Dwnload Full Introduction To Corporate Finance What Companies Do 3rd Edition Graham Solutions Manual PDF
Dwnload Full Introduction To Corporate Finance What Companies Do 3rd Edition Graham Solutions Manual PDF
Dwnload Full Introduction To Corporate Finance What Companies Do 3rd Edition Graham Solutions Manual PDF
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do-3rd-edition-graham-solutions-manual/
Chapter Overview
The Opening Focus looks at an issue close to most students’ hearts – digital music. It details Ap-
ple’s successful strategy in selling songs for about a dollar each, downloaded into its iPod MP3
player. Students may not realize that Apple sells more iPods than computers. Apple has found a
way to compete in two highly competitive businesses – music and computers. Chapter 1 looks at
how financial managers, like those at Apple, interacted with operations, marketing, communica-
tions and legal to create shareholder wealth. The importance of the finance function and the finan-
cial manager within business organizations has been rising steadily over the past two decades.
Financial professionals can do more than just raise the operating efficiency of a company—they
can create value in their own right. The primary focus of this textbook will be on the practicing
financial manager, working as an integral part of the management team of a modern corporation.
As an introduction to what a financial manager’s job entails, this chapter includes a description of
the principal tasks and responsibilities that a finance professional employed by a large corporation
might encounter.
Discussion Questions:
1. What do you imagine were the interactions between the finance function and operations func-
tion at Apple when the iPod was being developed? On what business criteria does Apple’s
strategy depend?
2. What can a firm do to make a low profit margin strategy more successful? What are other ex-
amples of tie-ins, like Apple’s iTunes and iPod?
Technology
2. Smart Practices Video. This interviews Tom Cole, Deutsche Bank, Leveraged Finance
Group, telling how important it is to understand how business works in order to be good at fi-
nance.
3. Smart Practices Video. This quotes Joshua Haines, senior credit analyst at the Private Bank,
concerning how he continues to use basic finance concepts he learned in earlier finance classes.
1
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated or posted to a publicly acces-
sible website, in whole or in part.
4. Smart Practices Video. This quotes Bill Eckmann, investment banker, concerning his career
in investment banking.
5. Smart Concepts Video. This quotes David Nickel, controller for Intel Corp.’s Communica-
tions Group, about how finance can help business increase shareholder value.
6. Smart Ethics Video. Andy Bryant, executive vice president of finance and enterprise systems
and chief financial officer, Intel Corp., discusses that ethical behavior on the part of a company
can add value.
7. Smart Practices Video. This quotes Vince LoForti, chief financial officer of Overland Stor-
age Inc. about the impact of Sarbanes-Oxley on a company’s business.
Lecture Guide
Give students some examples of jobs they can get as finance graduates. The college career services
office may be helpful in giving examples of specific employers who recruit on campus. It may also
have information about average pay scales in each area in finance.
Explain that internal financing – the profits that a firm generates that are not paid to sharehold-
ers as dividends are the most important source of firm financing. A company seeks capital market
debt and equity finance when it does not generate enough funds for its investment opportunities.
Tell students about the history of finance. For example, raising funds from a large number of
investors spread with the legal concept of a corporation. During the 17th century, corporations were
first given limited liability. This induced wealthy individuals to invest – they knew the worst that
could happen was the loss of their investment; they would not lose all of their wealth in a bad ven-
ture. The idea of incorporation was so successful that England freely allowed companies to incor-
porate by the mid 19th century. Other countries followed England’s lead. The verb “to finance,” or
raising funds for investment, was entered into the English dictionary in 1866.
Student Interaction:
Ask students how many of them give money directly to a company. Few will (unless
they own their own business.) This is a good springboard to how corporations receive
money from individuals, for example, through banks that lend their savings deposits to
firms. Few, if any of the students will have participated in a company’s direct means
of obtaining funds (initial public offerings and secondary offerings) and are more like-
ly to have participated in stock investing through the secondary market.
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated or posted to a publicly acces-
sible website, in whole or in part.
Chapter 1 The Scope of Corporate Finance 3
This section provides an opportunity to bring in current events, while explaining the external
financing choices a firm has. The Google IPO made news in the summer of 2004. It was an inno-
vative IPO. For most IPOs, only the favored clients of the investment banking firm can purchase
shares at the IPO price. Google specifically structured its IPO so that small investors could partici-
pate, buying as few as 5 shares of Google. At the time of the IPO, Google had a great deal of in-
formation posted online, at http://www.ipo.google.com. If still available, the instructor can run
Google’s interactive prospectus
Capital budgeting is the function perhaps most highly associated with corporate finance –
what projects should a firm invest in? Note how the nature of investment has changed over time.
Investment used to mean building a factory and stocking it with equipment. Today’s business
model generally requires a high investment in information technology. It is much harder to meas-
ure the value of an investment in IT. A factory produces a particular product that is then sold to
consumers. Ask students what technology produces. It may be more of preventing a loss; for ex-
ample, investing in IT may keep consumers coming to a company’s online and physical retail
stores. The firm has invested in IT to keep customers from shopping at competitors with better
Web sites.
