Corporate Finance

Author:
Ross, Westerfield, Jaffe and Jordan

Publisher:

Edition:
12th

ISBN:

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Complete Chapter - 2 Video(s)

Introduction to Corporate Finance


This video provides an introduction to the subject and scope of corporate finance. It covers important themes laid out in Section 1.1, and Section 1.2.

INtroduction to Finance Agency


This video explains what is the goal of financial management (Section 1.4), the agency problem inherent in corporate firms (Section 1.5), and the regulatory framework in which corporations operate (Section 1.6).

Complete Chapter - 2 Video(s)

Financial Statements Balance Sheet and Income Statement


The video explains the basic financial statement: The Balance Sheet (Section 2.1) and The Income Statement (Section 2.2),.

Financial Statements Statement of Cash Flows


This video explains the The Accounting Statement of Cash Flows (Section 2.6) and the related idea of determining Cash Flow of The Firm (Section 2.3). It concludes with a discussion of Cash Flow Management (Section 2.7).

The Balance Sheet - 1 Video(s)

The Balance Sheet 2 0


This video describes the typical balance sheet.

The Income Statement - 1 Video(s)

The Income Statement 2 0


This video explains the income statement, including revenues and expenses.

Cash flow of the Firm - 1 Video(s)

Cash Flows 2 0


This video discusses the difference between financial and accounting cash flows. Demonstrates extraction of cash flows from financial statements.

Complete Chapter - 4 Video(s)

Financial Ratios Liquidity and Leverage Copy


This video explains some of the ways in which you can conduct Financial Statement Analysis (Section 3.1). Specifically, it explains Common-Size Balance Sheets, Common-Seize Income Statements and some of the short-term/liquidity ratios and long-term debt ratios covered in Section 3.2

Financial Ratios Efficiency


This video explains Efficiency/Turnover ratios. It also explains important concepts of Operating Cycle and Cash Conversion Cycle.

Financial Ratios Profitability


This video sheds light on how to calculate different profitability ratios. It also explains the concept of DuPont identity and how it can be used to gain insight into what is driving a firm's ROE.

Financial Ratios Market Value Ratios


This video explains how to calculate and analyze different types of market value ratios.

Financial Statement Analysis - 1 Video(s)

Financial Statement and Ratio Analysis 2 0


This video covers common size financial statements and financial ratio analysis.

The DuPont Identity - 1 Video(s)

The DuPont Identity and Problems with Financial Statement Analysis 2 0


This video discusses the DuPont Identity and how to use it to measure firm performance. Also discussed are potential issues with using financial statement analysis, including common size financial statements and financial ratio analysis.

External Financing and Growth - 1 Video(s)

Long term financial planning 2 0


This video covers the financial planning process, which begins with the sales forecast and includes determination of capital sources for new asset investment.

Guided Solutions to End-of-Chapter Problems - 10 Video(s)

FIN 301 Problem 4.3


Watching this video will help you attempt Question 3 at the end of the chapter (under "Questions and Problems" section).

FIN 301 Problem 4_4


Watching this video will help you attempt Question 4 at the end of the chapter (under "Questions and Problems" section).

FIN 301 Problem 4_5


Watching this video will help you attempt Question 5 at the end of the chapter (under "Questions and Problems" section).

FIN 301 Problem 4.11


Watching this video will help you attempt Question 11 at the end of the chapter (under "Questions and Problems" section).

FIn 301 Problem 4_15


Watching this video will help you attempt Question 15 at the end of the chapter (under "Questions and Problems" section).

FIN 301 Problem 4_21


Watching this video will help you attempt Question 21 at the end of the chapter (under "Questions and Problems" section).

FIN 301 Problem 4_28


Watching this video will help you attempt Question 28 at the end of the chapter (under "Questions and Problems" section).

FIN 301 Problem 4_30


Watching this video will help you attempt Question 30 at the end of the chapter (under "Questions and Problems" section).

FIN 301 Problem 4_33


Watching this video will help you attempt Question 33 at the end of the chapter (under "Questions and Problems" section).

FIN 301 Problem 4_38


Watching this video will help you attempt Question 38 at the end of the chapter (under "Questions and Problems" section).

1. Introduction - 1 Video(s)

Introduction: What is Discounted Cash Flow Valuation?


