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iv Brief Contents

CHAPTER 15 Capital Structure Decisions 589 CHAPTER 24 Bankruptcy, Reorganization, and

Web Extensions 15A: Degree of Leverage Liquidation 943
Web Extensions 24A: Multiple Discriminant
Analysis
PART 7 Managing Global
Operations 629 PART 10 Special Topics 975
CHAPTER 16 Supply Chains and Working CHAPTER 25 Portfolio Theory and Asset Pricing
Capital Management 631 Models 977
Web Extensions 16A: Secured Short-Term CHAPTER 26 Real Options 1011
Financing
Web Extensions 26A: The Abandonment Real
CHAPTER 17 Multinational Financial Option
Management 681 26B: Risk-Neutral Valuation
____________________________________
PART 8 Tactical Financial Appendixes
Decisions 727 APPENDIX A Solutions to Self-Test
Problems 1035
CHAPTER 18 Public and Private Financing: Initial
Offerings, Seasoned Offerings, and APPENDIX B Answers to End-of-Chapter
Investment Banks 729 Problems 1067
Web Extensions 18A: Rights Offerings APPENDIX C Selected Equations 1077
CHAPTER 19 Lease Financing 771 APPENDIX D Values of the Areas under the
Standard Normal Distribution
Web Extensions 19A: Leasing Feedback
Function 1091
19B: Percentage Cost Analysis
____________________________________
19C: Leveraged Leases Glossary 1093
CHAPTER 20 Hybrid Financing: Preferred Stock,
Warrants, and Convertibles 799
____________________________________
Name Index 1121
Web Extensions 20A: Calling Convertible Issues
____________________________________
Subject Index 1127
PART 9 Strategic Finance in ____________________________________
a Dynamic Web Chapters:
Environment 827
CHAPTER 27 Providing and Obtaining Credit
CHAPTER 21 Dynamic Capital Structures 829 CHAPTER 28 Advanced Issues in Cash
CHAPTER 22 Mergers and Corporate Management and Inventory
Control 867 Control
Web Extensions 22A: Projecting Consistent Debt CHAPTER 29 Pension Plan Management
and Interest Expenses CHAPTER 30 Financial Management in Not-for-
CHAPTER 23 Enterprise Risk Management 909 Profit Businesses

Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
 © lulu/fotolia.com Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xviii

PART 1 The Company and Its Environment 1

CHAPTER 1
An Overview of Financial Management and the Financial Environment 3
Box: The Global Economic Crisis 4
The Five-Minute MBA 4
The Corporate Life Cycle 5
Box: Columbus Was Wrong—the World Is Flat! And Hot! And Crowded! 6
The Primary Objective of the Corporation: Value Maximization 9
Box: Ethics for Individuals and Businesses 10
Box: Corporate Scandals and Maximizing Stock Price 12
An Overview of the Capital Allocation Process 13
Financial Securities 14
The Cost of Money 18
Financial Institutions 23
Financial Markets 27
Trading Procedures in Financial Markets 29
Box: Life in the Fast Lane: High-Frequency Trading! 30
Types of Stock Market Transactions 30
The Secondary Stock Markets 31
Box: Measuring the Market 33
Stock Market Returns 34
The Global Economic Crisis 36
Box: Anatomy of a Toxic Asset 43
The Big Picture 45
e-Resources 46
Summary 46
Web Extensions
1A: An Overview of Derivatives
1B: A Closer Look at the Stock Markets

CHAPTER 2
Financial Statements, Cash Flow, and Taxes 51
Box: Intrinsic Value, Free Cash Flow, and Financial Statements 52
Financial Statements and Reports 52
The Balance Sheet 53
Box: The Global Economic Crisis 56

Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). v
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vi Contents

The Income Statement 56

Statement of Stockholders’ Equity 58
Statement of Cash Flows 59
Box: Financial Analysis on the Web 60
Box: Filling in the GAAP 63
Net Cash Flow 64
Free Cash Flow: The Cash Flow Available for Distribution to Investors 65
Box: Sarbanes-Oxley and Financial Fraud 70
Performance Evaluation 72
The Federal Income Tax System 76
Box: When It Comes to Taxes, History Repeats and Repeals Itself! 79
Summary 82
Web Extensions
2A: The Federal Income Tax System for Individuals

CHAPTER 3
Analysis of Financial Statements 95
Box: Intrinsic Value and Analysis of Financial Statements 96
Financial Analysis 96
Liquidity Ratios 97
Asset Management Ratios 100
Box: The Global Economic Crisis 103
Debt Management Ratios 103
Profitability Ratios 107
Box: The World Might Be Flat, but Global Accounting Is Bumpy!
The Case of IFRS versus FASB 108
Market Value Ratios 110
Trend Analysis, Common Size Analysis, and Percentage Change Analysis 113
Tying the Ratios Together: The DuPont Equation 115
Comparative Ratios and Benchmarking 117
Uses and Limitations of Ratio Analysis 118
Box: Ratio Analysis on the Web 119
Looking Beyond the Numbers 119
Summary 120

PART 2 Fixed Income Securities 131

CHAPTER 4
Time Value of Money 133
Box: Corporate Valuation and the Time Value of Money 134
Time Lines 135
Future Values 135
Box: Hints on Using Financial Calculators 139
Present Values 143
Box: It’s a Matter of Trust 144
Finding the Interest Rate, I 147
Finding the Number of Years, N 148
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 Contents vii

