ebook download Financial Management: Theory & Practice 15th Edition (eBook PDF) all chapter

Financial Management: Theory &
Practice 15th Edition (eBook PDF)

Go to download the full and correct content document:
https://ebooksecure.com/product/financial-management-theory-practice-15th-edition-
ebook-pdf/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
(eBook PDF) Financial Management Theory & Practice 15th

by Eugene
http://ebooksecure.com/product/ebook-pdf-financial-management-
theory-practice-15th-by-eugene/
Financial Management: Theory & Practice 15th Edition

Eugene F. Brigham - eBook PDF
https://ebooksecure.com/download/financial-management-theory-
practice-ebook-pdf/
(eBook PDF) Financial Management: Theory & Practice

16th Edition
theory-practice-16th-edition/
(eBook PDF) Financial Management: Theory and Practice

3rd edition
theory-and-practice-3rd-edition/
Financial Management Theory & Practice 16th Edition
Brigham - eBook PDF
https://ebooksecure.com/download/financial-management-theory-
practice-ebook-pdf-2/
Financial Management: Theory and Practice 10th 10th

Edition Prasanna Chandra - eBook PDF
https://ebooksecure.com/download/financial-management-theory-and-
practice-10th-ebook-pdf/
(eBook PDF) Management Theory & Practice 9th Edition
http://ebooksecure.com/product/ebook-pdf-management-theory-
practice-9th-edition/
(eBook PDF) Management Theory and Practice, 6th Edition
http://ebooksecure.com/product/ebook-pdf-management-theory-and-
(eBook PDF) Management Theory and Practice 9th Edition
http://ebooksecure.com/product/ebook-pdf-management-theory-and-
This is an electronic version of the print textbook. Due to electronic rights restrictions,
some third party content may be suppressed. Editorial review has deemed that any suppressed
content does not materially affect the overall learning experience. The publisher reserves the right
to remove content from this title at any time if subsequent rights restrictions require it. For
valuable information on pricing, previous editions, changes to current editions, and alternate
formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for
materials in your areas of interest.
Important Notice: Media content referenced within the product description or the product
text may not be available in the eBook version.
Copyright 2017 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.
Financial Management: Theory and Practice: 2017, 2014 Cengage Learning®
Fifteenth Edition WCN: 02-200-203
Eugene F. Brigham and Michael C. Ehrhardt ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be
reproduced or distributed in any form or by any means, except as permitted by U.S.
Vice President, General Manager: Science, Math
copyright law, without the prior written permission of the copyright owner.
and Quantitative Business: Balraj Kalsi
Product Director: Mike Schenk
Product Team Manager: Joe Sabatino For product information and technology assistance, contact us at
Senior Product Manager: Mike Reynolds Cengage Learning Customer & Sales Support, 1-800-354-9706
Senior Product Assistant: Adele Scholtz For permission to use material from this text or product,
Associate Content Developer: Brad Sullender submit all requests online at www.cengage.com/permissions
Further permissions questions can be emailed to
Senior Marketing Manager: Nathan Anderson permissionrequest@cengage.com
Content Project Manager: Jana Lewis
Manufacturing Planner: Kevin Kluck Unless otherwise noted, all images are © Cengage Learning.
Marketing Coordinator: Eileen Corcoran Library of Congress Control Number: 2015943329
Media Developer: Mark Hopkinson ISBN: 978-1-305-63229-5
Production Service: Integra Software Services
Pvt. Ltd. Cengage Learning
20 Channel Center Street
Senior Art Director: Michelle Kunkler
Boston, MA 02210
Internal Designer: Ramsdell Design USA
Cover Designer: Ramsdell Design
Cover Image: © EpicStockMedia/Shutterstock. Cengage Learning is a leading provider of customized learning solutions with
com, © Panda3800/Shutterstock.com employees residing in nearly 40 different countries and sales in more than 125
Intellectual Property Analyst: Brittani Morgan countries around the world. Find your local representative at www.cengage.com.
Project Manager: Erika Mugavin Cengage Learning products are represented in Canada by Nelson Education, Ltd.
To learn more about Cengage Learning Solutions, visit www.cengage.com
Purchase any of our products at your local college store or at our preferred online
store www.cengagebrain.com
Brief Contents
© EpicStockMedia/Shutterstock.com
Preface xix
PART 1 THE COMPANY AND ITS PART 3 STOCKS AND OPTIONS 239
ENVIRONMENT 1
CHAPTER 6 Risk and Return 241
CHAPTER 1 An Overview of Financial Web Extensions 6A: Continuous Probability
Management and the Financial Distributions
Environment 3
Web Extensions 6B: Estimating Beta with a Financial
1A: An Overview of Derivatives
Web Extensions Calculator
CHAPTER 2 Financial Statements, Cash Flow,
CHAPTER 7 Corporate Valuation and Stock
and Taxes 57
Valuation 293
Web Extension 2A: The Federal Income Tax System for
Web Extension 7A: Derivation of Valuation
Individuals
Equations
CHAPTER 3 Analysis of Financial
CHAPTER 8 Financial Options and Applications
Statements 101
in Corporate Finance 343
PART 2 FIXED INCOME SECURITIES 137 PART 4 PROJECTS AND THEIR

