Sunday, December 13, 2015

Financial Management and Real Options







Financial Management and Real Options
Buku ini diterbitkan tahun 2003  oleh  John Wiley & Sons Ltd, England  adalah buku edisi  Pertama.


Judul:  Financial Management and Real Options
Oleh:   Jack Broyles
Penerbit:  John Wiley & Sons Ltd, England
Tahun: 2003
Jumlah Halaman:  457  hal.

Editor:

Jack Broyles

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Lingkup Pembahasan:

Buku ini terutama adalah tentang manajemen keuangan dan, sebagai judul menyiratkan, pilihan nyata adalah terpisahkan, anak tema. Pilihan nyata peluang yang tersedia untuk manajemen mengizinkan
mereka untuk beradaptasi perusahaan untuk perubahan kebutuhan. Memahami nilai opsi riil
penting untuk manajemen keuangan perusahaan. Contoh dalam beberapa bab menunjukkan mengapa kegagalan untuk menilai nilai pilihan nyata mengarah ke keputusan investasi yang salah. Sebuah ciri khas dari buku ini menunjukkan bagaimana melakukan analisis riil pilihan tanpa matematika yang lebih tinggi.

Daftar Isi:

Preface xi
Part 1 Introduction to Financial Management 1
1  Financial Management and Corporate Governance 3

    1-1     What Financial Management is Really About 3
    1-2     How Finance Is Organized in Corporations 6
    1-3     The Chief Financial Officer 8
    1-4     The Chief Accountant 8
    1-5     The Treasurer 9
    1-6     Corporate Financial Objectives 11
    1-7     Corporate Governance 14
    1-8     Conclusions 15
    Further Reading 15
    Questions and Problems 15
2  Fundamental Methods of Financial Analysis 17
    2-1     What is a rate of return? 18
    2-2     What is Risk? 19
    2-3     How to Relate Required Rates of Return to Risk 22
    2-4     Discounted Cash Flow and Net Value for Shareholders 24
    2-5     Precision Discounting 28
    2-6     The Internal Rate of Return 30
    2-7     The Present Value of a Perpetuity 32
    2-8     The Present Value of an Annuity 33
    2-9     The Loan Balance Method 36
    2-10     The Value of Growth 37
    2-11     Why Flexibility and Choice Have Value 37
    2-12     Conclusions 39
    Questions and Problems 39
3   An Introduction to Corporate Debt and Equity 42
    3-1     How Much Should an Investor pay for a Corporate Bond? 43
    3-2     How Much Should an Investor Pay for Shares in a Company’s Equity? 46
    3-3     How Limited Liability Affects the Relative Values of Equity and Debt 49
    3-4     Executive Stock Options 52
    3-5     Equity Warrants 53
    3-6     Other Corporate Securities 54
    3-7     Traded Equity Options 55
    3-8     Conclusions 57
    Further Reading 57
    Questions and Problems 57
    Appendix 3.1 Using the Black and Scholes Option Pricing Formula 59

4  Shareholder Value in Efficient Markets 61
    4-1     Conditions Conducive to Capital Market Efficiency 62
    4-2     Weak-form Tests of Market Efficiency 64
    4-3     Semistrong-form Tests of Market Efficiency 66
    4-4     Strong-form Tests of Market Efficiency 68
    4-5     Apparent Exceptions to Market Efficiency 71
    4-6     Conclusions 73
    Further Reading 73
    Questions and Problems 73

Part 2 Valuation of Investment and Real Options 75
5  An Introduction to the Appraisal of Capital Projects 77

    5-1     Capital Budgeting 78
    5-2     Competitive Advantage and Value Creation 78
    5-3     Project Appraisal 79
    5-4     Incremental Cash Flow and Incremental Value 80
    5-5     Net Present Value 83
    5-6     The Rate of Return on a Project 83
    5-7     Project Liquidity 85
    5-8     Some Related Issues 87
    5-9     About Taxes 89
    5-10     Measuring Project Risk and Determining the Discount Rate 89
    5-11     Real Options 91
    5-12     Conclusions 91
    Further Reading 93
    Questions and Problems 93
6  Pitfalls in Project Appraisal 96
    6-1     Specifying a Project’s Incremental Cash Flow Requires Care 96
    6-2     The Internal Rate of Return Is Biased 98
    6-3     The Payback Period Is Often Ambiguous 103
    6-4     Discount Rates Are Frequently Wrong 104
    6-5     Rising Rates of Inflation Are Dangerous 106
    6-6     The Precise Timing of Cash Flows Is Important 109
    6-7     Forecasting Is Often Untruthful 110
    6-8     Risk Adds Value to Real Options 110
    6-9     Real Options Affect the NPV Rule 111
    6-10     Conclusions 112
Further Reading 113
Questions and Problems 114
7  Further Project Appraisal Methods 116
    7-1     Adjusted Present Value Method 116
    7-2     Multiperiod Capital Rationing: The Profitability Index Annuity 120
    7-3     Multiperiod Capital Rationing: Mathematical Programming 123
    7-4     Measuring Project Yield 127
    7-5     Conclusions 131
    Further Reading 132
    Questions and Problems 132

