Financial Management Brigham 13th Edition Solutions Free Download

Solutions

Financial Management Brigham 13th Edition Solutions Free Download 6 0 2

Click the button below to add the Financial Management: Theory & Practice Brigham Ehrhardt 14th Edition solutions manual to your wish list. Related Products Financial Management Theory & Practice Brigham Ehrhardt 15th edition solutions $32.00.

  • JavaScript Not Detected
    JavaScript is required to view textbook solutions.

Financial Management Brigham 13th Edition Solutions Free Download Free

  • Step 1 of 25

    Financial system allows money to transfer from one to another(say from the creditor to borrower). It helps the businesses tohave smooth operations in case of deficit conditions.

    A financial system allocates the resources more efficiently inthe current economic situations. It includes the banks, financialmarkets, instruments and other finance related services.

    • An order exist within the system and it is generally up to you to find out the order, the four segments that make health care financial system work are: · The original records · The information system · The account system · The reporting system Discuss these four segments; in your responses, provide an example of each.
  • Step 2 of 25

    a.

    Corporate finance mainly deals with the financing sources,capital structure, decisions that increase the value of a firm aswell as allocating resources efficiently.

    A manager’s primary goal is shareholder’s wealth maximizing.Such goal can be reached only through corporate finance as it helpsin selecting the best investment plan that adds value to therespective company. Also helps in forecasting the funds requiredand the possible sources from which the funds can be acquired.

  • Step 3 of 25

    b.

    Following are the three forms of organization:

    Sole-Proprietorship

    It is a kind of business firm that is operated solely by oneindividual. Under this type of business there will be nodistinction between the business entity and the owner of thebusiness. The sole proprietor will be able to enjoy the totalprofits and at the same time he will be liable for all therisks.

    Partnership firm

    A partnership firm is the business established by theassociation of two or more persons. All the profits and losses willbe as per the partnership deed i.e. the partners will agree at thetime of partnership agreement to share the profits as well as therisks proportionately.

    Corporation

    It is a group of persons combined to perform a single act or forthe common goal. Under this business the business entity and theowners are considered as separate and distinct.

  • Step 4 of 25

    Advantages of proprietorship and partnership:

    • Easy decision making process as both the forms of organizationinvolves simple hierarchy.

    • Only few Legal regulations applicable for both the forms.

    • Income of the participants is treated as personal income andis not subject to any corporate tax.

  • Step 5 of 25

    Disadvantages of proprietorship and partnership:

    • Capital investment for the growth of the business in case ofboth partnership and proprietorship seems difficult when comparedto a corporation.

    • Both proprietor and the partner are liable for the company’sliabilities.

    • The life of business in case of proprietorship depends on theproprietor or the founder’s life.

    • In partnership form there will be always a chance of falloutbetween the partners.

  • Step 6 of 25

    Advantages of corporation:

    • Easy to access capital for the growth of the business.

    • Shareholders have a limited liability depending on the amountinvested by them.

    • Unlimited business life.

    • Ownership interest can be transferred to the other interestedparty.

  • Step 7 of 25

    Disadvantages of corporation:

    • Corporation is subject to a set of complex legalregulations.

    • Subject to double taxation system i.e. corporate tax on theincome of the company and personal tax on the dividends paid to theshareholders.

  • Step 8 of 25

    c.

    A firm goes public when it issues its shares to the publicthrough Initial Public Offering (IPO). It may issue additionalstocks or debt securities when additional capital is required forthe growth plans.

  • Step 9 of 25

    Agency problems generally arise when the company’s decisionsserve the personal goals rather than serving the shareholdersinterest.

    Corporation governance refers to a set of internal regulationsthat are set by the organization to control the agency problems.Also serve as the standards of the firm to be obeyed in the regularbusiness activities.

  • Step 10 of 25

    d.

    The primary objective of managers should be stockholders wealthmaximization.

    (1)

    Every firm has some ethical and moral responsibilities to beobeyed to the societal rules and regulations. That means to providea safe and healthy working environment and produce quality productswithout harming or polluting the environment.

  • Step 11 of 25

    (2)

    Stock price generally increase when the quality of the productor service increases and when producing the products as per theconsumer needs. A growing profit margin indicates efficiency in theoperations of the organization in reducing cost of products.

    Hence, the stock price maximization is good for the society.

    (3)

    Studies have shown a high correlation between long runprofitability of a company and its ethics. If a firm takes backstep in following ethics in order to increase the profits byproviding poor quality products may lead to legal issues. By allsuch unethical activities the image of the firm may downslide.

  • Step 12 of 25

    e.

    Following are the three aspects of cash flows affecting thevalue of investment:

    • Amount of cash flows expected.

    • Timing of the expected cash flows.

    • Uncertainty or the risk involved with the materialization ofsuch cash flows.

  • Step 13 of 25

    f.

    Free cash flow refers to the cash that is available with a firmafter paying all the taxes and acquiring the capital needs forvarious growth plans.

  • Step 14 of 25

    g.

    Weighted average cost of capital is the average rate of returnthat an investor requires or expects to receive. WACC is used todiscount the investment cash flows when the project reflects theaverage risk involved.

  • Step 15 of 25

    h.

    The weighted average cost of capital is used to discount thefree cash flows of a project that finally gives the present valueof a firm.

