**Chapter 1: Introduction of Corporate Finance**

Introduction of corporate finance

Investments projects and firms

**Chapter 2: The Time Value of Money and Net Present Value**

The time value of money and net present value

Basic scenario perfect markets certainty constant interest rates

Returns net returns and rates of return

The time value of money future value and compounding

Present values discounting and capital budgeting

**Chapter 3: Stock and Bond Valuation: Annuities and Perpetuities**

Stock and bond valuation annuities and perpetuities

Projects with different lives and rental equivalents

Perpetuity and annuity derivations

Comparing different multiyear contracts

**Chapter 4: A First Encounter with Capital Budgeting Rules**

A first encounter with capital budgeting rules

The internal rate of return irr

The payback capital budgeting rule

How do chief financial officers CFOS decide

**Chapter 5: Time-Varying Rates of Return and the Yield Curve**

Working with time varying rates of return

Study of treasury bills and yield curve in time varying interest rates

Why is the slope of yield curve upward

Corporate insights about time varying costs of capital obtained from the yield curve

Extracting forward interest rates

Shorting and locking in forward interest rate

Institutional knowledge about compounding and price quotes

**Chapter 6: Uncertainty, Default, and Risk**

Interest rates and credit risk default risk

Uncertainty in capital budgeting

Splitting uncertain project payoffs into debt and equity

**Chapter 7: A First Look at Investments**

Risk and return risk aversion in a perfect market

Cash bonds and stocks 1970 to 2007

Market institutions related to equity an overview

**Chapter 8: Investor Choice Risk and Reward**

Investor choice risk and reward

Portfolios diversification and investor preferences

How to measure risk contribution

Expected rates of return and market betas for weighted portfolios and firms

Spreadsheet calculations for risk and reward

An investors specific trade off between risk and reward

A shortcut formula for the risk of a portfolio

Graphing the mean variance efficient frontier

**Chapter 9: The Capital Asset Pricing Model**

The capital asset pricing model

What you already know and what you want to know

The capital asset pricing model capm a cookbook recipe approach

The capm cost of capital in the present value formula

Empirical evidence is the capm the right model

Application certainty equivalence

**Chapter 10: Market Imperfections**

Causes and consequences of imperfect markets

Opinions disagreements and insider information

Market depth and transaction costs

Deconstructing quoted rates of return liquidity and tax premiums

Multiple effects how to work novel problems

**Chapter 11**: **Perfect and Efficient Markets, and Classical and Behavioral Finance**

Perfect and efficient markets and classical and behavioral finance

The fundamentals based classification and behavioral finance

**Chapter 12: Capital Budgeting Applications and Pitfalls**

Capital budgeting applications and pitfalls

Promised expected typical or most likely

Badly blended costs of capital

The economics of project interactions

Evaluating projects incrementally

Decision trees one set of parameters

Projects with different parameters

Appendix valuing some more real options

**Chapter 13: from Financial Statements to Economic Cash Flows**

From financial statements to economic cash flows

A bottom up example long term accruals depreciation

Bottom up example deferred taxes

Bottom up example short term accruals and working capital

Extracting economic cash flow from pepsico financials

Summary in from financial statements to economic cash flows

**Chapter 14: Valuation from Comparables and Some Financial Ratios**

Valuation comparables financial ratios

Capital structure payout policy

Comparables and net present value

The price or earnings p or e ratio

Problems with price or earnings ratios

**Chapter 15: Corporate Claims**

Tracking ibms capital structure from 2001 to 2003

**Chapter 16: Capital Structure and Capital Budgeting In a Perfect Market**

Capital structure and capital budgeting in a perfect market

Conceptual basics maximization of equity value or firm value

Modigliani and miller the informal way

Modigliani and miller the formal way

The weighted average cost of capital wacc

The big picture how to think of debt and equity

Non financial and operational liabilities and the marginal cost of capital

**Chapter 17: the Weighted Cost of Capital and Adjusted Present Value in an Imperfect Market with Taxes**

The weighted cost of capital and adjusted present value in an imperfect market with taxes

Relative taxation of debt and equity

Firm value under different capital structures

Formulaic valuation methods apv and wacc

A sample application of tax adjusted valuation techniques

The tax subsidy on pepsicos financial statement

The discount factor on tax obligations and tax shelters

**Chapter 18: What Matters?**

The role of personal income taxes and clientele effects

Operating policy behavior in bad times financial distress

Operating policy agency issues and behaviour in good times

Inside information and adverse selection

Transaction costs and behavioural issues

Static capital structure summary

The effect of leverage on costs of capital and quoted bond yields

Valuation formulas with many market imperfections

**Chapter 19: Equity Payouts**

Dividends and share repurchases

**Chapter 20: for Value, Financial Structure and Corporate Strategy Analysis**

For value financial structure and corporate strategy analysis

The length of the detailed projection period

Alternative assumptions and sensitivity and scenario analyses

Proposing capital structure change

Caution the emperors new clothes

**Chapter 21: Capital Structure Dynamics**

Capital structure dynamics firm scale

Theories of capital structure levels changes and issuing activity

Capital market pressures toward the optimal capital structure

Working capital management and financial flexibility

Debt and debt hybrid offerings

Raising funds through other claims and means

The capital market response to issue and dividend announcements

**Chapter 22: Capital Structure Patterns In the United States**

Capital structure patterns in the united states

Empirical capital structure patterns

What are the underlying rationales for capital structure changes

**Chapter 23:** **Investment Banking and Mergers and Acquisitions**

Investment banking and mergers and acquisitions

Underwriting services from the firms perspective

Mergers and acquisitions m and a from the firms perspective

**Chapter 24: Corporate Governance **

Separation of ownership and control

The role of social institutions

Debt the right of creditors to force default

Equity the right of shareholders to vote

The design and effectiveness of corporate governance systems

**Chapter 25: International Finance**

Investments in foreign financial markets

Capital budgeting with foreign cash flows

**Chapter 26: Options and Risk Management**

A call and put options on stock