Instant Ebooks Textbook (Ebook PDF) Fundamentals of Corporate Finance 11th by Stephen Ross Download All Chapters

Full download ebooks at ebooksecure.
com
(eBook PDF) Fundamentals of Corporate Finance 11th

by Stephen Ross
For dowload this book click LINK or Button below
http://ebooksecure.com/product/ebook-pdf-
fundamentals-of-corporate-finance-11th-by-stephen-
ross/
OR CLICK BUTTON
DOWLOAD EBOOK
Download More ebooks from https://ebooksecure.com

More products digital (pdf, epub, mobi) instant
download maybe you interests ...
(eBook PDF) Corporate Finance 11th Edition by Stephen

Ross
http://ebooksecure.com/product/ebook-pdf-corporate-finance-11th-
edition-by-stephen-ross/

Edition by Stephen Ross
http://ebooksecure.com/product/ebook-pdf-fundamentals-of-
corporate-finance-7th-edition-by-stephen-ross/

Edition by Stephen Ross
http://ebooksecure.com/product/ebook-pdf-fundamentals-of-
corporate-finance-12th-edition-by-stephen-ross/

Ross
Ross
(eBook PDF) Essentials of Corporate Finance 9th Edition

by Stephen Ross
http://ebooksecure.com/product/ebook-pdf-essentials-of-corporate-
finance-9th-edition-by-stephen-ross/
(eBook PDF) Corporate Finance 7th Canadian Edition by

Stephen Ross
canadian-edition-by-stephen-ross/
(eBook PDF) Essentials of Corporate Finance 10th

Edition by Stephen A Ross
finance-10th-edition-by-stephen-a-ross/
(eBook PDF) Essentials Of Corporate Finance 4th Stephen

A. Ross
finance-4th-stephen-a-ross/
Preface from the Authors
When the three of us decided to write a book, we were united by one strongly held principle: Corporate
finance should be developed in terms of a few integrated, powerful ideas. We believed that the subject
was all too often presented as a collection of loosely related topics, unified primarily by virtue of being
bound together in one book, and we thought there must be a better way.
One thing we knew for certain was that we didn’t want to write a “me-too” book. So, with a lot of
help, we took a hard look at what was truly important and useful. In doing so, we were led to eliminate
topics of dubious relevance, downplay purely theoretical issues, and minimize the use of extensive
and elaborate calculations to illustrate points that are either intuitively obvious or of limited practical
use.
As a result of this process, three basic themes became our central focus in writing Fundamentals
of Corporate Finance:
AN EMPHASIS ON INTUITION
We always try to separate and explain the principles at work on a common sense, intuitive level
before launching into any specifics. The underlying ideas are discussed first in very general terms
and then by way of examples that illustrate in more concrete terms how a financial manager might
proceed in a given situation.
A UNIFIED VALUATION APPROACH

We treat net present value (NPV) as the basic concept underlying corporate finance. Many texts
stop well short of consistently integrating this important principle. The most basic and important
notion, that NPV represents the excess of market value over cost, often is lost in an overly mechan-
ical approach that emphasizes computation at the expense of comprehension. In contrast, every
subject we cover is firmly rooted in valuation, and care is taken throughout to explain how particular
decisions have valuation effects.
A MANAGERIAL FOCUS
Students shouldn’t lose sight of the fact that financial management concerns management. We
emphasize the role of the financial manager as decision maker, and we stress the need for mana-
gerial input and judgment. We consciously avoid “black box” approaches to finance, and, where
appropriate, the approximate, pragmatic nature of financial analysis is made explicit, possible pit-
falls are described, and limitations are discussed.
In retrospect, looking back to our 1991 first edition IPO, we had the same hopes and fears as any
entrepreneurs. How would we be received in the market? At the time, we had no idea that 23 years
later, we would be working on an eleventh edition. We certainly never dreamed that in those years we
would work with friends and colleagues from around the world to create country-specific Australian,
Canadian, and South African editions, an International edition, Chinese, French, Polish, Portuguese,
Thai, Russian, Korean, and Spanish language editions, and an entirely separate book, Essentials of
Corporate Finance, now in its eighth edition.
Today, as we prepare to once more enter the market, our goal is to stick with the basic principles
that have brought us this far. However, based on the enormous amount of feedback we have received
from you and your colleagues, we have made this edition and its package even more flexible than pre-
vious editions. We offer flexibility in coverage, as customized editions of this text can be crafted in any
combination through McGraw-Hill’s CREATE system, and flexibility in pedagogy, by providing a wide
vii
viii PREFACE FROM THE AUTHORS
variety of features in the book to help students to learn about corporate finance. We also
provide flexibility in package options by offering the most extensive collection of teaching,
learning, and technology aids of any corporate finance text. Whether you use only the text-
book, or the book in conjunction with our other products, we believe you will find a combi-
nation with this edition that will meet your current as well as your changing course needs.
Stephen A. Ross
Randolph W. Westerfield
Bradford D. Jordan
Coverage
This book was designed and developed explicitly for a first course in business or corporate finance,
for both finance majors and non-majors alike. In terms of background or prerequisites, the book is
nearly self-contained, assuming some familiarity with basic algebra and accounting concepts, while
still reviewing important accounting principles very early on. The organization of this text has been
developed to give instructors the flexibility they need.
The following grid presents, for each chapter, some of the most significant features as well as a few
selected chapter highlights of the 11th edition of Fundamentals. Of course, in every chapter, opening
vignettes, boxed features, in-chapter illustrated examples using real companies, and end-of-chapter
material have been thoroughly updated as well.
Chapters Selected Topics of Interest Benefits to You

PART 1 Overview of Corporate Finance
CHAPTER 1 Goal of the firm and agency problems. Stresses value creation as the most fundamental
aspect of management and describes agency
Introduction to Corporate
issues that can arise.
Finance
Ethics, financial management, and Brings in real-world issues concerning conflicts
executive compensation. of interest and current controversies surrounding
ethical conduct and management pay.
Sarbanes-Oxley. Up-to-date discussion of Sarbanes-Oxley and its
implications and impact.
Minicase: The McGee Cake Company. Examines the choice of organization form for a
small business.
CHAPTER 2 Cash flow vs. earnings. Clearly defines cash flow and spells out the
differences between cash flow and earnings.
Financial Statements, Taxes,
and Cash Flow Market values vs. book values. Emphasizes the relevance of market values over
book values.
Brief discussion of average corporate Highlights the variation in corporate tax rates
tax rates. across industries in practice.
Minicase: Cash Flows and Financial Reinforces key cash flow concepts in a small
Statements at Sunset Boards, Inc. business setting.
PART 2 Financial Statements and Long-Term Financial Planning

CHAPTER 3 Expanded DuPont analysis. Expands the basic DuPont equation to better
explore the interrelationships between operating
Working with Financial
and financial performance.
Statements
DuPont analysis for real companies Analysis shows students how to get and use real-
using data from S&P Market Insight. world data, thereby applying key chapter ideas.
Ratio and financial statement analysis Uses firm data from RMA to show students how
using smaller firm data. to actually get and evaluate financial statement
benchmarks.
Understanding financial statements. Thorough coverage of standardized financial
statements and key ratios.
The enterprise value–EBITDA ratio. Defines enterprise value (EV) and discusses the
widely used EV–EBITDA ratio.
Minicase: Ratio Analysis at S&S Air, Illustrates the use of ratios and some pitfalls in a
Inc. small business context.
ix
x COVERAGE

CHAPTER 4 Expanded discussion of sustainable Illustrates the importance of financial planning in
growth calculations. a small firm.
Long-Term Financial Planning
and Growth Explanation of alternative formulas for Explanation of growth rate formulas clears up a
sustainable and internal growth rates. common misunderstanding about these formulas
and the circumstances under which alternative
formulas are correct.
Thorough coverage of sustainable Provides a vehicle for examining the interrelation-
growth as a planning tool. ships between operations, financing, and growth.
Long-range financial planning. Covers percentage of sales approach to creating
pro forma statements.
Minicase: Planning for Growth at S&S Discusses the importance of financial plan and
Air. capacity utilization for a small business.
PART 3 Valuation of Future Cash Flows

CHAPTER 5 First of two chapters on time value of Relatively short chapter introduces just the basic
money. ideas on time value of money to get students
Introduction to Valuation:
started on this traditionally difficult topic.
The Time Value of Money
CHAPTER 6 Growing annuities and perpetuities. Covers more advanced time value topics with
Second of two chapters on time value numerous examples, calculator tips, and Excel
Discounted Cash Flow
of money. spreadsheet exhibits. Contains many real-world
Valuation
examples.
Minicase: The MBA Decision. Explores the financial pros and cons of pursuing
an MBA degree.
CHAPTER 7 Bond valuation. Complete coverage of bond valuation and bond

features.
Interest Rates and Bond
Valuation Interest rates. Discusses real versus nominal rates and the
determinants of the term structure.
“Clean” vs. “dirty” bond prices and Clears up the pricing of bonds between coupon
accrued interest. payment dates and also bond market quoting
conventions.
TRACE system and transparency in Up-to-date discussion of new developments in
the corporate bond market. fixed income with regard to price, volume, and
transactions reporting.
“Make-whole” call provisions. Up-to-date discussion of a relatively new type of
call provision that has become very common.
Islamic finance
Minicase: Financing S&S Air’s Discusses the issues that come up in selling
Expansion Plans with a Bond Issue. bonds to the public.
CHAPTER 8 Stock valuation. Thorough coverage of constant and non-

constant growth models.
Stock Valuation
New! NYSE market operations. Up-to-date description of major stock market
operations.
Valuation using multiples. lllustrates using PE and price/sales ratios for
equity valuation.
Minicase: Stock Valuation at Illustrates the difficulties and issues surrounding
Ragan, Inc. small business valuation.
COVERAGE xi