Perpetuities 149
Annuities 150
Future Value of an Ordinary Annuity 151
Box: The Power of Compound Interest 153
Future Value of an Annuity Due 154
Present Value of Ordinary Annuities and Annuities Due 154
Box: Variable Annuities: Good or Bad? 157
Finding Annuity Payments, Periods, and Interest Rates 158
Box: Using the Internet for Personal Financial Planning 160
Uneven, or Irregular, Cash Flows 160
Future Value of an Uneven Cash Flow Stream 163
Solving for I with Irregular Cash Flows 164
Semiannual and Other Compounding Periods 165
Box: Truth in Lending: What Loans Really Cost 168
Fractional Time Periods 169
Amortized Loans 170
Box: What You Know Is What You Get: Not in Payday Lending 171
Box: The Global Economic Crisis An Accident Waiting to Happen: Option Reset Adjustable
Rate Mortgages 174
Summary 176
Web Extensions
4A: The Tabular Approach
4B: Derivation of Annuity Formulas
4C: Continuous Compounding

CHAPTER 5
Bond, Bond Valuation, and Interest Rates 187
Box: Intrinsic Value and the Cost of Debt 188
Who Issues Bonds? 188
Box: The Global Economic Crisis 190
Key Characteristics of Bonds 190
Bond Valuation 194
Changes in Bond Values Over Time 199
Box: Drinking Your Coupons 202
Bonds with Semiannual Coupons 202
Bond Yields 203
The Pre-Tax Cost of Debt: Determinants of Market Interest Rates 206
The Real Risk-Free Rate of Interest, r* 207
The Inflation Premium (IP) 208
The Nominal, or Quoted, Risk-Free Rate of Interest, rRF 210
The Default Risk Premium (DRP) 211
Box: The Global Economic Crisis 212
Box: The Global Economic Crisis 215

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viii Contents

The Liquidity Premium (LP) 216

Box: The Few, the Proud, the… AAA-Rated Companies! 217
The Maturity Risk Premium (MRP) 217
Box: The Global Economic Crisis 218
The Term Structure of Interest Rates 221
Financing with Junk Bonds 222
Bankruptcy and Reorganization 223
Summary 224
Web Extensions
5A: A Closer Look at Zero Coupon Bonds
5B: A Closer Look at TIPS: Treasury Inflation-Protected Securities
5C: A Closer Look at Bond Risk: Duration
5D: The Pure Expectations Theory and Estimation of Forward Rates

PART 3 Stocks and Options 233

CHAPTER 6
Risk and Return 235
Box: Intrinsic Value, Risk, and Return 236
Investment Returns and Risk 236
Measuring Risk for Discrete Distributions 238
Risk in a Continuous Distribution 241
Using Historical Data to Estimate Risk 242
Box: What Does Risk Really Mean? 243
Box: The Historic Trade-off between Risk and Return 246
Risk in a Portfolio Context 246
The Relevant Risk of a Stock: The Capital Asset Pricing Model (CAPM) 250
Box: The Benefits of Diversifying Overseas 256
The Relationship between Risk and Return in the Capital Asset Pricing Model 257
Box: Another Kind of Risk: The Bernie Madoff Story 265
The Efficient Markets Hypothesis 265
The Fama-French Three-Factor Model 270
Behavioral Finance 274
The CAPM and Market Efficiency: Implications for Corporate Managers and Investors 276
Summary 277
Web Extensions
6A: Continuous Probability Distributions
6B: Estimating Beta with a Financial Calculator

CHAPTER 7
Valuation of Stocks and Corporations 289
Box: Corporate Valuation and Stock Prices 290
Legal Rights and Privileges of Common Stockholders 290
Types of Common Stock 291

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 Contents ix

Stock Market Reporting 292

Valuing Common Stocks 293
Valuing a Constant Growth Stock 296
Valuing Nonconstant Growth Stocks 301
The Free Cash Flow Valuation Model 304
Market Multiple Analysis 311
Preferred Stock 312
Summary 313
Web Extensions
7A: Derivation of Valuation Equations

CHAPTER 8
Financial Options and Applications in Corporate Finance 325
Box: The Intrinsic Value of Stock Options 326
Overview of Financial Options 326
Box: Financial Reporting for Employee Stock Options 330
The Single-Period Binomial Option Pricing Approach 330
The Single-Period Binomial Option Pricing Formula 335
The Multi-Period Binomial Option Pricing Model 337
The Black-Scholes Option Pricing Model (OPM) 340
Box: Taxes and Stock Options 345
The Valuation of Put Options 346
Applications of Option Pricing in Corporate Finance 348
Summary 350

PART 4 Projects and Their Valuation 355

CHAPTER 9
The Cost of Capital 357
Box: Corporate Valuation and the Cost of Capital 358
The Weighted Average Cost of Capital 359
Choosing Weights for the Weighted Average Cost of Capital 360
After-Tax Cost of Debt: rd(1 − T) and rstd(1 − T) 361
Box: How Effective Is the Effective Corporate Tax Rate? 364
Cost of Preferred Stock, rps 366
Cost of Common Stock: The Market Risk Premium, RPM 367
Using the CAPM to Estimate the Cost of Common Stock, rs 370
Dividend-Yield-Plus-Growth-Rate, or Discounted Cash Flow (DCF), Approach 372
The Weighted Average Cost of Capital (WACC) 375
Box: Global Variations in the Cost of Capital 377
Adjusting the Cost of Equity for Flotation Costs 377
Privately Owned Firms and Small Businesses 379

