Chapter 01 - Introduction to Corporate Finance
Solutions Manual
Fundamentals of Corporate Finance 10th edition
Ross, Westerfield, and Jordan
Updated XX-XX-2011
Prepared by
Joe Smolira
Belmont University
1-1
Chapter 01 - Introduction to Corporate Finance
C
Chapter 04 - Long-Term Financial Planning and Growth
CHAPTER 4
LONG-TERM FINANCIAL PLANNING
AND GROWTH
Answers to Concepts Review and Critical Thinking Questions
1. The reason is that, ultimately, sales are the driving force behind a business. A firms ass
Chapter 02 - Financial Statements, Taxes, and Cash Flow
CHAPTER 2
FINANCIAL STATEMENTS, TAXES, AND
CASH FLOW
Answers to Concepts Review and Critical Thinking Questions
1.
Liquidity measures how quickly and easily an asset can be converted to cash without
Chapter 03 - Working with Financial Statements
Chapter 03
Working with Financial Statements
1. Activities of a firm which require the spending of cash are known as:
A. sources of cash.
B. uses of cash.
C. cash collections.
D. cash receipts.
E. cash on han
Chapter 17 - Dividends and Payout Policy
CHAPTER 17
DIVIDENDS AND PAYOUT POLICY
Answers to Concepts Review and Critical Thinking Questions
1.
Dividend policy deals with the timing of dividend payments, not the amounts ultimately paid.
Dividend policy is i
Chapter 02 - Financial Statements, Taxes, and Cash Flow
Chapter 02
Financial Statements, Taxes, and Cash Flow
1. Which one of the following is the financial statement that shows the accounting value of a
firm's equity as of a particular date?
A. income st
Chapter 04 - Long-Term Financial Planning and Growth
Chapter 04
Long-Term Financial Planning and Growth
Multiple Choice Questions
1. Phil is working on a financial plan for the next three years. This time period is referred to as
which one of the followin
Chapter 01 - Introduction to Corporate Finance
Chapter 01
Introduction to Corporate Finance
1. Which one of the following terms is defined as the management of a firm's long-term
investments?
A. working capital management
B. financial allocation
C. agency
Chapter 18 - Short-Term Finance and Planning
CHAPTER 18
SHORT-TERM FINANCE AND PLANNING
Answers to Concepts Review and Critical Thinking Questions
1.
These are firms with relatively long inventory periods and/or relatively long receivables periods.
Thus,
Chapter 08 - Stock Valuation
CHAPTER 8
STOCK VALUATION
Answers to Concepts Review and Critical Thinking Questions
1.
The value of any investment depends on the present value of its cash flows; i.e., what investors will
actually receive. The cash flows fro
Chapter 16 - Financial Leverage and Capital Structure Policy
CHAPTER 16
FINANCIAL LEVERAGE AND CAPITAL
STRUCTURE POLICY
Answers to Concepts Review and Critical Thinking Questions
1. Business risk is the equity risk arising from the nature of the firms ope
Chapter 12 - Some Lessons from Capital Market History
CHAPTER 12
SOME LESSONS FROM CAPITAL
MARKET HISTORY
Answers to Concepts Review and Critical Thinking Questions
1.
They all wish they had! Since they didnt, it must have been the case that the stellar p
Chapter 14 - Cost of Capital
CHAPTER 14
COST OF CAPITAL
Answers to Concepts Review and Critical Thinking Questions
1.
It is the minimum rate of return the firm must earn overall on its existing assets. If it earns more than
this, value is created.
2.
Book
Chapter 15 - Raising Capital
CHAPTER 15
RAISING CAPITAL
Answers to Concepts Review and Critical Thinking Questions
1.
A companys internally generated cash flow provides a source of equity financing. For a profitable
company, outside equity may never be ne
Chapter 06 - Discounted Cash Flow Valuation
CHAPTER 6
DISCOUNTED CASH FLOW VALUATION
Answers to Concepts Review and Critical Thinking Questions
1.
The four pieces are the present value (PV), the periodic cash flow ( C), the discount rate (r), and the
numb
Chapter 13 - Return, Risk, and the Security Market Line
CHAPTER 13
RETURN, RISK, AND THE SECURITY
MARKET LINE
Answers to Concepts Review and Critical Thinking Questions
1.
Some of the risk in holding any asset is unique to the asset in question. By invest
Chapter 10 - Making Capital Investment Decisions
CHAPTER 10
MAKING CAPITAL INVESTMENT
DECISIONS
Answers to Concepts Review and Critical Thinking Questions
1.
In this context, an opportunity cost refers to the value of an asset or other input that will be
Chapter 11 - Project Analysis and Evaluation
CHAPTER 11
PROJECT ANALYSIS AND EVALUATION
Answers to Concepts Review and Critical Thinking Questions
1.
Forecasting risk is the risk that a poor decision is made because of errors in projected cash
flows. The
Chapter 09 - Net Present Value and Other Investment Criteria
CHAPTER 9
NET PRESENT VALUE AND OTHER
INVESTMENT CRITERIA
Answers to Concepts Review and Critical Thinking Questions
1.
A payback period less than the projects life means that the NPV is positiv
Chapter 07 - Interest Rates and Bond Valuation
CHAPTER 7
INTEREST RATES AND BOND
VALUATION
Answers to Concepts Review and Critical Thinking Questions
1.
No. As interest rates fluctuate, the value of a Treasury security will fluctuate. Long-term Treasury
s
Chapter 03 - Working with Financial Statements
CHAPTER 3
WORKING WITH FINANCIAL
STATEMENTS
Answers to Concepts Review and Critical Thinking Questions
1.
a. If inventory is purchased with cash, then there is no change in the current ratio. If
inventory is
Chapter 05 - Introduction to Valuation: The Time Value of Money
CHAPTER 5
INTRODUCTION TO VALUATION: THE
TIME VALUE OF MONEY
Answers to Concepts Review and Critical Thinking Questions
1.
The four parts are the present value (PV), the future value (FV), th