This video serves as an introduction to the over-arching theme of the entire chapter. Specifically, it explains the core idea behind discounted cash flow valuation and why it is important in evaluating any kind of long-term investment.

2. Valuation: The Single Period Case - 3 Video(s)

Present Value and Future Value: The One Period Case


This video explains the key idea behind present value and future value calculation. It is a good introduction to Section 4.1 of the chapter, and shows clearly how the concepts of present value and future value are related to each other.

Present Value (PV) and Net Present Value (NPV): The One-Period Case


This video shows how one can use the concepts of Present Value (PV) and NET Present Value (NPV) to decide whether or not to pursue an investment. The setting is a simple one in which the investment requires an upfront investment and yields a SINGLE cash inflow one year after the investment is made. After watching this video, you will also get a good understanding of Example 4.2 in the chapter.

Present Value and Opportunity Cost: Additional Insight


This is an extremely important video. It explains how the discount rate we use to calculate present value must reflect the riskiness of the cash flows. All else equal, risky cash flows must be discounted at a higher discount rate and, therefore, must have a lower present value. After watching this video, you will also get a good understanding of Example 4.2 on "Uncertainty and Valuation" in the chapter.

3. The Multiperiod Case - 4 Video(s)

Future Value and Compounding (Future Value in a Multi-Period Setting)


This video explains how to calculate the future value of a single cash flow in a MULTI-PERIOD setting. In the process, it also explains the important concept of compound interest. A

Present Value and Discounting (Present Value in a Multi-period Setting)


This video explains the concept and calculation of present value in a MULTI-PERIOD setting.

Using the Relationship Between Present Value and Future Value to Find the Number of Time Periods

How to Calculate Future Value, Present Value and Net Present Value with Multiple Cash Flows

4. Compounding Periods - 2 Video(s)

Multiple Compounding Periods in a SINGLE Year and Effective Annual Rate


This video illustrates the distinction between annual percentage rate and effective annual rate.

Multiple Compounding Periods in MULTIPLE Years

5. Simplifications: Perpetuities - 4 Video(s)

Present Value of a Perpetuity (aka Ordinary Perpetuity)


This video explains the concept of "ordinary" perpetuities. The textbook just refers to these as perpetuities (without using the term "ordinary"). Nonetheless, it would do you good to think bear this terminology in mind, as later it help you better understanding the difference between "Ordinary Annuities" and "Annuities Due".

Present Value of a Perpetuity Due


This video explain what is meant by Perpetuity "Due" and how it differs from an "ordinary" perpetuity. This is a useful video to help you get deeper understanding about the PV of Perpetuity formula.

Present Value of a Growing Perpetuity (aka Growing Ordinary Perpetuity)


This video shows how to determine the present value of a GROWING perpetuity where cash flows are growing at a constant RATE of g% (forever). Please REALLY understand this formula, as it will help you later in understanding an extremely important concept in finance called "Terminal Value". NOTE: You cannot use the growing perpetuity formula for situations where cash flows are growing by a constant DOLLAR (forever). It has to be growth by a constant PERCENTAGE.

Present Value of a Delayed Perpetuity


This video explain an EXTREMELY IMPORTANT calculation that many students find confusing. The present value of "ordinary" perpetuity formula (PV = C/r) can only be used when the FIRST cash flow is occurring one time-period into the future. However, there can be instances where the perpetuity is "delayed", i.e. the first cash flow occurs MORE than one year into the future (You will see applications of this in more advance finance classes). In such cases, the PV = C/r "ordinary" perpetuity formula needs to be augmented. This video shows you how.

6. Simplifications: Annuities - 6 Video(s)

Future Value of an Annuity Due

Present Value of an Annuity (aka Ordinary Annuity)

Present Value of an Annuity DUE (**IMPORTANT**)

Present Value of the "Infrequent" Annuity

Present Value of a DELAYED Annuity (**IMPORTANT**)

Present Value of a Growing Annuity

7. Loan Amortization - 3 Video(s)

Loan Amortization Example: Mortgage With Monthly Payments

Loan Amortization and Balloon Payments Using MS Excel


Watching this video will not only help you attempt Problem 56 at the end of the chapter but also teach you (a) how to construct an amortization schedule in Excel, and (b) how to determine your outstanding loan balance at a specific point in time during the duration of the loan.

Loan Amortization Using Present Value of Annuity Formula

Valuation - 1 Video(s)

Time Value of Money


This video introduces the concept of the time value of money.