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
x Contents

Managerial Issues and the Cost of Capital 381

Four Mistakes to Avoid 385
Summary 386
Web Extensions
9A: The Required Return Assuming Nonconstant Dividends and Stock Repurchases

CHAPTER 10
The Basics of Capital Budgeting: Evaluating Cash Flows 397
Box: Corporate Valuation and Capital Budgeting 398
An Overview of Capital Budgeting 398
The First Step in Project Analysis 400
Net Present Value (NPV) 401
Internal Rate of Return (IRR) 403
Modified Internal Rate of Return (MIRR) 410
Profitability Index (PI) 413
Payback Period 414
How to Use the Different Capital Budgeting Methods 416
Other Issues in Capital Budgeting 419
Summary 425
Web Extensions
10A: The Accounting Rate of Return (ARR)

CHAPTER 11
Cash Flow Estimation and Risk Analysis 437
Box: Project Valuation, Cash Flows, and Risk Analysis 438
Identifying Relevant Cash Flows 438
Analysis of an Expansion Project 443
Risk Analysis in Capital Budgeting 450
Measuring Stand-Alone Risk 451
Sensitivity Analysis 451
Scenario Analysis 455
Monte Carlo Simulation 457
Project Risk Conclusions 460
Replacement Analysis 461
Real Options 463
Phased Decisions and Decision Trees 465
Summary 468
Appendix 11A Tax Depreciation 481
Web Extensions
11A: Certainty Equivalents and Risk-Adjusted Discount Rates

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
 Contents xi

PART 5 Corporate Valuation and Governance 485

CHAPTER 12
Corporate Valuation and Financial Planning 487
Box: Corporate Valuation and Financial Planning 488
Overview of Financial Planning 489
Financial Planning at MicroDrive, Inc. 490
Forecasting Operations 491
Projecting MicroDrive’s Financial Statements 496
Analysis and Revision of the Preliminary Plan 500
Additional Funds Needed (AFN) Equation Method 504
Forecasting When the Ratios Change 507
Summary 511

CHAPTER 13
Agency Conflicts and Corporate Governance 523
Box: Corporate Governance and Corporate Valuation 524
Agency Conflicts 524
Corporate Governance 528
Box: The Global Economic Crisis 532
Box: The Dodd-Frank Act and “Say on Pay” 534
Box: The Sarbanes-Oxley Act of 2002 and Corporate Governance 535
Box: International Corporate Governance 538
Employee Stock Ownership Plans (ESOPs) 539
Summary 542

PART 6 Cash Distributions and Capital Structure 545

CHAPTER 14
Distributions to Shareholders: Dividends and Repurchases 547
Box: Uses of Free Cash Flow: Distributions to Shareholders 548
An Overview of Cash Distributions 548
Procedures for Cash Distributions 550
Cash Distributions and Firm Value 553
Clientele Effect 556
Information Content, or Signaling, Hypothesis 557
Implications for Dividend Stability 558
Box: The Global Economic Crisis: Will Dividends Ever Be the Same? 559
Setting the Target Distribution Level: The Residual Distribution Model 559
The Residual Distribution Model in Practice 561
A Tale of Two Cash Distributions: Dividends versus Stock Repurchases 562
The Pros and Cons of Dividends and Repurchases 571
Box: Dividend Yields around the World 573
Other Factors Influencing Distributions 573

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xii Contents

Summarizing the Distribution Policy Decision 574

Stock Splits and Stock Dividends 576
Box: The Global Economic Crisis: Talk about a Split Personality! 577
Dividend Reinvestment Plans 579
Summary 580

CHAPTER 15
Capital Structure Decisions 589
Box: Corporate Valuation and Capital Structure 590
An Overview of Capital Structure 590
Business Risk and Financial Risk 592
Capital Structure Theory 596
Box: Yogi Berra on the MM Proposition 598
Capital Structure Evidence and Implications 604
Estimating the Optimal Capital Structure 608
Anatomy of a Recapitalization 614
Box: The Global Economic Crisis: Deleveraging 618
Summary 619
Web Extensions
15A: Degree of Leverage

PART 7 Managing Global Operations 629

CHAPTER 16
Supply Chains and Working Capital Management 631
Box: Corporate Valuation and Working Capital Management 632
Overview of Working Capital Management 633
Using and Financing Operating Current Assets 634
The Cash Conversion Cycle 638
Box: Some Firms Operate with Negative Working Capital! 644
The Cash Budget 644
Cash Management and the Target Cash Balance 648
Cash Management Techniques 649
Box: Your Check Isn’t in the Mail 651
Inventory Management 652
Box: Supply Chain Management 653
Receivables Management 654
Box: Supply Chain Finance 656
Accruals and Accounts Payable (Trade Credit) 658
Box: A Wag of the Finger or Tip of the Hat? The Colbert Report and Small Business Payment
Terms 659
Managing Short-Term Investments 662
Short-Term Financing 663
Short-Term Bank Loans 664

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
 Contents xiii

Commercial Paper 668

Use of Security in Short-Term Financing 668
Summary 669
Web Extensions
16A: Secured Short-Term Financing

