-to-equity Approach 178
13.3 Weighted-average-cost-of-capital Method 179
13.4 A Comparison of the APV,FTE,and WACC Approaches 181
13.5 Project-based Costs of Capital 182
13.6 Beta and Leverage 183
Questions and Problems 186
CHAPTER 14 Dividend Policy 191
14.1 Different Types of Dividends 192
14.2 Standard Method of Cash Dividend Payment 193
14.3 Dividend Policy and Value of Firm 193
14.4 Repurchase of Stock 203
14.5 Dividend Policy in Practice 207
14.6 Non-cash Distributions 209
Questions and Problems 211
Reference Resources 215