... the average of beginning- and end -of- year assets. See
Chapter 29.
Brealey−Meyers:
Principles of Corporate
Finance, Seventh Edition
III. Practical Problems in
Capital Budgeting
12. Making Sure ... value of
Boeing 737 in
January 1987 as a
function of age.
Value, millions of dollars
$25
20
15
10
5
0
1
023 4 5 6 7 8 9 10 11 12 1413 15
Years
Brealey−Meyers:
Principle...
... from the $23,800 calcu-
lated in Chapter 2. Since the net present value is positive, you should still go ahead.
4
Brealey−Meyers:
Principles of Corporate
Finance, Seventh Edition
I. Value 3. ... three-year annuity
factor?
e. From your answers to (c) and (d), calculate the three-year discount factor.
Visit us at www.mhhe.com/bm7e
Brealey−Meyers:
Principles of Corporate
F...
... satisfactory way of defining the true rate of re-
turn of a long-lived asset. The best available concept is the so-called discounted-
cash-flow (DCF) rate of return or internal rate of return (IRR). ... one we ob-
tained earlier. Instead of investing in one unit of project A and one of project D, we
are told to take half of project A, all of project B, and three-quarters...
... is 40 percent of the difference between salvage value and depreciated investment.
4. The cost of capital is 20 percent.
a. What is the value of a one-year-old plant? Of a two-year-old plant? ... recent
selling prices of a sample of similar New Jersey buildings used as, or available for use
as, warehouses.
Visit us at www.mhhe.com/bm7e
EXCEL
EXCEL
Brealey−Meyers:
Principles...
...
Description of Capital Stock
The Company’s authorized capital stock consists of 10,000,000 shares of voting
Common Stock.
Brealey−Meyers:
Principles of Corporate
Finance, Seventh Edition
IV. ... Examination of Voluntary versus Involuntary Issuances by
Commercial Banks,” Journal of Financial Economics 35 (1994), pp. 99 122 .
Brealey−Meyers:
Principles of Corporate...
... what causes them.
Value
of firm
ϭ
value if
all-equity-financed
ϩ PV1tax shield2Ϫ
PV 1costs of
financial 1distress2
Brealey−Meyers:
Principles of Corporate
Finance, Seventh Edition
V. Dividend Policy ... stream of cash flows of $28 per year. The risk of these
flows is likely to be less than the risk of the operating assets of L. The tax shields
Brealey−Meyers:
Prin...
... Construct an ex-
ample to show whether the option delta is likely to vary more if you hedge with an in-
the-money option, an at-the-money option, or an out -of- the-money option.
12. Other things ... each tree we show a histogram of the possible six-month price changes, assuming investors are risk-
neutral.
Brealey−Meyers:
Principles of Corporate
Finance, Seventh Edition
VI. Op...
... a coupon of 5 percent, matured in 10 years,
and offered a yield of 12 percent (the risk-free interest rate was 6 percent).
Brealey−Meyers:
Principles of Corporate
Finance, Seventh Edition
VI. ... the Design of Convertible
Debt,” Journal of Applied Corporate Finance, 11:45–53 (Spring 1998).
Visit us at www.mhhe.com/bm7e
Brealey−Meyers:
Principles of Corporate...