PART 4 Capital Budgeting
CHAPTER 9 First of three chapters on capital Relatively short chapter introduces key ideas
budgeting. on an intuitive level to help students with this
Net Present Value and Other
traditionally difficult topic.
Investment Criteria
NPV, IRR, payback, discounted Consistent, balanced examination of advantages
payback, and accounting rate of and disadvantages of various criteria.
return.
Minicase: Bullock Gold Mining. Explores different capital budgeting techniques
with nonstandard cash flows.
CHAPTER 10 Project cash flow. Thorough coverage of project cash flows and the
relevant numbers for a project analysis.
Making Capital Investment
Decisions Alternative cash flow definitions. Emphasizes the equivalence of various formulas,
thereby removing common misunderstandings.
Special cases of DCF analysis. Considers important applications of chapter
tools.
Minicase: Conch Republic Electronics, Analyzes capital budgeting issues and
Part 1. complexities.
CHAPTER 11 Sources of value. Stresses the need to understand the economic

basis for value creation in a project.
Project Analysis and Evaluation
Scenario and sensitivity “what-if” Illustrates how to actually apply and interpret
analyses. these tools in a project analysis.
Break-even analysis. Covers cash, accounting, and financial break-
even levels.
Minicase: Conch Republic Electronics, Illustrates the use of sensitivity analysis in capital
Part 2. budgeting.
PART 5 Risk and Return

CHAPTER 12 Expanded discussion of geometric Discusses calculation and interpretation
vs. arithmetic returns. of geometric returns. Clarifies common
Some Lessons from Capital
misconceptions regarding appropriate use of
Market History
arithmetic vs. geometric average returns.
Capital market history. Extensive coverage of historical returns,
volatilities, and risk premiums.
Market efficiency. Efficient markets hypothesis discussed along
with common misconceptions.
The equity risk premium. Section discusses the equity premium puzzle and
latest international evidence.
The 2008 experience. Section on the stock market turmoil of 2008.
Minicase: A Job at S&S Air. Discusses selection of investments for a 401(k)
plan.
CHAPTER 13 Diversification, systematic and Illustrates basics of risk and return in a

unsystematic risk. straightforward fashion.
Return, Risk, and the Security
Market Line Beta and the security market line. Develops the security market line with an intuitive
approach that bypasses much of the usual
portfolio theory and statistics.
Minicase: The Beta for Detailed discussion of beta estimation.
Colgate-Palmolive.
xii COVERAGE

PART 6 Cost of Capital and Long-Term Financial Policy
CHAPTER 14 Cost of capital estimation. Contains a complete, Web-based illustration of
cost of capital for a real company.
Cost of Capital
Geometric vs. arithmetic growth rates. Both approaches are used in practice. Clears up
issues surrounding growth rate estimates.
New! Firm valuation. Illustrates the free cash flow approach to firm
valuation.
Minicase: Cost of Capital for Hubbard Covers pure play approach to cost of capital
Computer, Inc. estimation.
CHAPTER 15 Dutch auction IPOs. Explains uniform price auctions using recent
Google IPO as an example.
Raising Capital
IPO “quiet periods.” Explains the SEC’s quiet period rules.
Rights vs. warrants. Clarifies the optionlike nature of rights prior to
their expiration dates.
IPO valuation. Extensive, up-to-date discussion of IPOs,
including the 1999–2000 period.
Minicase: S&S Air Goes Public. Covers the key parts of the IPO process for a
small firm.
CHAPTER 16 Basics of financial leverage. Illustrates effect of leverage on risk and return.
Financial Leverage and Capital Optimal capital structure. Describes the basic trade-offs leading to an
Structure Policy optimal capital structure.
Financial distress and bankruptcy. Briefly surveys the bankruptcy process.
Minicase: Stephenson Real Estate Discusses optimal capital structure for a medium-
Recapitalization. sized firm.
CHAPTER 17 Very recent survey evidence on New survey results show the most important (and
dividend policy. least important) factors considered by financial
Dividends and Payout Policy
managers in setting dividend policy.
Effect of new tax laws. Discusses implications of new, lower dividend
and capital gains rates.
Dividends and dividend policy. Describes dividend payments and the factors
favoring higher and lower payout policies.
Optimal payout policy. Extensive discussion of the latest research and
survey evidence on dividend policy, including
life-cycle theory.
Stock repurchases. Thorough coverage of buybacks as an alternative
to cash dividends.
Minicase: Electronic Timing, Inc. Describes the dividend/share repurchase issue
for a small company.
COVERAGE xiii

PART 7 Short-Term Financial Planning and Management
CHAPTER 18 Operating and cash cycles. Stresses the importance of cash flow timing.
Short-Term Finance Short-term financial planning. Illustrates creation of cash budgets and potential
and Planning need for financing.
Purchase order financing. Brief discussion of PO financing, which is popular
with small and medium-sized firms.
Minicase: Piepkorn Manufacturing Illustrates the construction of a cash budget and
Working Capital Management. short-term financial plan for a small company.
CHAPTER 19 Float management. Thorough coverage of float management and

potential ethical issues.
Cash and Liquidity
Management Cash collection and disbursement. Examination of systems used by firms to handle
cash inflows and outflows.
Minicase: Cash Management at Webb Evaluates alternative cash concentration systems
Corporation. for a small firm.
CHAPTER 20 Credit management Analysis of credit policy and implementation.

Credit and Inventory Inventory management Brief overview of important inventory concepts.
Management Minicase: Credit Policy at Howlett Evaluates working capital issues for a small
Industries. firm.
PART 8 Topics in Corporate Finance

CHAPTER 21 Foreign exchange. Covers essentials of exchange rates and their
determination.
International Corporate Finance
International capital budgeting. Shows how to adapt basic DCF approach
to handle exchange rates.
Exchange rate and political risk. Discusses hedging and issues surrounding
sovereign risk.
Minicase: S&S Air Goes International. Discusses factors in an international expansion
for a small firm.
CHAPTER 22 Behavioral finance. Unique and innovative coverage of the effects of

biases and heuristics on financial management
Behavioral Finance:
decisions. “In Their Own Words” box by Hersh
Implications for Financial
Shefrin.
Management
Case against efficient markets. Presents the behavioral case for market
inefficiency and related evidence pro and con.
CHAPTER 23 Volatility and risk. Illustrates need to manage risk and some of the
most important types of risk.
Enterprise Risk Management
Hedging with forwards, options, and Shows how many risks can be managed with
swaps. financial derivatives.
Minicase: Chatman Mortgage, Inc. Analyzes hedging of interest rate risk.
xiv COVERAGE

CHAPTER 24 Stock options, employee stock options, Discusses the basics of these important option
and real options. types.
Options and Corporate Finance
Option-embedded securities. Describes the different types of option found in
corporate securities.
Minicase: S&S Air’s Convertible Bond. Examines security issuance issues for a
small firm.
CHAPTER 25 Put–call parity and Black–Scholes. Develops modern option valuation and factors
influencing option values.
Option Valuation
Options and corporate finance. Applies option valuation to a variety of corporate
issues, including mergers and capital budgeting.
Minicase: Exotic Cuisines Employee Illustrates complexities that arise in valuing
Stock Options. employee stock options.
CHAPTER 26 Alternatives to mergers and Covers strategic alliances and joint ventures and
acquisitions. why they are important alternatives.
Mergers and Acquisitions
Defensive tactics. Expanded discussion of antitakeover provisions.
Divestitures and restructurings. Important actions such as equity carve-outs,
spins-offs, and split-ups are examined.
Mergers and acquisitions. Develops essentials of M&A analysis, including
financial, tax, and accounting issues.
Minicase: The Birdie Golf–Hybrid Golf Covers small business valuation for acquisition
Merger. purposes.
CHAPTER 27 Synthetic leases. Discusses controversial practice of custom-

tailored, “off-balance-sheet” financing.
Leasing
Leases and lease valuation. Essentials of leasing, good and bad reasons for
leasing, and NPV of leasing are examined.
Minicase: The Decision to Lease or Covers lease-or-buy and related issues for a
Buy at Warf Computers. small business.
In-Text Study Features
To meet the varied needs of its intended audience, Fundamentals of Corporate Finance is rich in valu-
able learning tools and support.
CHAPTER-OPENING VIGNETTES
Vignettes drawn from real-world events introduce students to the chapter concepts.
CHAPTER LEARNING OBJECTIVES

C
12
PART 5 Risk and Return T
This feature maps out the topics and learning
goals in every chapter. Each end-of-chapter
g
problem and test bank question is linked to a
p
Some Lessons from learning objective, to help you organize your
le
Capital Market History assessment of knowledge and comprehension.