1. Introduction - 1 Video(s)

Introduction


This video serves as an introduction to the chapter. It gives an overall perspective on what the entire chapter is all about.

2. Why Use Net Present Value - 1 Video(s)

Net Present Value (NPV)


This video explains the core concept behind Net Present Value calculation. It also shows a simple example that illustrates how you can implement the NPV formula.

3. The Payback Period - 1 Video(s)

Payback Period: Calculation, Advantages and Disadvantages


This video explains what is meant by Payback Period and how it can be used to evaluate investments. It also sheds light on the various advantages and disadvantages of using the technique.

4. The Discounted Payback Period - 1 Video(s)

Discounted Payback Period Method

5. The Internal Rate of Return - 2 Video(s)

The Internal Rate of Return (IRR) - Part 1

The Internal Rate of Return (IRR) - Part 2

6. Problems with the IRR Approach - 5 Video(s)

Drawback of IRR Approach to Investment Evaluation: Investing Vs. Financing Decisions


In this video I explain how and why the IRR decision rule needs to be modified when one is considering financing projects, or investments in which cash inflow occurs first and outflows happen later (An example of such an investment would be in the construction industry, where a contractor may receive funds from the customer first and THEN make all the investments later).

Drawback of IRR Approach to Investment Evaluation: Multiple IRRs


In this video I explain the conditions under which a project can have multiple IRRs, and how, therefore, one cannot reliably use the IRR decision rule to make an investment decision.

Modified Internal Rate of Return (MIRR) And The Multiple IRR Problem


When a project has multiple IRRs, we can modify the original cash flows to calculate a single, "modified" internal rate of return (MIRR) for the project. In this video, I show three different ways in which you can calculate the MIRR to resolve the multiple IRR problem: (a) The Discounting Approach, (b) The Reinvestment Approach, and (c) The Combination Approach. I also show how you can calculate the MIRR in Excel using the =MIRR function in Excel.

Drawback of IRR When Investments are Mutually Exclusive: The Scale Problem


Would you rather make a 100% return on a $1 investment, or a 10% return on a $1 million investment? If you are like most people, you'd choose making 10% on a $1 million investment. And yet, if you had based your decision on IRR, you would have chosen the investment with the higher IRR, which is 100% (as opposed to 10%) on a $1 investment. That, essentially, is the scale problem - if you have to pick between two competing ("mutually exclusive") investments, picking the one with the higher IRR may not be the value-maximizing thing to do.

Drawback of IRR When Investments Are Mutually Exclusive: The Timing Problem


When choosing between competing, mutually exclusive investments, picking the project with the higher IRR may may not be the right thing to do. In this video, I illustrate this point by calculating and comparing the IRR and NPV of two competing project which differ with respect to the timing of their cash flows.

Complete Chapter - 3 Video(s)

NPV and Other Investment Rules Pt1


This video explains the concept of Net Present Value (NPV) and also sheds on some of alternative investment decision rules, such as the Payback Period. It also briefly touches upon the important concept of Internal Rate of Return (IRR) and how it is related to NPV and NPV Profile.

NPV and Other Investment Rules Pt2


This video sheds additional light on IRR, specifically its shortcomings with respect to mutually exclusive projects.

NPV and Other Investment Rules Pt3


This video wraps up the discussion on IRR, and then discusses the important concepts of MODIFIED IRR (MIRR), Incremental IRR (when dealing with mutually exclusive projects) and Profitability Index. Some useful examples from other sources have been used to drive home important points.

Why Use Net Present Value - 1 Video(s)

Investment Decision Rules


The video details the investment decision rules commonly used in corporate finance, including NPV, Payback, IRR, and PI.

Complete Chapter - 2 Video(s)

Making Capital Investment Decisions Pt1


It is extremely important for you to understand how to determine a project's INCREMENTAL cash flows. This video explains what are the factors that one should consider when trying to determine a project's incremental cash flows. Important related ideas of operating cash flow, capital expenditures and depreciation are discussed. Where necessary, I have used material/examples from other sources to drive home some points.

Making Capital Investment Decisions Pt2


This video walk you through the process of calculating incremental financial (or free) cash flows of a project. It also discusses the relationship between inflation and capital budgeting, as well as how to decide between projects with unequal lives using the principle of equivalent annual cost (EAC).

