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Summary

An essential guide to corporate financeUnderstanding corporate finance is a necessity for financial practitioners who struggle every day to find the right balance between maximizing corporate value and reducing a firm's financial risk.Divided into two comprehensive parts, Mastering Corporate Finance Essentials presents the material by example, using an extended scenario involving a new business formation. In Part One, present and future value mathematics are introduced followed by a number of applications using the tools. In Part Two, statistics as applied to finance are examined, with detailed discussions of standard deviations, correlations, and how they impact diversification. Through theory and real-world examples this book provides a solid grounding in corporate finance Other titles by Stuart McCrary include: Mastering Financial Accounting Essentials, How to Create and Manage a Hedge Fund, and Hedge Fund Course Covers the essential elements of this field, from traditional capital budgeting concepts and methods of valuing investment projects under uncertainty to the importance of "real-options" in the decision-making processThis reliable resource offers a hands-on approach to corporate finance that will allow you to gain a solid understanding of this discipline.

Preface
Acknowledgments
Time Value of Money Toolbox
Introduction
Cash Flows
Future Value
The Impact of Compounding Frequency on Future Value
Equivalent Interest Rate
Continuously Compounded Interest
Present Value
Formulas for Present Value and Future Value
Conclusion
Questions
Statistics for Finance
Introduction
The Meaning of Mean or Average
Median as a Substitute for Mean
Standard Deviation Measures the Noise
Annualizing Variance and Standard Deviation Estimates
The Normal Curve Is a Probability Distribution
The Cumulative Density Function
Measures of Dependency
Measuring Covariance and Correlation
Calculating Statistics in Practice
Combining Normal Distributions
Conclusion
Questions
Core Finance Theories and the Cost of Capital
Introduction
Risk Reduction from Diversification
Systematic versus Unsystematic Risk
The Market Portfolio
The Capital Asset Pricing Model
Using Beta to Determine the Required Return for a Stock
Other Factor Models
Cost of Debt
Weighted Average Cost of Capital
Modigliani and Miller
Patterns of Debt and Equity in Capital Structures
Conclusion
Questions
Capital Budgeting Tools
Introduction
Three Ways to Evaluate Investments
Calculating Net Present Value
Net Present Value Example
Calculating Internal Rate of Return
Calculating Years to Payback
Financial Decision Making
The Annuity Formula
Valuing an Annuity with More Frequent Cash Flows
Using the Present Value Formula and the Annuity Formula to Value a Bond
Using the Annuity Formula to Value a Mortgage
NPV Using the Annuity Formula
Valuing a Perpetuity
Valuing a Growth Annuity
Introduction to Uncertainty
Conclusion
Questions
Techniques for Handling Uncertainty
Introduction
Using Scenario Analysis
Using Monte Carlo Simulation
Uniform Random Numbers
Transforming Uniform Distributions
Adding and Multiplying Two Random Numbers
Using Random Numbers in a Budget Analysis
Using Random Numbers in a Capital Budgeting Analysis
Conclusion
Questions
Real Options Analysis of Capital Investments
Introduction
Why Study Options?
What Is a Real Option?
Types of Real Options
Methods for Valuing Real Options
Conclusion
Questions
Appendix: Day Counting for Interest Rate Calculations
Introduction
The 30/360 Method
The Actual/Actual Method
The Actual/360 Method
The Actual/365 Method
Example and Comparison of 30/360 and Actual/Actual
Impact of Day Counting over Longer Intervals
Calculating Calendar Intervals over Long Periods
A Note about Continuous Compounding
Conclusion
Questions and Answers
About the Author
Index
Table of Contents provided by Publisher. All Rights Reserved.

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