a
WITH THE S&P 500 UP about 32 percent and the NASDAQ index up about 38 percent in 2013, stock
market performance overall was well above average for the year. However, investors in Fannie Mae had to be
thrilled with the 1,333 percent gain in that stock, and investors in Freddie Mac had to feel pleased with its 963
percent gain. Of course, not all stocks increased during the year. Stock in communications services company NII
Holdings fell 63 percent during the year, and stock in retailer JC Penney fell 54 percent. These examples show that
there were tremendous potential profits to be made during 2013, but there was also the risk of losing money—
lots of it. So what should you, as a stock market investor, expect when you invest your own money? In this chapter,
we study almost nine decades of market history to find out.
Learning Objectives
After studying this chapter, you should understand:

LO1 How to calculate the LO3 The historical risks on
For updates
on the latest return on an investment. various important types of
happenings in
finance, visit LO2 The historical returns on investments.
www.fundamentals
ofcorporate
various important types of LO4 The implications of
finance.blogspot investments. market efficiency.
.com.
PEDAGOGICAL USE OF COLOR FIGURE 9.3

This learning tool continues to be an important Future Value of Project
Cash Flows 700
feature of Fundamentals of Corporate Finance. $642
In almost every chapter, color plays an 600
$541
extensive, nonschematic, and largely self-
Future value ($)
500
evident role. A guide to the functional use of FV of initial investment $481
400
color is on the endsheets of the text.
300
FV of projected cash flow
200
100
0 1 2 3 4 5
Year
Future Value at 12.5%

$100 Annuity $300 Lump Sum
Year (Projected Cash Flow) (Projected Investment)
0 $ 0 $300
1 100 338
2 213 380
3 339 427
4 481 481
5 642 541
xv
xvi IN-TEXT STUDY FEATURES
IN THEIR OWN
IN THEIR OWN WORDS …
WORDS BOXES Robert C. Higgins on Sustainable Growth
This series of boxes are the
popular articles updated from Most financial officers know intuitively that it takes money to make money. Rapid sales growth requires
increased assets in the form of accounts receivable, inventory, and fixed plant, which, in turn, require money to pay
previous editions written by for assets. They also know that if their company does not have the money when needed, it can literally “grow broke.”
a distinguished scholar or The sustainable growth equation states these intuitive truths explicitly.
Sustainable growth is often used by bankers and other external analysts to assess a company’s credit-worthiness.
practitioner on key topics They are aided in this exercise by several sophisticated computer software packages that provide detailed analyses
in the text. Boxes include of the company’s past financial performance, including its annual sustainable growth rate.
Bankers use this information in several ways. Quick comparison of a company’s actual growth rate to its sustainable
essays by Merton Miller on rate tells the banker what issues will be at the top of management’s financial agenda. If actual growth consistently
capital structure, Fischer exceeds sustainable growth, management’s problem will be where to get the cash to finance growth. The banker thus
can anticipate interest in loan products. Conversely, if sustainable growth consistently exceeds actual, the banker had
Black on dividends, and best be prepared to talk about investment products, because management’s problem will be what to do with all the
cash that keeps piling up in the till.
Roger Ibbotson on capital Bankers also find the sustainable growth equation useful for explaining to financially inexperienced small business
market history. A complete owners and overly optimistic entrepreneurs that, for the long-run viability of their business, it is necessary to keep
growth and profitability in proper balance.
list of “In Their Own Words” Finally, comparison of actual to sustainable growth rates helps a banker understand why a loan applicant needs
boxes appears on page xlv. money and for how long the need might continue. In one instance, a loan applicant requested $100,000 to pay off
several insistent suppliers and promised to repay in a few months when he collected some accounts receivable that
were coming due. A sustainable growth analysis revealed that the firm had been growing at four to six times its
sustainable growth rate and that this pattern was likely to continue in the foreseeable future. This alerted the banker to
the fact that impatient suppliers were only a symptom of the much more fundamental disease of overly rapid growth,
and that a $100,000 loan would likely prove to be only the down payment on a much larger, multiyear commitment.
Robert C. Higgins is the Marguerite Reimers Professor of Finance, Emeritus, at the Foster School of Business at the University of Washington.
He pioneered the use of sustainable growth as a tool for financial analysis.
A NOTE ABOUT SUSTAINABLE GROWTH RATE CALCULATIONS

Very commonly, the sustainable growth rate is calculated using just the numerator in our
expression, ROE 3 b. This causes some confusion, which we can clear up here. The issue
has to do with how ROE is computed. Recall that ROE is calculated as net income divided
by total equity. If total equity is taken from an ending balance sheet (as we have done con-
sistently, and is commonly done in practice), then our formula is the right one. However, if
total equity is from the beginning of the period, then the simpler formula is the correct one.
I i i l ’ll l h i bl h dl f hi h
WORK THE WEB WORK THE

As we discussed in this chapter, ratios are an important tool for examining a company’s performance.
Gathering the necessary financial statements to calculate ratios can be tedious and time-consuming.
WEB BOXES
Fortunately many sites on the Web provide this information for free. One of the best is www.reuters These boxes show students
.com. We went there, entered the ticker symbol “HD” (for Home Depot), and then went to the ratio
page. Here is an abbreviated look at the results: how to research financial
issues using the Web
and then how to use the
information they find to
make business decisions.
Work the Web boxes also
include interactive follow-up
questions and exercises.
The website reports the company, industry, and sector ratios. As you can see, Home Depot has
higher quick and current ratios than the industry.
Questions
1. Go to www.reuters.com and find the major ratio categories listed on this website. How do the categories
differ from the categories listed in this textbook?
2. Go to www.reuters.com and find all the ratios for Home Depot. How does the company compare to the
industry for the ratios presented on this website?
IN-TEXT STUDY FEATURES xvii
REAL-WORLD EXAMPLES
Actual events are integrated throughout the text, tying chapter concepts to real life through illustration and
reinforcing the relevance of the material. Some examples tie into the chapter-opening vignette for added
reinforcement.
SPREADSHEET STRATEGIES SPREADSHEET

How to Calculate Present Values with Multiple STRATEGIES
Future Cash Flows Using a Spreadsheet
Just as we did in our previous chapter, we can set up a basic spreadsheet to calculate the present values of T
This feature introduces
the individual cash flows as follows. Notice that we have simply calculated the present values one at a time students to Excel and
and added them up:
shows them how to set up
spreadsheets in order to
analyze common financial
problems—a vital part of
every business student’s
education.
CALCULATOR HINTS
Brief calculator tutorials appear in selected chapters to help
students learn or brush up on their financial calculator skills.
These complement the Spreadsheet Strategies.
CALCULATOR HINTS
How to Calculate Present Values with Multiple Future
Cash Flows Using a Financial Calculator
To calculate the present value of multiple cash flows with a financial calculator, we will simply discount the
individual cash flows one at a time using the same technique we used in our previous chapter, so this is not
really new. However, we can show you a shortcut. We will use the numbers in Example 6.3 to illustrate.
To begin, of course we first remember to clear out the calculator! Next, from Example 6.3, the first cash
flow is $200 to be received in one year and the discount rate is 12 percent, so we do the following:
Enter 1 12 200
N I/Y PMT PV FV
Solve for 2178.57
Now, you can write down this answer to save it, but that’s inefficient. All calculators have a memory where
you can store numbers. Why not just save it there? Doing so cuts way down on mistakes because you don’t
have to write down andyor rekey numbers, and it’s much faster.
Next we value the second cash flow. We need to change N to 2 and FV to 400. As long as we haven’t
changed anything else, we don’t have to reenter IyY or clear out the calculator, so we have:
Enter 2 400
N I/Y PMT PV FV
Solve for 2318.88
xviii IN-TEXT STUDY FEATURES
CONCEPT BUILDING
Chapter sections are intentionally kept short to promote a step-by-step, building block approach to learning. Each section is then
followed by a series of short concept questions that highlight the key ideas just presented. Students use these questions to make
sure they can identify and understand the most important concepts as they read.
Concept Questions
3.3a What are the five groups of ratios? Give two or three examples of each kind.
3.3b Given the total debt ratio, what other two ratios can be computed? Explain
how.
3.3c Turnover ratios all have one of two figures as the numerator. What are these
two figures? What do these ratios measure? How do you interpret the results?
3.3d Profitability ratios all have the same figure in the numerator. What is it? What do
these ratios measure? How do you interpret the results?
SUMMARY TABLES
These tables succinctly restate key principles, results, and equations. They appear whenever it is useful to emphasize and
summarize a group of related concepts. For an example, see Chapter 3, page 69.
PV for a perpetuity 5 C r [6.4] LABELED EXAMPLES

For example, an investment offers a perpetual cash flow of $500 every year. The return you Separate numbered and titled
require on such an investment is 8 percent. What is the value of this investment? The value examples are extensively
of this perpetuity is: integrated into the chapters.
Perpetuity PV 5 Cyr 5 $500y.08 5 $6,250 These examples provide detailed
For future reference, Table 6.2 contains a summary of the annuity and perpetuity basic applications and illustrations of
calculations we described. By now, you probably think that you’ll just use online calcula- the text material in a step-by-
tors to handle annuity problems. Before you do, see our nearby Work the Web box! step format. Each example is
completely self-contained so
students don’t have to search
Preferred Stock EXAMPLE 6.7 for additional information. Based
Preferred stock (or preference stock) is an important example of a perpetuity. When a
on our classroom testing, these
corporation sells preferred stock, the buyer is promised a fixed cash dividend every period examples are among the most
(usually every quarter) forever. This dividend must be paid before any dividend can be paid useful learning aids because
to regular stockholders—hence the term preferred. they provide both detail and
Suppose the Fellini Co. wants to sell preferred stock at $100 per share. A similar issue of
preferred stock already outstanding has a price of $40 per share and offers a dividend of $1 explanation.
every quarter. What dividend will Fellini have to offer if the preferred stock is going to sell?
IN-TEXT STUDY FEATURES xix
KEY TERMS
Key Terms are printed in bold type and defined within the text the first time they appear. They also
appear in the margins with definitions for easy location and identification by the student.
EXPLANATORY WEB LINKS