8  Appraising Projects with Real Options 134
    8-1     Real Options in Capital Projects 135
    8-2     The Impact of Uncertainty on Project Profitability 137
    8-3     How Uncertainty Creates Real Option Value 138
    8-4     Estimating the PI of the Expected Payoff on a Real Option 140
    8-5     Risk-neutral Valuation of Real Options 141
    8-6     Refining the Valuation 144
    8-7     Applications 147
    8-8     Conclusions 149
    Further Reading 150
    Questions and Problems 150

9 Valuing Interrelated Real Options 155
    9-1     The Project Frame 155
    9-2     The One-step Binomial Tree: Two Branches 157
    9-3     Multistep Binomial Trees: More Branches 162
    9-4     Incorporating the Values of Real Options 163
    9-5     Obtaining the Net Present Value of the Project 166
    9-6     Real Options Sensitivity Analysis 166
    9-7     Conclusions 171
    Further Reading 172
    Questions and Problems 172
10  Valuation of Companies with Real Options 174
    10-1     Are Financial Ratios Sufficient to Value a Company? 174
    10-2     The Investment Opportunities Approach 176
    10-3     Formulation of the Investment Opportunities Approach 177
    10-4     Inputs to the Investment Opportunities Approach 184
    10-5     Investment Opportunities as Expected Pay-offs on Real Options 188
    10-6     Conclusions 190
    Further Reading 190
    Questions and Problems 190
11  Mergers and Acquisitions 194
    11-1     What are Mergers and Acquisitions? 195
    11-2     Types of Merger 195
    11-3     MergerWaves 196
    11-4     Motivations for Mergers and Acquisitions 197
    11-5     How Much to Pay for an Acquisition 199
    11-6     Synergy 203
    11-7     Other Motives for Mergers and Acquisitions 207
    11-8     Financing Mergers and Acquisitions 208
    11-9     The Bidding Process 209
    11-10 Defending Against a Bid 210
    11-11 Who Gains from Mergers and Acquisitions? 212
    11-12 Conclusions 213
    Further Reading 214
    Questions and Problems 214

Part 3 Financial Structure 219
12  Portfolio Theory and Asset Pricing 221

    12-1     Returns to Equity Investors 222
    12-2     Risk to Equity Investors 223
    12-3     Risk Reduction through Portfolio Diversification 226
    12-4     The Two-Security Portfolio 228
    12-5     Portfolios of More than Two Securities 231
    12-6     Efficient Portfolio Diversification 233
    12-7     The Optimum Portfolio of Risky Securities 234
    12-8     The Capital Asset Pricing Model (CAPM) 236
    12-9     Using the Capital Asset Pricing Model 238
    12-10 Limitations of the Capital Asset Pricing Model 239
    12-11 Arbitrage Pricing Theory (APT) 240
    12-12 Summary 241
    Further Reading 242
    Questions and Problems 242
    Appendix 12.1 Calculation of the Standard Deviation 244
    Appendix 12.2 Calculation of the Correlation Coefficient 245
13  Calculating the Cost of Capital 246
    13-1     Adjusting the Weighted Average Cost of Capital for Risk 247
    13-2     Estimating the Company’s Weighted Average Cost of Capital 248
    13-3     Extraction of the Company’s Risk Premium from Its WACC 252
    13-4     Adjusting the Company’s Risk Premium for Project Risk 252
    13-5     Adjusting the WACC for the Project’s Risk Premium 255
    13-6     The Costs of Capital for a Risk Class 255
    13-7     Conclusions 258
    Further Reading 258
    Questions and Problems 258
    Appendix 13.1 After-tax Interest Rates for Temporarily Non-taxpaying  Companies 260
    Appendix 13.2 Linear Growth and the Cost of Equity 261
    Appendix 13.3 The Method of Similars 262
14  Long-term Financing 264
    14-1     Financial Policy 265
    14-2     Primary and Secondary Financial Markets 266
    14-3     Corporate Securities 267
    14-4     Government Debt 268
    14-5     Corporate Debt 272
    14-6     Corporate Equity 275
    14-7     How Securities are Issued in the Primary Market 277
    14-8     The Rights Issue Procedure 279
    14-9     Rights Issues and Market Prices 279
    14-10 Rights Issue Signaling Effects 281
    14-11 New Issues for Unquoted Companies 281
    14-12 Conclusions 282
    Further Reading 282
    Questions and Problems 283
    Appendix 14.1 Moody’s Corporate Bond Ratings 284
15  Dividend Policy 286
    15-1     Dividends and Earnings 286
    15-2     Dividends as Signals 289
    15-3     Is Dividend Policy Irrelevant? 289
    15-4     Is Dividend Policy Affected by Personal Taxes? 292
    15-5     Dividend Policy and Shareholder Tax Clienteles 294
    15-6     Dividend Policy and Portfolio Diversification 295
    15-7     Alternatives to Paying Cash Dividends 296
    15-8     Macroeconomic Considerations 297
    15-9     Conclusions 298
    Further Reading 299
    Questions and Problems 299
16  Capital Structure 303
    16-1     What is Capital Structure and Why Does it Matter? 303
    16-2     How Capital Structure Affects Financial Risk 305
    16-3     The Weighted Average Cost of Capital 308
    16-4     Contrasting Views on the Relevance of Capital Structure 310
    16-5    Arbitrage and the Net Operating Income View 313
    16-6     Taxes in a Classical Tax System 316
    16-7     Tax Effects in Modigliani and Miller’s Equilibrium 318
    16-8     Tax Effects in Miller’s After-tax Equilibrium 319
    16-9     The Existence of Optimum Capital Structures 322
    16-10 The Relevance of Flotation Costs 324
    16-11 A Combined Approach 325
    16-12 Conclusions 327
    Further Reading 328
    Questions and Problems 328
17  Lease Finance 331
    17-1     Leasing and Ownership 332
    17-2     Why Companies Lease Assets 334
    17-3     How Leasing Can Affect the Capital Investment Decision 335
    17-4     How to Value a Financial Lease 335
    17-5     How Temporary Non-taxpaying Affects the Leasing Decision 338
    17-6     The After-tax Discount Rate 339
    17-7     The Loan Balance Method 339
    17-8     The Internal Rate of Return Approach 341
    17-9     Residual Values 342
    17-10 Interactions between Leasing and Investment Decisions 344
    17-11 Lease Rates and Competition in the Leasing Market 344
    17-12 Conclusions 345
    Further Reading 345
    Questions and Problems 345