  • Step 16 of 25

    i.

    Households are treated as net savers whereas financialintermediaries are treated as net borrowers and when the governmentruns a fiscal surplus is also considered as net borrower.

    Capital is transferred from a saver to the user by:

    • Direct transfer: Funds are directly place to be used by theusers.

    • Indirect transfer:

    It takes through the following two types of mechanism:

    1. Investment banks underwrite the shares of a particularcompany. It means investment banks buy shares and sell it to otherinvestors in the market.

    2. Financial intermediaries issue their own shares or securitiesand the amount received from the investors is reinvested in thebusiness for further plans.

  • Step 17 of 25

    j.

    The price that is paid by the borrower for the debt capital iscalled as interest rate.

    The cost of equity capital is called as return on equity. It isthe sum of dividend rate and appreciation in equity capital.

    Following are the factors affecting the cost of capital:

    • Growth opportunities: A growth opportunity indicates increasein demand for capital.

    • Consumption preference with respect to time: Consumers havinglower reference of consumption now will be willing to lend thecapital at a lower cost.

    • Inflation: Increase in the outlook of inflation makes thesavers expect a higher rate of return on the investment made.

    • Risk: Default in loan payments. Greater the chance of default,higher will be the required rate of return.

  • Step 18 of 25

    k.

    Following are some of the economic conditions that affect thecost of money:

    • Inflation: Greater the inflation, higher will be the cost ofcapital.

    • Political instability: Greater the instability, higher will bethe cost of capital.

    • Volatility in foreign exchange rate: Greater the volatility,higher will be the cost of capital.

    • Sovereign default risk: Greater the default risk, higher willbe the cost of capital.

    • Economic outlook: If the economy is positive cost of capitalwill be low. If the economy is in expansion state, the cost ofcapital will be lower than the cost of capital in case ofcontraction.

    • Monetary and fiscal policy.

    • International trade deficit or surplus.

    • Governmental budget deficit or surplus.

  • Step 19 of 25

    l.

    Financial securities are the intangible assets. These arenegotiable and have a certain financial worth. They are thecontractual obligations and most often have an additional paymentthat is met on the initial advance amount paid for a particularsecurity.

    Short term securities such as Treasury bills, commercial paperfrom the banks have relatively low default risk and are generallyfor not more than 1 year term.

    Similarly US Treasury bonds are long term financial securitieshaving more than three years and are risk free securities.

    Corporate bonds have maturities up to forty years and yield agreater interest rate than treasury bonds due to greater defaultrisk.

    Municipal bonds are tax free bonds that provide taxexemption.

    Bank acceptances makes bank act as guarantors payment of receiptof goods by a buyer is made to the seller. This is mostly in casesof international transactions.

  • Step 20 of 25

    m.

    Financial institutions:

    • Investment banks

    • Deposit taking financial intermediaries – savings and loanassociations

    • Credit unions

    • Commercial banks

    • Investment fund houses such as various types of mutual fundhouses who invest in varied strategy based financialsecurities.

    • Hedge funds

    • Private equity funds

  • Step 21 of 25

    n.

    Following are some of the different types of markets:

    • Primary and secondary markets

    • Spot market and futures markets

    • Money markets

    • Capital markets

  • Step 22 of 25

    o.

    Secondary markets are organized on the following basis:

    • On the basis of location weather physical or over the counter(OTC)

    • On the basis of how the orders are carried out, weatherAuction, Dealer based, through Electronic communicationnetwork.

  • Step 23 of 25

    (1)

    Physical location based markets:

    • NYSE

    • AMEX

    Computer/telephone based exchange markets:

    • NASDAQ

    • For-Ex markets

  • Step 24 of 25

    (2)

    Open outcry method involves the deals that are made through anauction process and the transaction takes place on the floor of theexchange.

    In a dealer market, the dealers maintain an inventory of sharesi.e. buying and selling the securities at the bid and ask prices asquoted.

    Electronic communication network (ECN) serve as an electronicinterface which matches the orders of a trade automatically thatthe participants post on the ECN.

    Stargate puddle jumper model. 1237 'stargate puddle jumper' 3D Models. Every Day new 3D Models from all over the World. Click to find the best Results for stargate puddle jumper Models for. Apr 2, 2018 - Royalty free 3D model StarGate Atlantis Puddle Jumper for download as blend on TurboSquid: 3D models for games, architecture, videos. Right now there seems to be no changes needed to accomplish this fantastic model with the options I listed above. These figures are highly detailed and look just like the characters in Stargate and Stargate Atlantis. SG1/SGA/SGU - Saving Earth/Atlantis/?, one mission at a time!

  • Step 25 of 25

    p.

    The mortgages are converted into securities by the financialinstitutions that buy mortgages from mortgage brokers. This processis called as securitization of mortgages and these securities havetheir collateral as the expected cash flows from the mortgage.

    The securitization of the mortgages leads to a global crisis ifthe securities are valued as a less risky investment than theyactually are. This system clogged to focus on the ability of thebuyers to service the payments. In addition to this situation thelow interest rates in the US led to a greater demand of mortgagesthat result a greater degree of securitization.

    With an increase in the interest rates became more difficultwith the mortgage amount to serve and led to wide spread ofdefaults triggering a global economic crisis.

Posted on  by  admin