These Web links are provided in the margins of the text. They are specifically selected to accompany text
material and provide students and instructors with a quick way to check for additional information using
the Internet.
1. A petition is filed in a federal court. Corporations may file a voluntary petition, or

involuntary petitions may be filed against the corporation by several of its creditors.
2. A trustee-in-bankruptcy is elected by the creditors to take over the assets of the debtor
The SEC has a good overview corporation. The trustee will attempt to liquidate the assets.
of the bankruptcy process in its 3. When the assets are liquidated, after payment of the bankruptcy administration costs,
“Online Publications” section at
www.sec.gov.
the proceeds are distributed among the creditors.
4. If any proceeds remain, after expenses and payments to creditors, they are distributed
to the shareholders.
KEY EQUATIONS
Called out in the text, key equations are identified by an equation number. The list in Appendix B
shows the key equations by chapter, providing students with a convenient reference.
Based on our examples, we can now write the general expression for the value of a bond.
If a bond has (1) a face value of F paid at maturity, (2) a coupon of C paid per period, (3) t
periods to maturity, and (4) a yield of r per period, its value is:
Bond value 5 C 3 [1 2 1y(1 1 r)t ]yr 1 Fy(1 1 r)t [7.1]
Present value Present value
Bond value 5 of the coupons 1 of the face amount
HIGHLIGHTED CONCEPTS
Throughout the text, important ideas
Average Returns: The First Lesson 12.3
are pulled out and presented in a As you’ve probably begun to notice, the history of capital market returns is too complicated Excel Master It!
to be of much use in its undigested form. We need to begin summarizing all these numbers. Excel Master
highlighted box—signaling to students Accordingly, we discuss how to go about condensing the detailed data. We start out by coverage online
that this material is particularly relevant calculating average returns.
and critical for their understanding.
CALCULATING AVERAGE RETURNS
For examples, Chapter 10, page 313;
The obvious way to calculate the average returns on the different investments in Table 12.1
Chapter 13, page 434. is simply to add up the yearly returns and divide by 88. The result is the historical average
of the individual values.
EXCEL MASTER For example, if you add up the returns for the large-company stocks in Figure 12.5
for the 88 years, you will get about 10.61. The average annual return is thus 10.61y88 5
Icons in the margin identify concepts 12.1%. You interpret this 12.1 percent just like any other average. If you were to pick a year
and skills covered in our unique, RWJ- at random from the 88-year history and you had to guess what the return in that year was,
the best guess would be 12.1 percent.
created Excel Master program. For
more training in Excel functions for AVERAGE RETURNS: THE HISTORICAL RECORD
finance, and for more practice, log on Table 12.2 shows the average returns for the investments we have discussed. As shown, in a
typical year, the small-company stocks increased in value by 16.9 percent. Notice also how
to McGraw-Hill’s Connect Finance for much larger the stock returns are than the bond returns.
Fundamentals of Corporate Finance These averages are, of course, nominal because we haven’t worried about inflation.
to access the Excel Master files. This Notice that the average inflation rate was 3.0 percent per year over this 88-year span. The
pedagogically superior tool will help get nominal return on U.S. Treasury bills was 3.5 percent per year. The average real return on
Treasury bills was thus approximately .5 percent per year; so the real return on T-bills has
your students the practice they need to been quite low historically.
succeed—and to exceed expectations. At the other extreme, small stocks had an average real return of about 16.9% 2 3.0% 5
13.9%, which is relatively large. If you remember the Rule of 72 (Chapter 5), then you
k h i kb k f h l l l i ll h 13 9 l h
xx IN-TEXT STUDY FEATURES
CHAPTER SUMMARY AND CONCLUSIONS

Every chapter ends with a concise, but thorough, summary of the important ideas—helping
students review the key points and providing closure to the chapter.
CHAPTER REVIEW AND SELF-TEST PROBLEM CHAPTER REVIEW

2.1 Cash Flow for Mara Corporation This problem will give you some practice work- AND SELF-TEST
ing with financial statements and figuring cash flow. Based on the following informa-
tion for Mara Corporation, prepare an income statement for 2015 and balance sheets
PROBLEMS
for 2014 and 2015. Next, following our U.S. Corporation examples in the chapter, Appearing after
calculate cash flow from assets, cash flow to creditors, and cash flow to stockholders the Summary and
for Mara for 2015. Use a 35 percent tax rate throughout. You can check your answers
Conclusions, each chapter
against ours, found in the following section.
includes a Chapter
2014 2015 Review and Self-Test
Sales $4,203 $4,507 Problem section. These
Cost of goods sold 2,422 2,633 questions and answers
Depreciation 785 952
allow students to test
Interest 180 196
Dividends 225 250
their abilities in solving
Current assets 2,205 2,429 key problems related
Net fixed assets 7,344 7,650 to the chapter content
Current liabilities 1,003 1,255 and provide instant
Long-term debt 3,106 2,085
reinforcement.
CONCEPTS CONCEPTS REVIEW AND CRITICAL THINKING QUESTIONS

REVIEW AND 1. Liquidity [LO1] What does liquidity measure? Explain the trade-off a firm faces
between high liquidity and low liquidity levels.
CRITICAL
2. Accounting and Cash Flows [LO2] Why might the revenue and cost figures shown
THINKING on a standard income statement not be representative of the actual cash inflows and
outflows that occurred during a period?
QUESTIONS 3. Book Values versus Market Values [LO1] In preparing a balance sheet, why do
This successful end-of- you think standard accounting practice focuses on historical cost rather than market
chapter section facilitates value?
your students’ knowledge 4. Operating Cash Flow [LO2] In comparing accounting net income and operating
of key principles, as well cash flow, name two items you typically find in net income that are not in operating
cash flow. Explain what each is and why it is excluded in operating cash flow.
as intuitive understanding
5. Book Values versus Market Values [LO1] Under standard accounting rules, it is
of the chapter concepts. possible for a company’s liabilities to exceed its assets. When this occurs, the own-
A number of the questions ers’ equity is negative. Can this happen with market values? Why or why not?
relate to the chapter- 6. Cash Flow from Assets [LO4] Suppose a company’s cash flow from assets is neg-
opening vignette— ative for a particular period. Is this necessarily a good sign or a bad sign?
reinforcing student 7. Operating Cash Flow [LO4] Suppose a company’s operating cash flow has been
critical thinking skills and negative for several years running. Is this necessarily a good sign or a bad sign?
the learning of chapter 8. Net Working Capital and Capital Spending [LO4] Could a company’s change in
NWC be negative in a given year? (Hint: Yes.) Explain how this might come about.
material.
What about net capital spending?
9. Cash Flow to Stockholders and Creditors [LO4] Could a company’s cash flow to
stockholders be negative in a given year? (Hint: Yes.) Explain how this might come
about. What about cash flow to creditors?
10. Firm Values [LO1] Referring back to the Microsoft example used at the beginning
of the chapter, note that we suggested that Microsoft’s stockholders probably didn’t
suffer as a result of the reported loss. What do you think was the basis for our
conclusion?
11 E i V l [LO1] A fi ’ l i l h k l f
IN-TEXT STUDY FEATURES xxi
END-OF-CHAPTER QUESTIONS AND PROBLEMS

Students learn better when they have plenty of opportunity to practice; therefore, FCF, 11e, provides extensive end-of-chapter
questions and problems. The end-of-chapter support greatly exceeds typical introductory textbooks. The questions and problems
are separated into three learning levels: Basic, Intermediate, and Challenge. Answers to selected end-of-chapter material appear
in Appendix C. Also, most problems are available in McGraw-Hill’s Connect—see page xxiv for details.
p
QUESTIONS AND PROBLEMS

1. Building a Balance Sheet [LO1] KCCO, Inc., has current assets of $5,300, net BASIC
fixed assets of $24,900, current liabilities of $4,600, and long-term debt of $10,300. (Questions 1–12)
What is the value of the shareholders’ equity account for this firm? How much is net
working capital?
2. Building an Income Statement [LO1] Billy’s Exterminators, Inc., has sales of
$817,000, costs of $343,000, depreciation expense of $51,000, interest expense of
$38,000, and a tax rate of 35 percent. What is the net income for this firm?
3. Dividends and Retained Earnings [LO1] Suppose the firm in Problem 2 paid out
$95,000 in cash dividends. What is the addition to retained earnings?
4. Per-Share Earnings and Dividends [LO1] Suppose the firm in Problem 3 had
90,000 shares of common stock outstanding. What is the earnings per share, or EPS,
figure? What is the dividends per share figure?
5. Calculating Taxes [LO3] The Dyrdek Co. had $267,000 in 2014 taxable income.
Using the rates from Table 2.3 in the chapter, calculate the company’s 2014 income
taxes.
END-OF-CHAPTER CASES
Located at the end of the book’s chapters, these minicases focus on real-life company situations that embody important
corporate finance topics. Each case presents a new scenario, data, and a dilemma. Several questions at the end of each case
require students to analyze and focus on all of the material they learned from each chapter.
MINICASE
Bullock Gold Mining