CHAPTER 4 Time Value of Money 139 VALUATION 373
Web Extensions 4A: The Tabular Approach CHAPTER 9 The Cost of Capital 375
4B: Derivation of Annuity Formulas Web Extension 9A: The Required Return Assuming
4C: Continuous Compounding Nonconstant Dividends and Stock
Repurchases
CHAPTER 5 Bonds, Bond Valuation, and
Interest Rates 193 CHAPTER 10 The Basics of Capital Budgeting:
Evaluating Cash Flows 413
Web Extensions 5A: A Closer Look at Zero Coupon
and Other OID Bonds Web Extension 10A: The Accounting Rate of Return
(ARR)
Web Extensions 5B: A Closer Look at TIPS: Treasury
Inflation-Protected Securities CHAPTER 11 Cash Flow Estimation and Risk
Web Extensions 5C: A Closer Look at Bond Risk: Analysis 453
Duration Web Extension 11A: Certainty Equivalents and Risk-
Adjusted Discount Rates
Web Extensions 5D: The Pure Expectations Theory and
Estimation of Forward Rates
vi Brief Contents
CHAPTER 20 Hybrid Financing: Preferred

PART 5 CORPORATE VALUATION AND Stock, Warrants, and
GOVERNANCE 501 Convertibles 819
CHAPTER 12 Corporate Valuation and Financial Web Extensions 20A: Calling Convertible Issues
Planning 503
CHAPTER 13 Corporate Governance 541
PART 9 STRATEGIC FINANCE IN
A DYNAMIC ENVIRONMENT 847
PART 6 CASH DISTRIBUTIONS AND CHAPTER 21 Dynamic Capital Structures and
CAPITAL STRUCTURE 563 Corporate Valuation 849
CHAPTER 14 Distributions to Shareholders: Web Extensions 21A: Projecting Consistent Debt and
Dividends and Repurchases 565 Interest Expenses
CHAPTER 22 Mergers and Corporate
CHAPTER 15 Capital Structure Decisions 607
Control 873
Web Extension 15A: Degree of Leverage
CHAPTER 23 Enterprise Risk
Web Extension 15B: Capital Structure Theory: Management 911
Arbitrage Proofs of the Modigliani-
CHAPTER 24 Bankruptcy, Reorganization, and
Miller Theorems
Liquidation 947
Web Extensions 24A: Multiple Discriminant
PART 7 MANAGING GLOBAL Analysis
OPERATIONS 653
PART 10 SPECIAL TOPICS 979
CHAPTER 16 Supply Chains and Working
Capital Management 655 CHAPTER 25 Portfolio Theory and Asset Pricing
Web Extension 16A: Secured Short-Term Financing Models 981
CHAPTER 17 Multinational Financial CHAPTER 26 Real Options 1015
Management 705 Web Extensions 26A: The Abandonment Real
Option
PART 8 TACTICAL FINANCING Web Extensions 26B: Risk-Neutral Valuation