Part 4 Solvency management 347
18  Financial Planning and Solvency 349

    18-1     Importance of Financial Planning and Control 350
    18-2     The Pro forma Cash budget and Short-term Borrowing 352
    18-3     The Funds Flow Statement and Longer Term Financing 355
    18-4     Financial Modeling 357
    18-5     Financial Forecasting 359
    18-6     Structuring Uncertainty 360
    18-7     Scenarios of the Future 361
    18-8     Financial Planning Procedure 364
    18-9     Conclusions 365
    Further Reading 365
    Questions and Problems 366
19  Managing Debtor Risk 367
    19-1     Credit Terms 367
    19-2     The Trade Credit Decision 369
    19-3     Trade Credit as a Lending Decision 370
    19-4     Trade Credit as an Investment Decision 372
    19-5     The Control of Trade Credit 375
    19-6     Conclusions 376
    Further Reading 377
    Questions and Problems 377
20  Managing Inventory Risk 379
    20-1     Planning and Monitoring Inventory Levels 380
    20-2     Designing the Inventory Control System 383
    20-3     Elements of an Inventory Control System 384
    20-4     Operating the Inventory Control System 388
    20-5     Conclusions 389
    Further Reading 389
    Questions and Problems 389
    Appendix 20.1 Economic Order Quantities 390
21  Managing Interest and Exchange Rate Risks 393
    21-1     Fixed and Floating Rate Debt 394
    21-2     Corporate Bonds 394
    21-3     Interest Rate Swaps 397
    21-4     Forward Rate Agreements 398
    21-5     Interest Rate Derivatives 399
    21-6     Foreign Exchange Risk Management 400
    21-7     Behaviour of Foreign Exchange Rates 400
    21-8     Foreign Exchange Risk Exposure 403
    21-9     Foreign Exchange Risk Management Methods 405
    21-10 Conclusions 408
    Further Reading 409
    Questions and Problems 409

Part 5 International Investment 413
22  Appraising International Capital Projects 415

    22-1     Appraisal of International Projects 416
    22-2     Differential Rates of Inflation and Foreign Currency Cash Flows 416
    22-3     Differential Rates of Inflation and Required Rates of Return 417
    22-4     Valuation Method 1 419
    22-5     Differential Rates of Inflation and Expected Future Exchange Rates 421
    22-6     Valuation Method 2 422
    22-7     Unremitted Income 425
    22-8     International Required Rates of Return 426
    22-9     Conclusions 427
    Further Reading 428
    Questions and Problems 428
    Present Value Tables 430
    Probability Table 434
Index 435
  
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