Seth Bullock, the owner of Bullock Gold Mining, is evaluat- Year Cash Flow
ing a new gold mine in South Dakota. Dan Dority, the compa-
0 2$525,000,000
ny’s geologist, has just finished his analysis of the mine site.
1 74,000,000
He has estimated that the mine would be productive for eight
years, after which the gold would be completely mined. Dan 2 97,000,000
has taken an estimate of the gold deposits to Alma Garrett, 3 125,000,000
the company’s financial officer. Alma has been asked by Seth 4 157,000,000
to perform an analysis of the new mine and present her rec- 5 185,000,000
ommendation on whether the company should open the new 6 145,000,000
mine. 7 125,000,000
Alma has used the estimates provided by Dan to determine 8 102,000,000
the revenues that could be expected from the mine. She has 9 235,000,000
also projected the expense of opening the mine and the annual
operating expenses. If the company opens the mine, it will
QUESTIONS
cost $525 million today, and it will have a cash outflow of $35
million nine years from today in costs associated with closing 1. Construct a spreadsheet to calculate the payback period,
the mine and reclaiming the area surrounding it. The expected internal rate of return, modified internal rate of return,
cash flows each year from the mine are shown in the table. and net present value of the proposed mine.
Bullock Mining has a required return of 12 percent on all of 2. Based on your analysis, should the company open the mine?
its gold mines. 3. Bonus question: Most spreadsheets do not have a built-in
formula to calculate the payback period. Write a VBA
script that calculates the payback period for a project.
WEB
WE B EX
EXER
EXERCISES
ERCI
CISE
SESS (O
(ONLINE
(ONL
NLIN
INEE ON
ONLY
ONLY)
LY))
For instructors interested in integrating even more online resources and problems into their course, these Web activities show
students how to learn from the vast amount of financial resources available on the Internet. In the 11th edition of Fundamentals,
these Web exercises are available to students and instructors through Connect.
Comprehensive Teaching
and Learning Package
This edition of Fundamentals has several options in terms of the textbook, instructor supplements,
student supplements, and multimedia products. Mix and match to create a package that is perfect for
your course!
TEXTBOOK
Customize your version of Fundamentals 11e through McGraw-Hill’s Create platform. Teach the
chapters you want in the order you want—your rep can show you how!
INSTRUCTOR RESOURCES
Keep all the supplements in one place! Your Connect Library contains all the necessary supplements—
Instructor’s Manual, Solutions, Test Bank, Computerized Test Bank, and PowerPoint—all in one easy-
to-find, easy-to-use, integrated place: your Connect Finance course.
• Instructor’s Manual (IM)

Prepared by Denver Travis, Eastern Kentucky University
A great place to find new lecture ideas! The annotated outline for each chapter includes lecture
tips, real-world tips, ethics notes, suggested PowerPoint slides, and, when appropriate, a video
synopsis.
• Solutions Manual (SM)

Prepared by Brad Jordan, University of Kentucky, and Joseph Smolira, Belmont University
The Fundamentals Solutions Manual provides detailed solutions to the extensive end-of-chapter
material, including concept review questions, quantitative problems, and cases.
• Test Bank
Prepared by Kay Johnson
Over 100 questions and problems per chapter ! Each chapter includes questions that test the
understanding of key terms in the book; questions patterned after learning objectives, concept
questions, chapter opening vignettes, boxes, and highlighted phrases; multiple-choice problems
patterned after end-of-chapter questions at a variety of skill levels; and essay questions to test
problem-solving skills and more advanced understanding of concepts.
• Computerized Test Bank (Windows)

Create your own tests in a snap! These additional questions are found in a computerized test bank
utilizing McGraw-Hill’s EZ Test testing software to quickly create customized exams. This user-
friendly program allows instructors to sort questions by format; edit existing questions or add new
ones; and scramble questions for multiple versions of the same test.
• PowerPoint Presentations
Prepared by Denver Travis, Eastern Kentucky University
The PowerPoint slides for the 11th edition have been revised to include a wealth of instructor
material, including lecture tips, real-world examples, and international notes. Each presentation
now also includes slides dedicated entirely to ethics notes that relate to the chapter topics. In
addition, the PPTs provide exhibits and examples both from the book and from outside sources.
xxii
COMPREHENSIVE TEACHING AND LEARNING PACKAGE xxiii
Applicable slides have Web links that take you directly to specific Internet sites, or a
spreadsheet link to show an example in Excel. Go to the Notes Page function for more
tips and information while presenting the slides to your class.
STUDENT RESOURCES
Student resources for this edition can be found through the Library tab in your Connect
Finance course. If you aren’t using Connect, visit us at http://connect.mheducation.com
to learn more, and ask your professor about using it in your course for access to a great
group of supplement resources!
• Excel Resources
For those seeking additional practice, students can access Excel template problems
and Excel Master, designed by Brad Jordan and Joe Smolira.
• Narrated PowerPoint Slides
The Narrated PowerPoints provide real-world examples accompanied by step-by-
step instructions and explanations for solving problems presented in the chapter. The
Concept Checks from the text are also integrated into the slides to reinforce the key
topics in the chapter. Designed specifically to appeal to the different learning methods
of students, the slides provide a visual and audio explanation of topics and problems.
Click on the slide and listen to the accompanying narration!
TEACHING SUPPORT
Along with having access to all of the student resource materials through the Connect
Library tab, you also have password-protected access to the Instructor’s Manual, solutions
to end-of-chapter problems and cases, Instructor’s PowerPoint, Excel Template Solutions,
video clips, and video projects and questions.
HOW THE MARKET WORKS

Students receive free access to this Web-based portfolio simulation with a hypothetical
brokerage account to buy and sell stocks and mutual funds. Students can use the real data
found at this site in conjunction with the chapters on investments. They can also compete
against students in their class, and around the United States to run the most successful
portfolio. This site is powered by Stock-Trak, the leading provider of investment simulation
services to the academic community.
AVAILABLE FOR PURCHASE & PACKAGING

FinGame Online 5.0
By LeRoy Brooks, John Carroll University
(ISBN 10: 0077219880/ISBN 13: 9780077219888)
Just $15.00 when packaged with this text. In this comprehensive simulation game, stu-
dents control a hypothetical company over numerous periods of operation. The game
is now tied to the text by exercises found on the Connect Student Library. As stu-
dents make major financial and operating decisions for their company, they will develop
and enhance their skills in financial management and financial accounting statement
analysis.
xxiv COMPREHENSIVE TEACHING AND LEARNING PACKAGE
FINANCIAL ANALYSIS WITH AN ELECTRONIC

CALCULATOR, SIXTH EDITION
by Mark A. White, University of Virginia, McIntire School of Commerce
(ISBN 10: 0073217093/ISBN 13: 9780073217093)
The information and procedures in this supplementary text enable students to master the
use of financial calculators and develop a working knowledge of financial mathematics and
problem solving. Complete instructions are included for solving all major problem types
on four popular models: HP 10B and 12C, TI BA II Plus, and TI-84. Hands-on problems
with detailed solutions allow students to practice the skills outlined in the text and obtain
instant reinforcement. Financial Analysis with an Electronic Calculator is a self-contained
supplement to the introductory financial management course.
MCGRAW-HILL’S CONNECT FINANCE

LESS MANAGING. MORE TEACHING. GREATER LEARNING.
McGraw-Hill’s Connect Finance is an online assignment and as-
sessment solution that connects students with the tools and re-
sources they’ll need to achieve success.
McGraw-Hill’s Connect Finance helps prepare students for their future by enabling
faster learning, more efficient studying, and higher retention of knowledge.
MCGRAW-HILL’S CONNECT FINANCE FEATURES

Connect Finance offers a number of powerful tools and features to make managing
assignments easier, so faculty can spend more time teaching. With Connect Finance,
students can engage with their coursework anytime and anywhere, making the learning
process more accessible and efficient. Connect Finance offers you the features
described below.
Simple Assignment Management

With Connect Finance, creating assignments is easier than ever, so you can spend more
time teaching and less time managing. The assignment management function enables
you to:
• Create and deliver assignments easily with selectable end-of-chapter questions and
test bank items.
• Streamline lesson planning, student progress reporting, and assignment grading to
make classroom management more efficient than ever.
• Go paperless with the eBook and online submission and grading of student assignments.
Smart Grading
When it comes to studying, time is precious. Connect Finance helps students learn more
efficiently by providing feedback and practice material when they need it, where they need
it. When it comes to teaching, your time also is precious. The grading function enables
you to:
• Have assignments scored automatically, giving students immediate feedback on their
work and side-by-side comparisons with correct answers.
• Access and review each response; manually change grades or leave comments for
students to review.
• Reinforce classroom concepts with practice tests and instant quizzes.
Another random document with
no related content on Scribd:
Chapter VI.
NO JUST ANALOGY IN THE PRECEDENTS