CHAPTER 17
Multinational Financial Management 681
Box: Corporate Valuation in a Global Context 682
Multinational, or Global, Corporations 682
Multinational versus Domestic Financial Management 683
Exchange Rates 685
Exchange Rates and International Trade 690
The International Monetary System and Exchange Rate Policies 691
Trading in Foreign Exchange 697
Interest Rate Parity 698
Purchasing Power Parity 700
Inflation, Interest Rates, and Exchange Rates 701
Box: Hungry for a Big Mac? Go To Ukraine! 702
Box: Greasing the Wheels of International Business 703
International Money and Capital Markets 703
Box: Stock Market Indices Around the World 708
Multinational Capital Budgeting 708
Box: Consumer Finance in China 709
Box: Double Irish with a Dutch Twist 712
International Capital Structures 714
Multinational Working Capital Management 715
Summary 718

PART 8 Tactical Financial Decisions 727

CHAPTER 18
Public and Private Financing: Initial Offerings, Seasoned Offerings,
and Investment Banks 729
The Financial Life Cycle of a Start-Up Company 730
The Decision to Go Public 731
The Process of Going Public: An Initial Public Offering 733
Equity Carve-Outs: A Special Type of IPO 743
Other Ways to Raise Funds in the Capital Markets 744
Box: Where There’s Smoke There’s Fire 748
Investment Banking Activities and Their Role in the Global Economic Crisis 749
Box: The Global Economic Crisis: What Was the Role of Investment Banks? 751
The Decision to Go Private 752
Managing the Maturity Structure of Debt 754

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xiv Contents

Refunding Operations 756

Box: TVA Ratchets Down Its Interest Expenses 760
Managing the Risk Structure of Debt with Project Financing 763
Summary 764
Web Extensions
18A: Rights Offerings

CHAPTER 19
Lease Financing 771
Types of Leases 772
Tax Effects 775
Financial Statement Effects 776
Evaluation by the Lessee 778
Box: Off–Balance Sheet Financing: Is It Going to Disappear? 779
Evaluation by the Lessor 784
Other Issues in Lease Analysis 786
Box: What You Don’t Know Can Hurt You! 787
Box: Lease Securitization 789
Other Reasons for Leasing 790
Summary 792
Web Extensions
19A: Leasing Feedback
19B: Percentage Cost Analysis
19C: Leveraged Leases

CHAPTER 20
Hybrid Financing: Preferred Stock, Warrants, and Convertibles 799
Preferred Stock 800
Box: The Romance Had No Chemistry, But It Had a Lot of Preferred Stock! 801
Box: Hybrids Aren’t Only for Corporations 803
Warrants 805
Convertible Securities 810
A Final Comparison of Warrants and Convertibles 817
Reporting Earnings When Warrants or Convertibles Are Outstanding 818
Summary 819
Web Extensions
20A: Calling Convertible Issues

PART 9 Strategic Finance in a Dynamic Environment 827

CHAPTER 21
Dynamic Capital Structures 829
Box: Corporate Valuation and Capital Structure Decisions 830
The Impact of Growth and Tax Shields on Value 830

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 Contents xv

The Modigliani and Miller Models and the Compressed Adjusted Present Value (APV)
Model 833
Dynamic Capital Structures and the Adjusted Present Value (APV) Model 840
Risky Debt and Equity as an Option 844
Introducing Personal Taxes: The Miller Model 848
Capital Structure Theory: Arbitrage Proofs of the Modigliani-Miller Theorems 852
Summary 858

CHAPTER 22
Mergers and Corporate Control 867
Rationale for Mergers 868
Types of Mergers 871
Level of Merger Activity 871
Hostile versus Friendly Takeovers 872
Merger Regulation 874
Overview of Merger Analysis 875
The Free Cash Flow to Equity (FCFE) Approach 876
Illustration of the Three Valuation Approaches for a Constant Capital Structure 878
Setting the Bid Price 884
Analysis When There Is a Permanent Change in Capital Structure 886
Taxes and the Structure of the Takeover Bid 888
Box: Tempest in a Teapot? 889
Financial Reporting for Mergers 892
Analysis for a “True Consolidation” 894
The Role of Investment Bankers 895
Who Wins: The Empirical Evidence 896
Box: Merger Mistakes 897
Corporate Alliances 898
Divestitures 898
Holding Companies 899
Summary 901
Web Extensions
22A: Projecting Consistent Debt and Interest Expenses

CHAPTER 23
Enterprise Risk Management 909
Box: Corporate Valuation and Risk Management 910
Reasons to Manage Risk 910
An Overview of Enterprise Risk Management 913
A Framework for Enterprise Risk Management 915
Categories of Risk Events 918
Foreign Exchange (FX) Risk 920
Commodity Price Risk 921

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xvi Contents

Interest Rate Risk 925

Box: The Game of Truth or LIBOR 930
Project Selection Risks 933
Managing Credit Risks 936
Risk and Human Safety 938
Summary 939

CHAPTER 24
Bankruptcy, Reorganization, and Liquidation 943
Financial Distress and Its Consequences 944
Issues Facing a Firm in Financial Distress 946
Settlements without Going through Formal Bankruptcy 946
Federal Bankruptcy Law 949
Reorganization in Bankruptcy 950
Liquidation in Bankruptcy 959
Box: A Nation of Defaulters? 963
Anatomy of a Bankruptcy: Transforming the GM Corporation into the GM Company 963
Other Motivations for Bankruptcy 965
Some Criticisms of Bankruptcy Laws 966
Summary 967
Web Extensions
24A: Multiple Discriminant Analysis

