Topics Covered Discounted Cash Flows. NetProfits Incremental Cash Flows STreatment of Inflation Separation of Investment Financing Decisions SExample: Blooper Industries

Topics Covered Rates of Return Years of Capital Market History Measuring Risk Risk Diversification Thinking About risk Irwvin/McGraw-Hill

Market Portfolio-Portfolio of all assets in the economy. In practice a broad stock marke index, such as the S&P Composite, is used to represent the market. Beta- Sensitivity of a stock's return to the return on the market portfolio

SInvestment Decision vs. Financing Decision OMarket Efficiency →Weak form efficiency →Semi -strong- form efficiency >Strong form efficiency OLessons of Market Efficiency Irwvin/McGraw-Hill

Venture Capital The Initial Public Offering The Underwriters General Cash Offers The Private Placement

When there are no taxes and capital markets function well, it makes no difference whether the firm borrows or individual shareholders borrow. Therefore, the market value of a company does not depend on its capital structure

Common Stock Preferred Stock Corporate Debt Convertible Securities Patterns of Corporate Financing Irwvin/McGraw-Hill

Geothermal's Cost of Capital Weighted Average Cost of Capital (WACC) Capital Structure Required Rates of Return Big Oil's WACC SInterpreting WACC Flotation Costs

Organizing a Business The role of The Financial Manager Financial Markets Who Is The Financial Manager Corporate Goals& Incentives Value Maximization Irwvin/McGraw-Hill The McGraw-Hill Companies

Topics Covered SHow Firms Organize Their Investment Process Some\What If Questions Sensitivity analysis Break Even Analysis SFlexibility in Capital Budgeting Decision Trees Options