ADDUCED BY GOVERNMENT.
A thousand precedents would never justify a bad measure—it may

therefore be deemed superfluous to offer a remark on this head; but
as Mr. Canning has argued, that whatever is adopted in one colony
can safely be introduced into all the rest, and as this maxim has
been taken for granted by many persons willing to save themselves
the trouble of thinking, it is necessary to enter into some explanation.
Section 1.
TRINIDAD.
When the order in council for negro treatment was sent out to
Trinidad, great objections were offered, both generally, and to the
individual clauses which constitute compulsory manumission.
It is not necessary here to inquire how often that order has been
altered, or the reasons why the colonists of Trinidad have been
constrained to submit to the authority imposed upon them. We have
only to show that the case of that island differs from that of the other
British colonies.
Trinidad was originally a Spanish colony; its laws were framed
previously to the abolition of the slave-trade, and have continued
unaltered since the cession of the island to Great Britain.
Now it is apparent that, when fresh slaves can be procured,
compulsory manumission is not so objectionable; because the place
of those who purchase their freedom can be immediately filled up by
others.
It has consequently been considered that, while the slave-trade
was in active operation in the Spanish colonies, the practice of
manumission was encouraged, as increasing the means of
preventing insurrection.
But it is surely unfair to hold up to the imitation of another colony
the enactments and usages introduced by one whose laws were
adapted to a state of things so different; and to require that the
provisions of a code adapted to the existence of the slave-trade,
should be engrafted upon other codes framed since its abolition.
The order in council for Trinidad has not affected the principle of
the Spanish law, or rather the practice in the Spanish colonies, which
allows a slave to enfranchise himself by purchase. But the British law
in our settlements gives no such right whatever to a slave.
According to those codes, the interest of an owner in his slave is
that of a fee-simple absolute: he purchased upon that tenure, he has
continued to hold upon the same, and cannot be deprived of that
legal title without a direct violation of property.
In Trinidad it is otherwise: a person purchasing a slave in that
colony, knows beforehand that he acquires only a precarious title in
such a slave, which depends on the ability of the slave to purchase
himself.
Nor has sufficient time yet elapsed to make known the great
difference in the working of the measure that must take place now
that the slave-trade has ceased, contrasted with the period when it
was in active prosecution.
It ought also to be stated, that the hardship and evils of the law in
Trinidad, even subsequent to the abolition of the slave-trade, had not
been so much felt, from the nature of its laws not being generally
known in this country: consequently, there was no extraneous
excitement upon the subject given to the minds of the negroes.
But now, when this excitement has been given, the brief
experience already afforded, tends strongly to corroborate the
arguments we have advanced; and it is credibly asserted, that the
Secretary for the Colonies has received representations and
appeals, proving evils to have proceeded from the operation of this
law.
Among these evils, theft is shown to have increased; and the
proceedings before the local magistrates are said to evince a
progressive demoralization amongst the negroes.
It is further known, that instances have occurred where the sum
assessed by the appraisers, as the price of manumission, has been
higher than the negro was able, or considered himself entitled, to
pay; and the being sent back under these circumstances has visibly
produced in him a sullenness and discontent exactly as has been
described, and in all probability as injurious to the interests of his
master, as if he had obtained his discharge at his own valuation.
From these circumstances, it is apparent that there is no analogy
between the case of Trinidad and that of the other British Colonies,
and that thus far no proper precedent is established.
Section 2.
ST. LUCIE.
In regard to this colony, the measure has been but recently

introduced, and without the spontaneous concurrence of its
inhabitants. It was established there by the force of arbitrary
authority. There was no adequate court or power, similar in
constitution and functions to the Assemblies in the other islands, to
resist its promulgation; and the threat conveyed in the despatch of
Earl Bathurst to the Governor, thus amounted to an imperative
mandate for the adoption of the measure as law in the colony.
Is this a precedent?
Section 3.
BERBICE.
The case of Berbice is still more flagrant. This colony possessed, a
short time back, a council composed of persons having property at
stake. Before the enactments relating to the slaves in that colony
were brought forward, this council was dismissed, and another
arbitrarily appointed, consisting of persons having no interest in the
cultivation of the colony.
It was previously declared, that the new laws relating to the slaves,
in whatever way they might be finally settled, should not be carried
into operation at Berbice, unless the same measures were at the
same time adopted in Demerara. In the latter colony, all the
measures relating to amelioration were received, and compulsory
manumission alone rejected; but in Berbice, the new council, so
appointed and so composed, passed the latter measure contrary to
the wish of every proprietor in the colony.
It ought moreover to be stated that, before the new laws were
promulgated in Demerara, they were sent home to Lord Bathurst for
confirmation, upon which his Lordship observes,—“The King has
been graciously pleased to approve the decision that you adopted, of
referring the draft of the Act to his Majesty, for his consideration,
instead of immediately promulgating it as a law in the colony.”
But how does the new Council of Berbice act? The most important
of all the new measures they carry at once into effect; that is to say,
they allow no opportunity for parties in England to carry
remonstrance or explanation to the foot of the throne.
Again, let us ask, is this a precedent? What is the meaning of the
term? does it not warrant the inference, in this case, that some
assembly, composed of parties interested, have given their
concurrence? But how marked is the difference between a council
composed of persons possessing little or no property in slaves, and
a court where several of the members hold large plantations, and are
deeply interested in the permanent prosperity of their colony.
The possession of this large stake by the members, and the
circumstance of having delegated interests to represent, peculiarly
conduce to safe and practicable legislation. Such circumstances
present a security against precipitancy,—prompt to a careful and
minute consideration of all local peculiarities,—and procure for every
public measure a full and patient examination of all its relations, both
direct and contingent, before it is permitted to be put in execution.
And further, in respect to any one of these West India cases, has
there elapsed a time sufficient to enable us to estimate the policy of
the experiment, and still less to pronounce upon its fitness for the
whole of our West Indian possessions?
Section 4.
CAPE OF GOOD HOPE.
How this colony should be referred to as a precedent it is difficult to

explain. Its climate differs materially from that of the West Indies. In
the latter, the evils apprehended from giving freedom to the slaves
arise from the impossibility of procuring free labourers to supply their
place. It is but a very short time since emigration from this country to
the Cape of Good Hope was greatly encouraged; and it is
ascertained, by experience, that Europeans can work without injury
or inconvenience in that climate.
Thus the supply of voluntary labourers not only existing, but
increasing in that colony, the inducements to perpetuate slavery
must progressively expire, and slaves may consequently be freed
without injury to the property of their owners, or danger to the public
safety.
From this obvious difference in physical circumstances between
the West India colonies and the Cape of Good Hope, there is no just
analogy between the two; and though compulsory manumission may
be enacted in the one, it cannot, therefore, be taken as a model for
imitation to the other.
This straining after inapplicable precedent clearly indicates
deficiency of argument.
No enactment containing inherently a principle of evil, even though
acceded to willingly, or acquiesced in passively, by individual bodies,
should ever be set up by a wise government as an example for
general adoption.
It has been more than once remarked in Parliament, by persons of

high character, that the precedent generally existing throughout the
Spanish colonies served as a sufficient ground for the measure.
But there are two points which should never be omitted in
reflecting on the question:
I. As to the opportunity of procuring other labourers.
II. The difference of amount sunk in fixed capital, between the
Spanish colonies and those of Great Britain.
In regard to the first, fresh labourers can be procured in the
Spanish colonies, but cannot in the British; and in regard to the
second, there must surely be some difference in the working of a
measure when the amount of capital to be withdrawn varies in the
proportion of 20,000l. in the one case, to a few hundreds in the other.
Chapter VII.
RESPONSIBILITY ATTACHING TO MINISTERS

IF THEY ENFORCE COMPULSORY
MANUMISSION.
Whoever notices the levity of manner with which this question is

