Solution Manual For Fundamentals Of Corporate Finance, Seventh Canadian Edition

Solution Manual For Fundamentals Of Corporate Finance, Seventh Canadian Edition simplifies even the toughest textbook questions with step-by-step solutions and easy explanations.

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1-1Brealey7CESolutions to Chapter 11.realexecutive airplanesbrand namesfinancialstocksinvestmentcapital budgetingfinancing2.A firm might cut its labour force dramatically which could reduce immediate expensesand increase profits in the short term. Over the long term, however, the firm might notbe able to serve its customers properly or it might alienate its remaining workers; if so,future profits will decrease, and the stock price will decrease in anticipation of theseproblems.The moral of thisexamples is that, because stock prices reflect presentand futureprofitability, the firm should not necessarily sacrifice future prospects for short-termgains.3.The key advantage of separating ownership and management in a large corporationis that it gives the corporation permanence. The corporation continues to exist ifmanagers are replacedor if stockholders sell their ownership interests to otherinvestors. The corporation’s permanence is an essential characteristic in allowingcorporations to obtain the large amounts of financing required by many businessentities.Both public and private corporations are distinct legal entities, separate from itsowners (ie., its shareholders). The key difference between public and privatecorporationsisthe rules governing the sale of their common shares. The commonshares of a public corporation are listed for trading on a stock exchange andinvestors can freely buy and sell the corporation’s shares at the current stock price.The common shares of a private corporation are not listed for trading on a stockexchange. Shareholders of private corporations must negotiate directly withpotential buyers and are subject to resale restrictions.

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Fundamentals Of Corporate Finance b...

Solution Manual For Fundamentals Of Corporate Finance, Seventh Canadian Edition

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