Note that this function covers the theory that financial managers put into practice in their jobs.
Talk to students about the nexus of stakeholders concerned with a corporation. Corporations must
be concerned with
Shareholders
Debtholders/Creditors
Managers
Employees
Local community
Suppliers
Customers
The idea of a “nexus of stakeholders” is becoming increasingly recognized; for example, Penn-
sylvania has a law stating that boards of directors must take the concerns of other interested parties
into account, not just those of shareholders.
This chapter is a good opportunity to bring in current issues in finance. The after-effects of the
current accounting scandals (Enron, Worldcom, Adelphia, etc.) will be in the news for a long time.
Define executive stock options, and ask students for their opinion about their usage. Ask for sug-
gestions about what small shareholders can do if they are unhappy about the way their firm is man-
aged (band together, sell shares). Ask if company insiders should be on a company’s board of
directors.
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated or posted to a publicly acces-
sible website, in whole or in part.
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2247
NOTICES OF CONTRACTS.
The following contracts are advertised in different papers, and we
have kept a register of the particulars of each at the office, which
may be referred to on application. In the continuation of this plan,
which we flatter ourselves will be of service to our readers, material
assistance will be rendered by the forwarding of papers from our
country friends, or by any other means of notification, of which they
may choose to avail themselves.
New Church at Hildenborough, near Tunbridge, Kent.—
Tenders to be sent on the 2nd of March. Mr. Ewan Christian, 44,
Bloomsbury Square, Architect.
Railway Station Buildings, and other Masonry, &c., Hunt’s
Bank, Manchester.—Plans open from the 13th of February;
tenders to be sent in on the 6th of March. Mr. Gooch, Oldham Road,
Manchester.
Also, Formation and Completion of The Branch Railway To
Halifax, 1 mile and 55 chains.—The same time and parties.
West London Railway.—Contractors to attend at 35, Great
George Street, Westminster, at 11 o’clock of the 20th inst. Tenders to
be sent in on the 3rd of March.
Iron Bridge, Great Yarmouth.—Engineers, Messrs. Birch, 3,
Cannon Row, Westminster, 20th February to the 11th of March.
Pumps and Wells, Metropolis Roads.—Tenders to be sent in
on the 22nd inst.
Greenwich Union, Additions.—Mr. R. P. Brown, Architect,
Greenwich; time for receiving tenders, Feb. 23.
UNSTAMPED EDITION.
Quarterly 3 s. 3 d.
Half yearly 6 6
Yearly 13 0
STAMPED EDITION.
Quarterly 4 4
Half yearly 8 8
Yearly 17 4
TO OUR CORRESPONDENTS.
The readers of The Builder will be pleased to observe, that
although it appears in the form of a Magazine, our own mind is not
made up or reconciled to its continuing in that character, or at any
rate in that character alone. We shall look forward with some anxiety
to the period when we should be enabled to make it a complete
Weekly Journal, and this cannot be done without comprehending
news; neither do we think it economy that it should be otherwise—
economy of time and economy of means are involved in it,
particularly with the workman. A newspaper is to him a desideratum,
and why should he be driven to something like a double reading, and
the purchase of two papers: one containing a good deal of matter of
no interest in the world to him, when so ready a means of combining
both is offered as in this instance!
It is requested that where there has been any irregularity in the
transmission of The Builder, notice will be forwarded immediately
to the office.
Received Mr. Freeman Roe’s small tract, entitled “The Common
Pump, &c.” which, as it may be practically interesting to many, we
shall take an early opportunity of transcribing from.
Lithographic print of the Wesleyan Theological Institution,
Richmond, Andrew Trimen, Esq., architect. We shall notice this
structure at an early opportunity.
“Palmer’s Patent Glyphography, or Engraved Drawing.”
Kelly’s Post Office Almanack.
Design and explanation of “A self-supporting Institution” for the
Labouring Classes.
We are also preparing a weekly table of prices of Building
materials; and a long list of Buildings in progress, and contemplated.
All additions to our knowledge on this head will be thankfully
received.
We have in preparation several articles:—1st. On Wood
Pavements. 2nd. “The Metropolitan Model Institution, for improving
the dwellings of the Industrious Classes.” 3rd. On Casinos in public
parks and gardens. 4th. The Continuation of the Review of
Bardwell’s Temples. 5th. Notice of Palmer’s Glyphography, &c.
TABLE OF AMUSEMENTS.
PLACES OF AMUSEMENT OPEN GRATIS TO THE PUBLIC.
British Museum.—Monday, Wednesday, and Friday, from 10 to 4.
National Gallery.—Monday, Tuesday, Wednesday, and
Thursday, from 10 to 5.
Sir J. Soane’s Museum.—Every Tuesday and Friday, till July.
Hampton Court Palace.—Every day except Saturday and
Sunday, before 2.
Windsor Castle State Rooms.—Daily, except Friday.
Society of Arts.—Every day except Wednesday.
East India House Museum.—Every Saturday, from 11 to 3.
St. Paul’s.—Every day, from 9 to 10, and from 3 to 4.
Westminster Abbey.—Ditto.