treated, would imagine that our constitution had undergone a
change, and that His Majesty’s advisers were relieved from
responsibility for the acts of the executive. On any occasion it is a
rash step to counsel the crown to important measures before a full
investigation has been instituted. But when a step is taken so
contrary to the laws of the realm, as, by eminent law-authorities,
Compulsory Manumission, in regard to mortgaged property, is
conceived to be, responsibility ceases to be an idle term, and
circumstances may arise from it to disturb the peace of a minister of
state much longer than he anticipates.
It can never be too often repeated that, so far as legislation for the
negroes is concerned, what is once done is irrevocable. In other
public measures, an opportunity is afforded to a minister, when he
makes a false step, to change his policy by a dexterous manœuvre.
But no such resource being afforded in the West India Question, we
should conclude that more cautious deliberation would in the first
instance be exercised, and that a full examination would take place
before excitement was created by announcing even the heads of a
new measure. The proceedings hitherto have been on a principle
directly opposite. While the Irish Question remains undecided,
though more than a generation has passed by since it commenced;
and while the Corn Question has stood over until argument on the
subject is exhausted: In the West India Question—where, wrong
measures being once taken, all remedy is hopeless—the parties
whose whole property is at stake cannot be allowed more than the
lapse of a few weeks, to put on record all their objections to the most
essential innovations.
This presents an anomaly in the history of public measures, and it
can only be accounted for by supposing that ministers, amid their
many duties, have completely undervalued the importance of the
measure now pending. This conclusion is confirmed by what is
understood to be their language to independent members of the
legislature whose suffrage they solicit in future discussion. They say
the principal opposition of the West Indians is no more than idle and
transient clamour. It is merely of a piece with what has been always
witnessed. When the abolition of the slave-trade was under
discussion, did we not hear the cry, that our ancient colonies would
be ruined? That great measure was carried, yet no ruin ensued.
When the Registry Bill was brought in, had we not a similar clamour,
that the most dangerous excitement among the slaves would be the
consequence? That point, too, was carried; yet no such direful evils
attended it. Again, when the recent Amelioration Clauses were
proposed, how furious was the opposition in the colonies,—the
proprietors there were to be utterly ruined. Many of these clauses
have since been enacted, even where opposition was strongest at
the first, and yet no injury or change has taken place! What is the
inference in regard to compulsory manumission? We have strenuous
opposition at present, it is true; but when the measure is once
carried, that will soon subside, and all the frightful features of danger
which have alarmed the colonists will turn out to be mere phantoms
of the imagination.
Now, in answer, may we not allege, in the first place, that the
objections urged against those former measures were not
groundless. Our abolition of the slave-trade, without securing the
effectual concurrence of foreign powers in a similar act, has
transferred from British to foreign colonies the principal supply of
Europe with sugar, and without the smallest benefit to Africa. The
Registry Bills are an enormous tax on our impoverished colonies,
and it is not to them we owe the extinction of our colonial slave-
trade. Of our recent Amelioration Clauses, the effect in diminishing
production is as yet more certain than that of increased benefit to the
negro-population.
In the second place, may we not pronounce that the case we are
now submitting is very different from any of those cited?
But in this age of superficiality, where all laborious investigation
seems exploded, and when a well-turned period of declamation in
Parliament sways the nation, let us take another mode of pointing
out the difference of this case.
In those important measures which were passed some time back,
the Government carried a great number of colonial proprietors living
in this country along with them. How different, then, on primâ facie
evidence, must be the nature and bearings of the measure now
proposed, when colonial proprietors, who have always acted with
ministers, are constrained, as a solemn duty in defence of their
properties and of their families, to oppose it strenuously! It is evident,
that to occasion such a feeling, there must be something in the
measure alarmingly important, and demanding the most cautious
scrutiny.
In former times, the letters sent out by colonial proprietors in
England to their friends in the colonies impressed upon the latter, to
do all that they were able, to silence clamour in England; but with
regard to compulsory manumission, the lesser evil is chosen, and
the admonition is, “Beware of passing this measure, and thus
committing yourselves by your own act. Throw all the responsibility
upon ministers, that you may hereafter have full claims for
indemnification.”
The question then resolves itself into this,—Are ministers,
considering the situation in which they are placed, and having a due
regard to their own fame, prepared to take this responsibility upon
themselves? Do they rely upon the passing opinions of the day for
their support? Lord Bathurst says, in his despatches, that the
colonial legislature “may be assured, that from the final
accomplishment of this object this country will not be diverted.”
Now it may be true that, with the unthinking populace, the
extinction of slavery is desired; but what practical statesman would
take this vague expression of feeling for his guide? It may safely be
affirmed, that the intelligent portion of the community are aware of
the difficulties, and expect from Government, not what is theoretically
to be desired, but what is practically and wisely attainable. They are
not prepared to lose our West India colonies, which are believed to
contribute largely to the prosperity and strength of the kingdom; nor
are they at all disposed to inflict injustice upon their fellow-subjects,
knowing well, that whatever odium may now attach to the colonial
proprietor, the charge of having countenanced slavery is one which
he shares with the whole British nation.
But it ought further to be known, and well reflected on by His
Majesty’s ministers, that humane and enlightened individuals, not
anxious for the political so much as the moral grandeur of the
country, who waive every notion of expediency, and consider the
cause of humanity as paramount, are beginning to entertain doubts
as to the wisdom of the proceedings of Government.
This is not vague opinion, but is founded on weighty reasons.
First: That it is the object of British humanity to exalt the entire
African race, and to accomplish it as a matter of genuine
philanthropy in the most general and efficient manner.
It appears by parliamentary documents, that as cultivation, during
some years past, has decreased in the British colonies, precisely in
the same degree has the slave-trade of foreigners increased.
To ruin or deteriorate the British colonies is thus to encourage the
horrors of the slave-trade, and to increase the sum of African
suffering.
Therefore, it being the object of the British nation to abridge that
suffering, and not to make a mere display of sensibility, if the
proposed measures can be proved to be destructive of cultivation in
the British colonies, their spirit must be pronounced to be contrary to
the sentiments of the country.
And, Secondly: That having long since committed the crime of
transporting the negroes to our West India colonies, it is expected by
the British nation, that the welfare of future generations will be
contemplated; and that, hereafter, a black society may be witnessed,
possessing in itself the attributes, moral, intellectual, and political, of
a civilized people.
So strongly does this sentiment pervade the nation, that it is
common to hear the inquiry—“What are the negroes to do when
free?” implying the belief that rash interference may have proceeded
far to accomplish the object, but that judicious legislation has
stopped short on the threshold.
If we were to make an appeal to Lord Bathurst, and to all who
have taken an active part in the promotion of compulsory
manumission, must they not acknowledge, that since the agitation of
the subject in 1823, a considerable and perceptible change has
taken place in public opinion, in consequence of the inquiry relative
to free labour; and that the idea of having a free negro-peasantry
labouring under a tropical climate for hire is impracticable and
hopeless.
Does not, then, the whole question depend on free labour?
We cannot but infer, that when the relations and consequences of
granting freedom to the negroes by compulsion are fully understood
in all their widely-spreading effects, the opinion of the country will be
as strongly expressed in reprobation, as Earl Bathurst pronounces it
at present to be in approbation of the speedy adoption of the
measure.
Without any disrespect it may be stated, that some of our
ministers, who are upborne by the current of public applause, have
had sufficient experience of the fickleness of popularity. Let us recall
to mind the wise precept of Mr. Canning in 1819—“Speak not the will
of the populace, but consult their benefit.”
We appeal to each member of parliament to further this counsel.
The question of negro-emancipation is virtually before them. It is
conceived, by all those whose properties are at stake, to be
presented in its most objectionable form, and they unanimously
oppose it. Before deciding on the subject, let every member reflect
on the sentiments of two of our greatest statesmen.
Mr. Pitt, in every discussion in which negro-emancipation was
agitated, pronounced, that it was an act which must “flow from the
master alone.”
When that presiding genius of the country’s commercial greatness
was no more—when Mr. Fox had coalesced with Lord Grenville,—
and above all, when the whole anti-colonial party, with Mr.
Wilberforce at its head, had joined his ranks, Mr. Fox, in the full tide
of his popularity and his power, declared—
“That the idea of an act of parliament to emancipate the slaves in
the West Indies, without the consent and concurrent feeling of all
parties concerned, both in this country and in that, would not
only be mischievous in its consequences, but totally extravagant in
its conception, as well as impracticable in its execution.”
THE END.
LONDON:
PRINTED BY W. CLOWES,
Stamford-street.
TRANSCRIBER’S NOTE
Obvious typographical and punctuation errors have been corrected after
careful comparison with other occurrences within the text and consultation of
external sources.
Some hyphens in words have been silently removed (e.g., “West India” and
“West Indian”) and added (e.g., “sugar-plantation” and “sugar-estate”), when a
predominant preference was found in the original book.
Except for those changes noted below, all misspellings and inconsistent or
archaic usage in the text have been retained.
Page 3: “particular acts ema nate” replaced by “particular acts emanate”
Page 63: “announce to theslaves” replaced by “announce to the slaves”
*** END OF THE PROJECT GUTENBERG EBOOK COMPULSORY
MANUMISSION ***
Updated editions will replace the previous one—the old editions will
be renamed.
Creating the works from print editions not protected by U.S.

copyright law means that no one owns a United States copyright in
these works, so the Foundation (and you!) can copy and distribute it
in the United States without permission and without paying copyright
royalties. Special rules, set forth in the General Terms of Use part of
this license, apply to copying and distributing Project Gutenberg™
electronic works to protect the PROJECT GUTENBERG™ concept
and trademark. Project Gutenberg is a registered trademark, and
may not be used if you charge for an eBook, except by following the
terms of the trademark license, including paying royalties for use of
the Project Gutenberg trademark. If you do not charge anything for
copies of this eBook, complying with the trademark license is very
easy. You may use this eBook for nearly any purpose such as
creation of derivative works, reports, performances and research.
Project Gutenberg eBooks may be modified and printed and given
away—you may do practically ANYTHING in the United States with
eBooks not protected by U.S. copyright law. Redistribution is subject
to the trademark license, especially commercial redistribution.
START: FULL LICENSE

THE FULL PROJECT GUTENBERG LICENSE
PLEASE READ THIS BEFORE YOU DISTRIBUTE OR USE THIS WORK
To protect the Project Gutenberg™ mission of promoting the free

distribution of electronic works, by using or distributing this work (or
any other work associated in any way with the phrase “Project
Gutenberg”), you agree to comply with all the terms of the Full
Project Gutenberg™ License available with this file or online at
www.gutenberg.org/license.
Section 1. General Terms of Use and

