... 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.
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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.
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EXCEL
EXCEL
Brealey−Meyers:
Principles...
... investment would be measured as 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 ... 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:
Prin...
... and has been its
Chief Executive Officer since that date. He is a past president of the Institute of
Brealey−Meyers:
Principles of Corporate
Finance, Seventh Edition
IV. Financial Decisions ... “Bookbuilding and Strategic Allocation,” Journal of Finance 56 (Decem-
ber 2001), pp. 2337–2369.
Brealey−Meyers:
Principles of Corporate
Finance, Seventh Edition
IV. Finan...
... 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...