PART 10 Special Topics 975

CHAPTER 25
Portfolio Theory and Asset Pricing Models 977
Box: Intrinsic Value, Risk, and Return 978
Efficient Portfolios 978
Choosing the Optimal Portfolio 983
The Basic Assumptions of the Capital Asset Pricing Model 986
The Capital Market Line and the Security Market Line 987
Calculating Beta Coefficients 991
Box: Skill or Luck? 992
Empirical Tests of the CAPM 999
Arbitrage Pricing Theory 1002
Summary 1005

CHAPTER 26
Real Options 1011
Valuing Real Options 1012
The Investment Timing Option: An Illustration 1013
The Growth Option: An Illustration 1023
Concluding Thoughts on Real Options 1028
Summary 1030

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 Contents xvii

Web Extensions
26A: The Abandonment Real Option
26B: Risk-Neutral Valuation

Appendix A Solutions to Self-Test Problems . . . . . . . . . . . . . . . . . . . . . . . . . . .

1035
Appendix B Answers to End-of-Chapter Problems . . . . . . . . . . . . . . . . . . . . . . 1067
Appendix C Selected Equations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1077
Appendix D Values of the Areas under the Standard Normal
Distribution Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1091
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1093
Name Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1121
Subject Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1127

Web Chapters
CHAPTER 27 Providing and Obtaining Credit
CHAPTER 28 Advanced Issues in Cash Management and Inventory Control
CHAPTER 29 Pension Plan Management
CHAPTER 30 Financial Management in Not-for-Profit Businesses

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
 © lulu/fotolia.com Preface

resource When we wrote the first edition of Financial Management: Theory and Practice, we had
Students: Access the four goals: (1) to create a text that would help students make better financial decisions; (2)
Financial Management: to provide a book that could be used in the introductory MBA course, but one that was
Theory and Practice
(14th Edition) companion complete enough for use as a reference text in follow-on case courses and after graduation;
site and online student (3) to motivate students by demonstrating that finance is both interesting and relevant;
resources by visiting and (4) to make the book clear enough so that students could go through the material
www.cengagebrain.
com, searching for ISBN without wasting either their time or their professors’ time trying to figure out what we
9781111972202, and clicking were saying.
“Access Now” under The collapse of the sub-prime mortgage market, the financial crisis, and the global
“Study Tools” to go to the
student companion site. economic crisis make it more important than ever for students and managers to under-
stand the role that finance plays in a global economy, in their own companies, and in their
Instructors: Access the own lives. So in addition to the four goals listed above, this edition has a fifth goal, to
Financial Management:
Theory and Practice prepare students for a changed world.
(14th Edition) companion
site and instructor
resources by going to
login.cengage.com, INTRINSIC VALUATION AS A UNIFYING THEME
logging in with your faculty
account username and
Our emphasis throughout the book is on the actions that a manager can and should take
password, and using to increase the intrinsic value of the firm. Structuring the book around intrinsic valuation
ISBN 9781111972202 to enhances continuity and helps students see how various topics are related to one another.
reach the site through
your account.
As its title indicates, this book combines theory and practical applications. An under-
standing of finance theory is essential for anyone developing and/or implementing
effective financial strategies. But theory alone isn’t sufficient, so we provide numerous
examples in the book and the accompanying Excel spreadsheets to illustrate how theory is
applied in practice. Indeed, we believe that the ability to analyze financial problems using
Excel also is essential for a student’s successful job search and subsequent career. There-
fore, many exhibits in the book come directly from the accompanying Excel spreadsheets.
Many of the spreadsheets also provide brief “tutorials” by way of detailed comments on
Excel features that we have found to be especially useful, such as Goal Seek, Tables, and
many financial functions.
The book begins with fundamental concepts, including background on the economic
and financial environment, financial statements (with an emphasis on cash flows), the
time value of money, bond valuation, risk analysis, and stock valuation. With this back-
ground, we go on to discuss how specific techniques and decision rules can be used to help
maximize the value of the firm. This organization provides four important advantages:
1. Managers should try to maximize the intrinsic value of a firm, which is determined
by cash flows as revealed in financial statements. Our early coverage of financial
statements helps students see how particular financial decisions affect the various
parts of the firm and the resulting cash flow. Also, financial statement analysis
provides an excellent vehicle for illustrating the usefulness of spreadsheets.
2. Covering time value of money early helps students see how and why expected future
cash flows determine the value of the firm. Also, it takes time for students to digest
TVM concepts and to learn how to do the required calculations, so it is good to
cover TVM concepts early and often.

xviii Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
 Preface xix

3. Most students—even those who do not plan to major in finance—are interested in

investments. The ability to learn is a function of individual interest and motivation,
so Financial Management’s early coverage of securities and security markets is
pedagogically sound.
4. Once basic concepts have been established, it is easier for students to understand
both how and why corporations make specific decisions in the areas of capital
budgeting, raising capital, working capital management, mergers, and the like.

INTENDED MARKET AND USE

Financial Management is designed primarily for use in the introductory MBA finance
course and as a reference text in follow-on case courses and after graduation. There is
enough material for two terms, especially if the book is supplemented with cases and/or
selected readings. The book can also be used as an undergraduate introductory text for
exceptionally good students, or where the introductory course is taught over two terms.