DECISIONS 749
CHAPTER 18 Public and Private Financing: Initial APPENDIXES
Offerings, Seasoned Offerings, and
Investment Banks 751 APPENDIX A Solutions to Self-Test Problems 1041
APPENDIX B Answers to End-of-Chapter
Web Extensions 18A: Rights Offerings
Problems 1075
CHAPTER 19 Lease Financing 791 APPENDIX C Selected Equations 1085
Web Extensions 19A: Leasing Feedback APPENDIX D Values of the Areas under the
Web Extensions 19B: Percentage Cost Analysis Standard Normal Distribution
Web Extensions 19C: Leveraged Leases Function 1099
Brief Contents vii
GLOSSARY AND INDEXS WEB CHAPTERS:
Glossary 1101 CHAPTER 27 Providing and Obtaining Credit

Name Index 1149 CHAPTER 28 Advanced Issues in Cash
Subject Index 1153 Management and Inventory
Control
CHAPTER 29 Pension Plan Management
CHAPTER 30 Financial Management in Not-
for-Profit Businesses
Contents
© Panda3800/Shutterstock.com
Preface xix CHAPTER 2

Financial Statements, Cash Flow,
and Taxes 57
PART 1 THE COMPANY AND ITS Box: Intrinsic Value, Free Cash Flow, and
ENVIRONMENT 1 Financial Statements 58
Financial Statements and Reports 58
CHAPTER 1
The Balance Sheet 59
An Overview of Financial
Box: The Great Recession of 2007: Let s Play
Management and the Financial
Hide-and-Seek! 62
Environment 3
The Income Statement 62
The Five-Minute MBA 4
Statement of Stockholders’ Equity 65
Finance from 40,000 Feet Above 4
Box: Financial Analysis on the Web 66
The Corporate Life Cycle 5
Statement of Cash Flows 66
Governing a Corporation 10
Box: Filling in the GAAP 69
Box: Be Nice with a B-Corp 12
Net Cash Flow 70
Box: Taxes and Whistleblowing 14
Free Cash Flow: The Cash Flow Available for
An Overview of Financial Markets 14
Distribution to Investors 70
Claims on Future Cash Flows: Types of Financial
Box: Sarbanes-Oxley and Financial Fraud 76
Securities 16
Performance Evaluation 78
Claims on Future Cash Flows: The Required Rate
of Return (The Cost of Money) 20 The Federal Income Tax System 84
The Functions of Financial Institutions 24 Box: When It Comes to Taxes, History Repeats
and Repeals Itself! 86
Financial Markets 29
Summary 89
Overview of the U.S. Stock Markets 33
Web Extension
Trading in the Modern Stock Markets 34
2A: The Federal Income Tax System for
Box: Measuring the Market 42 Individuals
Finance and the Great Recession of 2007 42
Box: Anatomy of a Toxic Asset 50 CHAPTER 3
The Big Picture 52 Analysis of Financial Statements 101
e-Resources 53 Box: Intrinsic Value and Analysis of Financial
Summary 53 Statements 102
Web Extensions Financial Analysis 102
1A: An Overview of Derivatives Liquidity Ratios 104
ix
x Contents
Asset Management Ratios 106 Finding Annuity Payments, Periods, and Interest
Debt Management Ratios 109 Rates 162
Box: The Great Recession of 2007: The Price Is Box: Variable Annuities: Good or Bad? 163
Right! (Or Wrong!) 110 Box: Using the Internet for Personal Financial
Profitability Ratios 114 Planning 164
Box: The World Might Be Flat, but Global Uneven, or Irregular, Cash Flows 165
Accounting Is Bumpy! The Case of IFRS versus Future Value of an Uneven Cash Flow Stream 168
FASB 115 Solving for I with Irregular Cash Flows 169
Market Value Ratios 116 Semiannual and Other Compounding Periods 170
Trend Analysis, Common Size Analysis, and Box: Truth in Lending: What Loans Really Cost 173