Redistributing Project Gutenberg™
electronic works
1.A. By reading or using any part of this Project Gutenberg™
electronic work, you indicate that you have read, understand, agree
to and accept all the terms of this license and intellectual property
(trademark/copyright) agreement. If you do not agree to abide by all
the terms of this agreement, you must cease using and return or
destroy all copies of Project Gutenberg™ electronic works in your
possession. If you paid a fee for obtaining a copy of or access to a
Project Gutenberg™ electronic work and you do not agree to be
bound by the terms of this agreement, you may obtain a refund from
the person or entity to whom you paid the fee as set forth in
paragraph 1.E.8.
1.B. “Project Gutenberg” is a registered trademark. It may only be

used on or associated in any way with an electronic work by people
who agree to be bound by the terms of this agreement. There are a
few things that you can do with most Project Gutenberg™ electronic
works even without complying with the full terms of this agreement.
See paragraph 1.C below. There are a lot of things you can do with
Project Gutenberg™ electronic works if you follow the terms of this
agreement and help preserve free future access to Project
Gutenberg™ electronic works. See paragraph 1.E below.
1.C. The Project Gutenberg Literary Archive Foundation (“the
Foundation” or PGLAF), owns a compilation copyright in the
collection of Project Gutenberg™ electronic works. Nearly all the
individual works in the collection are in the public domain in the
United States. If an individual work is unprotected by copyright law in
the United States and you are located in the United States, we do
not claim a right to prevent you from copying, distributing,
performing, displaying or creating derivative works based on the
work as long as all references to Project Gutenberg are removed. Of
course, we hope that you will support the Project Gutenberg™
mission of promoting free access to electronic works by freely
sharing Project Gutenberg™ works in compliance with the terms of
this agreement for keeping the Project Gutenberg™ name
associated with the work. You can easily comply with the terms of
this agreement by keeping this work in the same format with its
attached full Project Gutenberg™ License when you share it without
charge with others.
1.D. The copyright laws of the place where you are located also
govern what you can do with this work. Copyright laws in most
countries are in a constant state of change. If you are outside the
United States, check the laws of your country in addition to the terms
of this agreement before downloading, copying, displaying,
performing, distributing or creating derivative works based on this
work or any other Project Gutenberg™ work. The Foundation makes
no representations concerning the copyright status of any work in
any country other than the United States.
1.E. Unless you have removed all references to Project Gutenberg:
1.E.1. The following sentence, with active links to, or other

immediate access to, the full Project Gutenberg™ License must
appear prominently whenever any copy of a Project Gutenberg™
work (any work on which the phrase “Project Gutenberg” appears, or
with which the phrase “Project Gutenberg” is associated) is
accessed, displayed, performed, viewed, copied or distributed:
This eBook is for the use of anyone anywhere in the United
States and most other parts of the world at no cost and with
almost no restrictions whatsoever. You may copy it, give it away
or re-use it under the terms of the Project Gutenberg License
included with this eBook or online at www.gutenberg.org. If you
are not located in the United States, you will have to check the
laws of the country where you are located before using this
eBook.
1.E.2. If an individual Project Gutenberg™ electronic work is derived

from texts not protected by U.S. copyright law (does not contain a
notice indicating that it is posted with permission of the copyright
holder), the work can be copied and distributed to anyone in the
United States without paying any fees or charges. If you are
redistributing or providing access to a work with the phrase “Project
Gutenberg” associated with or appearing on the work, you must
comply either with the requirements of paragraphs 1.E.1 through
1.E.7 or obtain permission for the use of the work and the Project
Gutenberg™ trademark as set forth in paragraphs 1.E.8 or 1.E.9.
1.E.3. If an individual Project Gutenberg™ electronic work is posted

with the permission of the copyright holder, your use and distribution
must comply with both paragraphs 1.E.1 through 1.E.7 and any
additional terms imposed by the copyright holder. Additional terms
will be linked to the Project Gutenberg™ License for all works posted
with the permission of the copyright holder found at the beginning of
this work.
1.E.4. Do not unlink or detach or remove the full Project

Gutenberg™ License terms from this work, or any files containing a
part of this work or any other work associated with Project
Gutenberg™.
1.E.5. Do not copy, display, perform, distribute or redistribute this

electronic work, or any part of this electronic work, without
prominently displaying the sentence set forth in paragraph 1.E.1 with
active links or immediate access to the full terms of the Project
Gutenberg™ License.
1.E.6. You may convert to and distribute this work in any binary,
compressed, marked up, nonproprietary or proprietary form,
including any word processing or hypertext form. However, if you
provide access to or distribute copies of a Project Gutenberg™ work
in a format other than “Plain Vanilla ASCII” or other format used in
the official version posted on the official Project Gutenberg™ website
(www.gutenberg.org), you must, at no additional cost, fee or expense
to the user, provide a copy, a means of exporting a copy, or a means
of obtaining a copy upon request, of the work in its original “Plain
Vanilla ASCII” or other form. Any alternate format must include the
full Project Gutenberg™ License as specified in paragraph 1.E.1.
1.E.7. Do not charge a fee for access to, viewing, displaying,

performing, copying or distributing any Project Gutenberg™ works
unless you comply with paragraph 1.E.8 or 1.E.9.
1.E.8. You may charge a reasonable fee for copies of or providing

access to or distributing Project Gutenberg™ electronic works
provided that:
• You pay a royalty fee of 20% of the gross profits you derive from
the use of Project Gutenberg™ works calculated using the
method you already use to calculate your applicable taxes. The
fee is owed to the owner of the Project Gutenberg™ trademark,
but he has agreed to donate royalties under this paragraph to
the Project Gutenberg Literary Archive Foundation. Royalty
payments must be paid within 60 days following each date on
which you prepare (or are legally required to prepare) your
periodic tax returns. Royalty payments should be clearly marked
as such and sent to the Project Gutenberg Literary Archive
Foundation at the address specified in Section 4, “Information
about donations to the Project Gutenberg Literary Archive
Foundation.”
• You provide a full refund of any money paid by a user who

notifies you in writing (or by e-mail) within 30 days of receipt that
s/he does not agree to the terms of the full Project Gutenberg™
License. You must require such a user to return or destroy all

Instant Ebooks Textbook (Ebook PDF) Fundamentals of Corporate Finance 11th by Stephen Ross Download All Chapters

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Instant Ebooks Textbook (Ebook PDF) Fundamentals of Corporate Finance 11th by Stephen Ross Download All Chapters

Uploaded by

Copyright:

Available Formats

Full download ebooks at ebooksecure.

(eBook PDF) Fundamentals of Corporate Finance 11th

For dowload this book click LINK or Button below

Download More ebooks from https://ebooksecure.com

(eBook PDF) Corporate Finance 11th Edition by Stephen

(eBook PDF) Fundamentals of Corporate Finance 7th

(eBook PDF) Fundamentals of Corporate Finance 12th

(eBook PDF) Corporate Finance 12th Edition by Stephen

(eBook PDF) Essentials of Corporate Finance 9th Edition

(eBook PDF) Corporate Finance 7th Canadian Edition by

(eBook PDF) Essentials of Corporate Finance 10th

(eBook PDF) Essentials Of Corporate Finance 4th Stephen

A UNIFIED VALUATION APPROACH

Chapters Selected Topics of Interest Beneﬁts to You

PART 2 Financial Statements and Long-Term Financial Planning

Chapters Selected Topics of Interest Beneﬁts to You

PART 3 Valuation of Future Cash Flows

CHAPTER 7 Bond valuation. Complete coverage of bond valuation and bond

CHAPTER 8 Stock valuation. Thorough coverage of constant and non-

Chapters Selected Topics of Interest Beneﬁts to You

CHAPTER 11 Sources of value. Stresses the need to understand the economic

PART 5 Risk and Return

CHAPTER 13 Diversification, systematic and Illustrates basics of risk and return in a

Chapters Selected Topics of Interest Beneﬁts to You

Chapters Selected Topics of Interest Beneﬁts to You

CHAPTER 19 Float management. Thorough coverage of float management and

CHAPTER 20 Credit management Analysis of credit policy and implementation.

PART 8 Topics in Corporate Finance

CHAPTER 22 Behavioral finance. Unique and innovative coverage of the effects of

Chapters Selected Topics of Interest Beneﬁts to You

CHAPTER 27 Synthetic leases. Discusses controversial practice of custom-

CHAPTER LEARNING OBJECTIVES

Capital Market History assessment of knowledge and comprehension.

After studying this chapter, you should understand:

PEDAGOGICAL USE OF COLOR FIGURE 9.3

Future Value at 12.5%

A NOTE ABOUT SUSTAINABLE GROWTH RATE CALCULATIONS

WORK THE WEB WORK THE

SPREADSHEET STRATEGIES SPREADSHEET

PV for a perpetuity 5 C r [6.4] LABELED EXAMPLES

EXPLANATORY WEB LINKS

1. A petition is filed in a federal court. Corporations may file a voluntary petition, or

CHAPTER SUMMARY AND CONCLUSIONS

CHAPTER REVIEW AND SELF-TEST PROBLEM CHAPTER REVIEW

CONCEPTS CONCEPTS REVIEW AND CRITICAL THINKING QUESTIONS

END-OF-CHAPTER QUESTIONS AND PROBLEMS

QUESTIONS AND PROBLEMS

Bullock Gold Mining

• Instructor’s Manual (IM)

• Solutions Manual (SM)

• Computerized Test Bank (Windows)

HOW THE MARKET WORKS

AVAILABLE FOR PURCHASE & PACKAGING

FINANCIAL ANALYSIS WITH AN ELECTRONIC

MCGRAW-HILL’S CONNECT FINANCE

MCGRAW-HILL’S CONNECT FINANCE FEATURES

Simple Assignment Management

NO JUST ANALOGY IN THE PRECEDENTS

A thousand precedents would never justify a bad measure—it may

In regard to this colony, the measure has been but recently

How this colony should be referred to as a precedent it is difficult to

It has been more than once remarked in Parliament, by persons of

RESPONSIBILITY ATTACHING TO MINISTERS