IMPROVEMENTS IN THE 14TH EDITION

As in every revision, we updated and clarified materials throughout the text, reviewing the
entire book for completeness, ease of exposition, and currency. We made hundreds of
small changes to keep the text up to date, with particular emphasis on updating the real-
world examples and including the latest changes in the financial environment and
financial theory. In addition, we made a number of larger changes. Some affect all
chapters, some involve reorganizing sections among chapters, and some modify material
covered within specific chapters.

Changes That Affect All Chapters

Following are some of the changes that affect all chapters.

THE GLOBAL ECONOMIC CRISIS. In every chapter we use real-world examples to show
how the chapter’s topics are related to some aspect of the global economic crisis. In
addition, many chapters have “Global Economic Crisis” boxes that focus on important
issues related to the crisis. Last edition we began using the global economic crisis to
illustrate important learning points, and we have continued that in this edition.

ADDITIONAL INTEGRATION WITH EXCEL. We have continued to integrate the textbook and
the accompanying Excel Tool Kit spreadsheet models for each chapter. Many figures in the
textbook show the appropriate area from the chapter’s Excel Tool Kit model. This makes the
analysis more transparent to the students and better enables them to follow the analysis in
the Excel model. In addition, we have added the Mini Case data to a worksheet in the Excel
Tool Kits in selected chapters, saving time for those students who do the Mini Cases.

IMPROVEMENTS IN MICRODRIVE. As in previous editions, we use a hypothetical

company, MicroDrive, as a running example to provide continuity and help students
move up the learning curve more efficiently. However, we have made several changes to
MicroDrive’s financial statements for this edition. First, the values are now all integers and
in most cases end with zero, which simplifies many calculations. This seemingly minor
change helps students learn the finance topics without being distracted by complicated
calculations. Second, we have broken operating costs into costs of goods sold (excluding

Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xx Preface

depreciation), other operating costs, and depreciation. This allows more flexibility in
defining ratios and in forecasting financial statements. Third, we have modified the
values in the financial statements so that MicroDrive can be used as the illustrative
company in more chapters and more topics than in the previous editions, especially in
measuring systematic risk and estimating intrinsic value with the free cash flow model.

Notable Changes within Selected Chapters

We made too many small improvements within each chapter to mention them all, but
some of the more notable ones are discussed below.

CHAPTER 1: AN OVERVIEW OF FINANCIAL MANAGEMENT AND THE FINANCIAL ENVIRON-

MENT. We added a box on high-frequency trading, “Life in the Fast Lane: High-Frequency
Trading!,” and a box on mortgage-backed securities, “Anatomy of a Toxic Asset.” We also
increased our coverage of the global economic crisis to reflect changes in the past three years,
including a section on the Dodd-Frank Act.

CHAPTER 2: FINANCIAL STATEMENTS, CASH FLOW, AND TAXES. We reorganized and

better integrated the sections on the statement of cash flows, operating cash flow, and free
cash flow. We now have a single section focusing on the use of free cash flow and its
components as performance measures. We added two new boxes. “Filling in the GAAP”
describes the planned convergence of GAAP and IFRS; “When It Comes to Taxes, History
Repeats and Repeals Itself!” discusses the actual taxes (or lack thereof) paid by many
corporations. MicroDrive is the company used as a running example throughout the book.
We changed its financial statements so that MicroDrive would provide additional learning
points when we cover valuation and forecasting in Chapter 12.

CHAPTER 3: ANALYSIS OF FINANCIAL STATEMENTS. We updated and revised the opening

vignette to describe Macy’s earnings announcement and its stock price reaction. In
previous editions, we defined the inventory turnover ratio using sales instead of COGS
because some compilers of financial ratio statistics, such as Dun & Bradstreet, use the ratio
of sales to inventories. However, most sources now report the turnover ratio using COGS,
so we have changed our definition to conform to the majority of reporting organizations
and now define the inventory turnover ratio as COGS/Inventories. Also, to be more
consistent with many Web-based reporting organizations, we now define the debt ratio
as total debt divided by total assets, the market debt ratio as total debt divided by total
debt plus the market value of equity, and the debt-to-equity ratio as total debt divided by
total common equity. MicroDrive is the company used as a running example throughout
the book, and we changed its financial statements (which change its ratios) so that
MicroDrive would offer additional learning points when we cover valuation and
forecasting in Chapter 12.

CHAPTER 4: TIME VALUE OF MONEY. We added a new box, “It’s a Matter of Trust,” that
describes the future value of several multi-century trusts. Another new box, “What You
Know Is What You Get: Not in Payday Lending,” which describes the effects of better
disclosure on consumer borrowing decisions. We moved the section on perpetuities so
that it now comes before the section on annuities, because perpetuities are simpler than
annuities and because perpetuities are the “building blocks” of annuities. We also
modified the example of consols to be denominated in pounds instead of dollars as part
of our effort to add more international examples to each chapter. We added a discussion

Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
 Preface xxi

of mortgage payments in Section 4.17, comparing the total interest paid on a 30-year
mortgage to a 15-year mortgage.

