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Solutions For Corporate Finance, 13th Edition Ross (All Chapters included)

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Complete Solutions Manual for Corporate Finance, 13th Edition By Stephen Ross, Randolph Westerfield, Jeffrey Jaffe and Bradford Jordan ; ISBN13: 9781260772388. Full Chapters included Chapter 1 to 31. Chapter 1. Introduction to corporate finance. Chapter 2. Financial statements and cash flow. Cha...

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  • November 30, 2023
  • April 2, 2024
  • 676
  • 2022/2023
  • Exam (elaborations)
  • Questions & answers

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  • solutions
  • manual
  • corporate
  • finance
  • corporate finance
  • 13th edition
  • 13e
  • ross
  • case solutions
  • excel master solutions
  • excel solutions
  • appendix
  • cases
  • solutions manual
  • excel master

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Solutions Manual Corporate Finance 13th edition Ross, Westerfield, Jaffe
, and Jordan Complete Chapter Solutions Manual are included (Ch 1 to 31)
** Immediate Download ** Swift Response
** All Chapters included ** Case Solutions (Page 582) CHAPTER 1 INTRODUCTION TO CORPORATE FINANCE Answers to Concept Questions 1. In the corporate form of ownership, the shareholders are the owners of the firm. The shareholders elec t
the directors of the corporation, who in turn appoint the firm’s management. This separation of
ownership from control in the corporate form of organization is what causes agency problems to exist.
Management may act in its own or someone else’s best interests , rather than those of the shareholde rs.
If such events occur, they may contradict the goal of maximizing the share price of the equity of the
firm.
2. Such organizations frequently pursue social or political missions, so many different goals ar e
conceivable. One goal that is often cited is revenue minimization; i.e., provide whatever goods and
services are offered at the lowest possible cost to society. A better approach might be to observe tha t
even a not- for-profit business has equity. Thus, one answer is that the appropriate goal is to maximize
the value of the equity.
3. Presumably, the current stock value reflects the risk, timing, and magnitude of all future cash flows,
both short -term and long- term. If this is correct, then the statement is false.
4. An argument can be made either way. At the one extreme, we could argue that in a market economy,
all of these things are priced. There is thus an optimal level of, for example, ethical and/or illegal
behavior, and the framework of stock valuation explicitly includes these. At the other extreme, w e
could argue that these are non -economic phenomena and are best handled through the political process.
A classic (and highly relevant) thought question that illustrates this debate goes something like th is:
“A firm has estimated that the cost of improving the safety of one of its products is $30 million.However, the firm believes that improving the safety of the product will only save $20 million in
product liability claims. What should the firm do?”
5. The goal will be the same, but the best course of action toward that goal may be different because of
differing social, political, and economic institutions.
6. The goal of management should be to maximize the share price for the current sharehol ders. If
management believes that it can improve the profitability of the firm so that the share price will exceed
$35, then they should fight the offer from the outside company. If management believes that this
bidder, or other unidentified bidders , will actually pay more than $35 per share to acquire the company,
then they should still fight the offer. However, if the current management cannot increase the value o
f
the firm beyond the bid price, and no other higher bids come in, then management is not act ing in the
interests of the shareholders by fighting the offer. Since current managers often lose their jobs when
the corporation is acquired, poorly monitored managers have an incentive to fight corporate takeove rs
in situations such as this. CHAPTER 2 - 3 7. We woul d expect agency problems to be less severe in other countries, primarily due to the relativel y
small percentage of individual ownership. Fewer individual owners should reduce the number o f
diverse opinions concerning corporate goals. The high percentage of institutional ownership migh t
lead to a higher degree of agreement between owners and managers on decisions concerning risky
projects. In addition, institutions may be better able to implement effective monitoring mechanisms
on managers than can individua l owners, based on the institutions’ deeper resources and experience s
with their own management.
8. The increase in institutional ownership of stock in the United States and the growing activism of these
large shareholder groups may lead to a reduction in agency problems for U.S. corporations and a more
efficient market for corporate control. However, this may not always be the case. If the managers of
the mutual fund or pension plan are not concerned with the interests of the investors, the agency
problem could potentially remain the same, or even increase , since there is the possibility of agency
problems between the fund and its investors.
9. How much is too much? Who is worth more, Larry Ell ison or Tiger Woods? The simplest answer is
that there is a market for executives just as there is for all types of labor. Executive compensation is
the price that clears the market. The same is true for athletes and performers. Having said that, one
aspect of executive compensation deserves comment. A primary rea son executive compensation ha s
grown so dramatically is that companies have increasingly moved to stock -based compensation. Such
movement is obviously consistent with the attempt to better align stockholder and managementinterests. In recent years, stock prices have soared, so management has cleaned up. It is sometimes
argued that much of this reward is due to rising stock prices in general, not managerial performance.
Perhaps in the future, executive compensation will be designed to reward only differenti al
performance, i.e., stock price increases in excess of general market increases.
10. Maximizing the current share price is the same as maximizing the future share price at any futureperiod. The value of a share of stock depends on all of the future cas h flows of company. Another w
ay
to look at this is that, barring large cash payments to shareholders, the expected price of the stock mu st
be higher in the future than it is today. Who would buy a stock for $100 today when the share price i n
one year is ex pected to be $80?

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