Fundamentals of Corporate Finance

About our authors Jonathan Berk, Stanford University, is the A.P. Giannini Professor of Finance at the Graduate School of Business, Stanford University and is a Research Associate at the National Bureau of Economic Research. Prior to earning his PhD, he worked as an Associate at Goldman Sachs (where his education in finance really began). Professor Berk’s research interests in finance include corporate valuation, capital structure, mutual funds, asset pricing, experimental economics and labor economics.Peter DeMarzo, Stanford University, is the Mizuho Financial Group Professor of Finance and former Senior Associate Dean for Academic Affairs at the Stanford Graduate School of Business. He is also a Research Associate at the National Bureau of Economic Research. He currently teaches MBA and PhD courses in corporate finance and financial modeling. In addition to his experience at the Stanford Graduate School of Business, Professor DeMarzo has taught at the Haas School of Business and the Kellogg Graduate School of Management, and he was a National Fellow at the Hoover Institution.Jarrad Harford, University of Washington, is the Marion B. Ingersoll Professor of Finance at the University of Washington. Prior to Washington, Professor Harford taught at the Lundquist College of Business at the University of Oregon. He received his PhD in Finance with a minor in Organizations and Markets from the University of Rochester. Harford has taught the core undergraduate finance course, Business Finance, for over 16 years, as well as an elective in mergers and acquisitions, and “Finance for Non-financial Executives” in the executive education program.

• PART 1: INTRODUCTION Corporate Finance and the Financial ManagerIntroduction to Financial Statement AnalysisPART 2: INTEREST RATES AND VALUING CASH FLOWS Time Value of Money: An IntroductionTime Value of Money: Valuing Cash Flow StreamsInterest RatesBondsStock ValuationPART 3: VALUATION AND THE FIRM Investment Decision RulesFundamentals of Capital BudgetingStock Valuation: A Second LookPART 4: RISK AND RETURN Risk and Return in Capital MarketsSystematic Risk and the Equity Risk PremiumThe Cost of CapitalPART 5: LONG-TERM FINANCING Raising Equity CapitalDebt FinancingPART 6: CAPITAL STRUCTURE AND PAYOUT POLICY Capital StructurePayout PolicyPART 7: FINANCIAL PLANNING AND FORECASTING Financial Modeling and Pro Forma AnalysisWorking Capital ManagementShort-Term Financial PlanningPART 8: SPECIAL TOPICS Option Applications and Corporate FinanceMergers and AcquisitionsInternational Corporate FinanceCHAPTERS ON THE WEB LeasingInsurance and Risk ManagementCorporate Governance