CHAPTER 5: BONDS, BOND VALUATION, AND INTEREST RATES. We refocused the

opening vignette on the amount of debt held by corporations, noncorporate businesses,
and households. We updated the box “Betting with or against the U.S. Government: The
Case of Treasury Bond Credit Default Swaps” to reflect the debt-ceiling crisis of July 2011.
We added another new box describing the handful of AAA rated companies, “The Few,
the Proud, the… AAA-Rated Companies!” We revised another box, “Fear and
Rationality,” to include the TED spread as well as the Hi-Yield bond spread. We also
added a brief discussion of duration and its use as a measure of risk. MicroDrive is the
company used as a running example throughout the book. We changed its example bond
offering to be consistent with MicroDrive’s revised financial statements.

CHAPTER 6: RISK AND RETURN. As a part of our effort to integrate the illustrative
company MicroDrive throughout the book, we made significant changes in this
chapter. We begin with a discussion of discrete probability distributions involving
different market scenarios and then segue into continuous distributions and estimating
means and standard deviations using historical data for MicroDrive. We discuss 2-stock
portfolios and the impact of diversification by using data for MicroDrive and another
company. This sets the stage for a discussion of market risk versus diversifiable risk and
the appropriate measure of market risk, beta. We then describe the risk-return
relationship defined by the CAPM and the basic concept of market equilibrium. This
provides a natural transition into the efficient market hypothesis (previously in Chapter 7,
the stock valuation chapter). We also added optional sections covering the Fama-French
3-factor model and behavioral finance. These optional sections can be omitted without
loss of continuity, or they can be covered to provide more depth on the topic of market
efficiency and asset pricing. This new organization consolidates our treatment of risk and
return and also illustrates these concepts with MicroDrive, providing a more effective
learning experience for students.

CHAPTER 7: VALUATION OF STOCKS AND CORPORATIONS. We moved coverage of

efficient markets into Chapter 6, where it is a natural extension of risk and return. This
change permits Chapter 7 to focus on stock valuation. In addition to the dividend growth
model, we moved coverage of the free cash flow valuation model from later in the book
into Chapter 7; this chapter now provides comprehensive coverage of stock valuation via
the dividend growth model and the free cash flow corporate valuation model.

CHAPTER 9: THE COST OF CAPITAL. We have a new opening vignette focusing on the
importance of the cost of capital to companies making equipment purchases. A new box,
“How Effective Is the Effective Corporate Tax Rate?,” shows the differences between the
statutory rate and the effective rate over time; it also compares the U.S. statutory and
effective rate with those of other developed economies. For better integration, we now use
the company in our running example, MicroDrive, to illustrate cost of capital estimation.
We streamlined the chapter’s coverage of the forward-looking risk premium by moving
the discussion of the relatively complex multistage model to a Web Extension. This allows
the text’s coverage of the forward-looking premium focus on the concepts all MBA
students need to understand, while at the same time letting the Web Extension address
additional issues in more detail, such as the application of multistage models and the

Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xxii Preface

impact of stock repurchases. We now cover the over-own-bond-yield-plus-judgmental-

risk-premium approach in the section on privately held companies, because this approach
is used more often for such companies.

CHAPTER 10: THE BASICS OF CAPITAL BUDGETING: EVALUATING CASH FLOWS. The new
opening vignette describes John Deere’s expansion plans and its commitment to disciplined
capital budgeting. We improved the integration with Chapter 11 by revising the numerical
example in Chapter 10 so that the cash flows for Project L are now the cash flows that we
estimate in Chapter 11. We put all the material related to IRR (such as the possibility of
multiple IRRs) in a single section to make our coverage of IRR more cohesive.

CHAPTER 11: CASH FLOW ESTIMATION AND RISK ANALYSIS. A new opening vignette
describes how several companies use risk analysis when making capital budgeting
decisions. We revised the numerical example so that the cash flows we estimate in this
chapter are the same cash flows we use in Chapter 10 for Project L.

CHAPTER 12: CORPORATE VALUATION AND FINANCIAL PLANNING. We divided the

financial planning process into two activities. First, we show how to forecast the
operating portion of a financial plan, including free cash flows and estimates of intrinsic
value. Second, we show how to take the operating forecast and combine it with a
preliminary financial policy to forecast the complete financial statements. This structure
makes it easier for students to grasp and gives instructors a choice of covering just the
operating forecast or covering the complete projection of financial statements.

CHAPTER 13: AGENCY CONFLICTS AND CORPORATE GOVERNANCE. We moved the

valuation material from the previous edition to the stock valuation chapter (Chapter 7)
and to the financial forecasting chapter (Chapter 13). In addition to better integrating the
topics in those chapters, the move allows us to focus on agency conflicts and corporate
governance in this chapter. We added a new opening vignette describing the shareholder
rejection of Citigroup’s proposed compensation plan at the 2012 annual meetings.

CHAPTER 14: DISTRIBUTIONS TO SHAREHOLDERS: DIVIDENDS AND REPURCHASES. We

added a new opening vignette describing Apple’s dividend initiation. We added a new
Self-Test Problem addressing the impact of dividends versus repurchases.

CHAPTER 15: CAPITAL STRUCTURE DECISIONS. While updating Section 15-4 to include
results from the latest empirical tests, we also reorganized the material and added subheadings
to make it easier to for students to synthesize. We moved the current valuation of Strausburg,
the illustrative company, so that it immediately precedes Strausburg’s recapitalization, which
provides a better segue into the valuation effects of recapitalizations.

