Corporate finance,11th ed.

• Main Author: Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe, Bradford D. Jordan.
• Format: Book
• Language: English
• Published: McGraw Hill 2020
• Subjects: Finance
• Online Access: http://dspace.uniten.edu.my/jspui/handle/123456789/15368

The teaching and the practice of corporate finance are more challenging and exciting than ever before. The last decade has seen fundamental changes in financial markets and financial instruments. In the early years of the 21st century, we still see announcements in the financial press about takeovers, junk bonds, financial restructuring, initial public offerings, bankruptcies, and derivatives. In addition, there are the new recognitions of “real” options, private equity and venture capital, subprime mortgages, bailouts, and credit spreads. As we have learned in the recent global credit crisis and stock market collapse, the world’s financial markets are more integrated than ever before. Both the theory and practice of corporate finance have been moving ahead with uncommon speed, and our teaching must keep pace. These developments have placed new burdens on the teaching of corporate finance. On one hand, the changing world of finance makes it more difficult to keep materials up to date. On the other hand, the teacher must distinguish the permanent from the temporary and avoid the temptation to follow fads. Our solution to this problem is to emphasize the modern fundamentals of the theory of finance and make the theory come to life with contemporary examples. Increasingly, many of these examples are outside the United States. All too often the beginning student views corporate finance as a collection of unrelated topics that are unified largely because they are bound together between the covers of one book. We want our book to embody and reflect the main principle of finance: Namely, that good financial decisions will add value to the firm and to shareholders and bad financial decisions will destroy value. The key to understanding how value is added or destroyed is cash flows. To add value, firms must generate more cash than they use. We hope this simple principle is manifest in all parts of this book. The Intended Audience of This Book This book has been written for the introductory courses in corporate finance at the MBA level and for the intermediate courses in many undergraduate programs. Some instructors will find our text appropriate for the introductory course at the undergraduate level as well. We assume that most students either will have taken, or will be concurrently enrolled in, courses in accounting, statistics, and economics. This exposure will help students understand some of the more difficult material. However, the book is self-contained, and a prior knowledge of these areas is not essential. The only mathematics prerequisite is basic algebra. New to Eleventh Edition Each chapter has been updated and where relevant, “internationalized.” We try to capture the excitement of corporate finance with current examples, chapter vignettes, and openers. Spreadsheets applications are spread throughout. ● CHAPTER 2 has been rewritten to better highlight the notion of cash flow and how it contrasts with accounting income. ● CHAPTER 6 has been reorganized to better emphasize some special cases of capital budgeting including cost cutting proposals and investments of unequal lives. ● CHAPTER 9 has updated the many new ways of stock market trading. ● CHAPTER 10 has updated material on historical risk and return and better motivated the equity risk premium. ● CHAPTER 13 has sharpened the discussion of how to use the CAPM for the cost of equity and WACC. ● CHAPTER 14 has updated and added to the discussion of behavioral finance and its challenge to the efficient market hypothesis. ● CHAPTER 15 expands on its description of equity and debt and has new material on the value of a call provision as well as the differences between book and market values. ● CHAPTER 19 AND 20 continue to build on the notion of a financial life cycle where capital structure decisions are driven by the varying needs for internal and external finance over a firm’s life.