Incremental Cash flows: The Key to Capital Budgeting - 2 Video(s)

Making Capital Investment Decisions


The video discusses which cash flows should be considered in capital budgeting analyses.

Baldwin Company Example Part II


This video is part 2 of 2 for the Baldwin Company Case .

6.2: The Baldwin Company: An Example - 2 Video(s)

Baldwin Company Example Part I


This video is part 1 of 2 of the Baldwin Company Case Study.

Baldwin Company Example Part II

Complete Chapter - 2 Video(s)

Risk Analysis Real Options and Capital Budgeting Pt1


This video describes basics of risk analysis of capital investments. Topics covered include sensitivity analysis and scenario analysis.

Risk Analysis Real Options and Capital Budgeting Pt2


This video covers other risk analysis tools that financial managers can use, including accounting and financial break-even analysis. The video concludes with a discussion and importance of real options (such as option to expand, abandon, etc.) in capital budgeting projects.

Break-Even Analysis - 1 Video(s)

Break Even Analysis and Operating Leverage


This video explains break-even analysis and operating leverage.

Bonds and Bond Valuation - 2 Video(s)

Bond Features 2 0


This video describes the features and different types of bonds.

Bonds and Bond Valuation 2 0


This video discusses bond vocabulary and the price behavior of discount and premium bonds as maturity approaches.

Present Value of Common Stocks - 1 Video(s)

Stock Features 2 0


Describes the features of common and preferred stock, including dividends and voting.

Estimates of Parameters in the Dividend Discount Model - 1 Video(s)

Stock Valuation 2 0


This video demonstrates the basic concepts behind the valuation of common and preferred stock.

Complete Chapter - 2 Video(s)

Lessons from History 1


This video describes the historical evidence on security returns. It illustrates the main idea that there is a trade-off between risk and expected return.

Lessons from History 2


This video digs deeper into the relationship between risk and expected return, and how standard deviation of returns can be used to develop confidence intervals around expected returns.

Complete Chapter - 3 Video(s)

Return Risk and CAPM Pt1


This video shows how to calculated expected returns and standard deviation of returns. First it shows how you can do these calculation for individual securities (Section 11.1). Then the principles are extended to portfolios. In the process, the important role of covariance/correlation of returns is also discussed.

Return risk and CAPM Pt2


This video explains the concept of portfolio expected returns and variance/standard deviation in more detail. Specifically, it shows you how to form the "efficient set" of portfolios, first in a world consisting only of risky assets, and then in a world where investors can combine risky portfolios with a risk-free asset. In the process, it also explains the important distinction between systematic and non-systematic risk, and how diversification help reduce the latter.

Return risk and CAPM Pt3


This video explains how beta measures the systematic risk of a security, and how it can be used to determine the expected return by developing the capital asset pricing model (CAPM).

The Return and Risk for Portfolios - 1 Video(s)

Risk and Return of Portfolios 2 0


This video describes the methods for determining the risks and returns of portfolios, along with the benefits that diversification bring.

Relationship between Risk and Expected Return (CAPM) - 1 Video(s)

Risk and Return CAPM 2 0


This video discusses the ideas behind the Capital Asset Pricing Model.

Options - 1 Video(s)

Options and Corporate Finance 2 0


This video discusses different types of financial options, option pricing, and application of options to corporate finance decisions.

Cash Cycle - 1 Video(s)

Tracing Cash, the Operating Cycle, and the Cash Cycle


This video explains how changes in different financial statement accounts effect the levels of cash at the firm. It also explores the operating cycle, the cash cycle, and discuss methods for reducing both.

Cash Budgeting - 1 Video(s)

Cash Budget and Short-term Borrowing


This video covers how to construct a cash budget to predict cash surpluses and deficits, and explains different methods for obtaining funding to overcome cash deficits.

Credit - 1 Video(s)

Credit and Credit Policy


This video explains what credit is and how it is administered via the credit policy. It also explain the rationale for providing credit and examine how changes in credit policy can impact profitability.

Inventory - 1 Video(s)

Inventory Management


This video covers the basics of inventory management systems, including economic order quantity, periodic order model, and continuous order model.

Mergers and Acquisitions - 1 Video(s)

Mergers and Acquisitions 2 0


This video describes the different types of corporate takeovers and the sources of gains from these takeovers. Explains the differences between stock and cash transactions.