CHAPTER 16: SUPPLY CHAINS AND WORKING CAPITAL MANAGEMENT. We added two
new boxes, “Your Check Isn’t in the Mail,” and “A Wag of the Finger or Tip of the Hat?
The Colbert Report and Small Business Payment Terms.” We rewrote the first section in
the chapter to better distinguish between cash (including cash equivalents and marketable
securities) used to support current operations and short-term investments (including
marketable securities) held for possible future uses. We continued this distinction
throughout the chapter in our discussions of cash management and managing short-
term investments. Recall that in Chapter 3 we updated our definition of inventory
turnover ratio to COGS/Inventories to be consistent with the majority of reporting, so
we followed through with that definition in Chapter 16.

Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Another Random Scribd Document
with Unrelated Content
 Anthropology - Answer Key
Third 2022 - Research Center

Prepared by: Dr. Garcia

Date: July 28, 2025

Quiz 1: Critical analysis and evaluation

Learning Objective 1: Historical development and evolution
• Ethical considerations and implications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Learning Objective 2: Experimental procedures and results
• Case studies and real-world applications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Learning Objective 3: Research findings and conclusions
• Interdisciplinary approaches
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Learning Objective 4: Practical applications and examples
• Study tips and learning strategies
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Formula: [Mathematical expression or equation]
Learning Objective 5: Experimental procedures and results
• Key terms and definitions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Remember: Fundamental concepts and principles
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Comparative analysis and synthesis
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Practice Problem 7: Fundamental concepts and principles
• Critical analysis and evaluation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Definition: Best practices and recommendations
• Current trends and future directions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Remember: Comparative analysis and synthesis
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Methodology 2: Comparative analysis and synthesis
Example 10: Comparative analysis and synthesis
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Note: Key terms and definitions
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Definition: Best practices and recommendations
• Fundamental concepts and principles
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Key Concept: Interdisciplinary approaches
• Practical applications and examples
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Experimental procedures and results
• Best practices and recommendations
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Definition: Key terms and definitions
• Current trends and future directions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Example 16: Learning outcomes and objectives
• Problem-solving strategies and techniques
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 17: Diagram/Chart/Graph]
Example 17: Study tips and learning strategies
• Study tips and learning strategies
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Example 18: Statistical analysis and interpretation
• Experimental procedures and results
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Practice Problem 19: Problem-solving strategies and techniques
• Learning outcomes and objectives
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Module 3: Problem-solving strategies and techniques
Note: Literature review and discussion
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Important: Learning outcomes and objectives
• Fundamental concepts and principles
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Best practices and recommendations
• Research findings and conclusions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Practical applications and examples
• Problem-solving strategies and techniques
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Example 24: Fundamental concepts and principles
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Key Concept: Current trends and future directions
• Research findings and conclusions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Note: Learning outcomes and objectives
• Learning outcomes and objectives
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Practice Problem 27: Statistical analysis and interpretation
• Theoretical framework and methodology
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 28: Diagram/Chart/Graph]
Note: Key terms and definitions
• Critical analysis and evaluation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Example 29: Research findings and conclusions
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Test 4: Practical applications and examples
Practice Problem 30: Literature review and discussion
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 31: Diagram/Chart/Graph]
Key Concept: Interdisciplinary approaches
• Current trends and future directions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Key Concept: Interdisciplinary approaches
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 33: Diagram/Chart/Graph]
Note: Current trends and future directions
• Comparative analysis and synthesis
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 34: Diagram/Chart/Graph]
Definition: Historical development and evolution
• Statistical analysis and interpretation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 35: Diagram/Chart/Graph]
Important: Statistical analysis and interpretation
• Learning outcomes and objectives
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 36: Diagram/Chart/Graph]
Important: Fundamental concepts and principles
• Experimental procedures and results
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Note: Literature review and discussion
• Research findings and conclusions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Example 38: Study tips and learning strategies
• Interdisciplinary approaches
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 39: Diagram/Chart/Graph]
Remember: Statistical analysis and interpretation
• Learning outcomes and objectives
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Topic 5: Comparative analysis and synthesis
Important: Fundamental concepts and principles
• Practical applications and examples
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Remember: Ethical considerations and implications
• Theoretical framework and methodology
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Note: Fundamental concepts and principles
• Practical applications and examples
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 43: Diagram/Chart/Graph]
Practice Problem 43: Interdisciplinary approaches
• Ethical considerations and implications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Remember: Interdisciplinary approaches
• Statistical analysis and interpretation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 45: Diagram/Chart/Graph]
Practice Problem 45: Literature review and discussion
• Fundamental concepts and principles
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Research findings and conclusions
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Important: Critical analysis and evaluation
• Best practices and recommendations
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Practice Problem 48: Assessment criteria and rubrics
• Research findings and conclusions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Theoretical framework and methodology
• Problem-solving strategies and techniques
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Methodology 6: Statistical analysis and interpretation
Remember: Research findings and conclusions
• Ethical considerations and implications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Best practices and recommendations
• Experimental procedures and results
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Example 52: Historical development and evolution
• Key terms and definitions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 53: Diagram/Chart/Graph]
Definition: Research findings and conclusions
• Study tips and learning strategies
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Theoretical framework and methodology
• Best practices and recommendations
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Practice Problem 55: Best practices and recommendations
• Key terms and definitions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 56: Diagram/Chart/Graph]
Definition: Learning outcomes and objectives
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Formula: [Mathematical expression or equation]
Key Concept: Literature review and discussion
• Current trends and future directions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 58: Diagram/Chart/Graph]
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