Percentage Change Analysis 120 Fractional Time Periods 174
Tying the Ratios Together: The DuPont Amortized Loans 175
Equation 123
Box: What You Know Is What You Get: Not in
Comparative Ratios and Benchmarking 124 Payday Lending 176
Uses and Limitations of Ratio Analysis 125 Growing Annuities 178
Box: Ratio Analysis on the Web 126
Box: The Great Recession of 2007: An Accident
Looking Beyond the Numbers 126 Waiting to Happen: Option Reset Adjustable Rate
Summary 127 Mortgages 179
Summary 181
Web Extensions
PART 2 FIXED INCOME SECURITIES 137 4A: The Tabular Approach
4B: Derivation of Annuity Formulas
CHAPTER 4 4C: Continuous Compounding
Time Value of Money 139
Box: Corporate Valuation and the Time Value of
Money 140 CHAPTER 5
Bonds, Bond Valuation, and Interest
Time Lines 140
Rates 193
Future Values 141
Box: Intrinsic Value and the Cost of Debt 194
Box: Hints on Using Financial Calculators 145
Who Issues Bonds? 194
Present Values 149
Box: Betting With or Against the U.S.
Box: It s a Matter of Trust 150 Government: The Case of Treasury Bond Credit
Finding the Interest Rate, I 153 Default Swaps 196
Finding the Number of Years, N 154 Key Characteristics of Bonds 196
Perpetuities 154 Bond Valuation 200
Annuities 155 Changes in Bond Values Over Time 205
Future Value of an Ordinary Annuity 156 Box: Chocolate Bonds 208
Box: The Power of Compound Interest 159 Bonds with Semiannual Coupons 208
Future Value of an Annuity Due 159 Bond Yields 209
Present Value of Ordinary Annuities and Annuities The Pre-Tax Cost of Debt: Determinants of Market
Due 160 Interest Rates 212
Contents xi
The Risk-Free Interest Rate: Nominal (rRF) and Box: The Benefits of Diversifying Overseas 263
Real (r *) 213 The Relationship between Risk and Return in the
The Inflation Premium (IP) 214 Capital Asset Pricing Model 263
The Maturity Risk Premium (MRP) 216 Box: Another Kind of Risk: The Bernie Madoff
The Default Risk Premium (DRP) 219 Story 271
Box: Insuring with Credit Default Swaps: Let the The Efficient Markets Hypothesis 272
Buyer Beware! 221 The Fama-French Three-Factor Model 276
Box: The Great Recession of 2007: U.S. Treasury Behavioral Finance 280
Bonds Downgraded! 223 The CAPM and Market Efficiency: Implications for
Box: The Few, the Proud, the AAA-Rated Corporate Managers and Investors 282
Companies! 225 Summary 283
The Liquidity Premium (LP) 225 Web Extensions
Box: The Great Recession of 2007: Fear and 6A: Continuous Probability Distributions
Rationality 226
6B: Estimating Beta with a Financial Calculator
The Term Structure of Interest Rates 226
Financing with Junk Bonds 228
Bankruptcy and Reorganization 228 CHAPTER 7
Corporate Valuation and Stock
Summary 229
Valuation 293
Web Extensions
Box: Corporate Valuation and Stock Prices 294
5A: A Closer Look at Zero Coupon and Other OID
Bonds Legal Rights and Privileges of Common
5B: A Closer Look at TIPS: Treasury Inflation- Stockholders 294
Protected Securities Types of Common Stock 295
5C: A Closer Look at Bond Risk: Duration Stock Market Reporting 296
5D: The Pure Expectations Theory and Valuing Common Stocks—Introducing the Free
Estimation of Forward Rates Cash Flow (FCF) Valuation Model 297
The Constant Growth Model: Valuation When
PART 3 STOCKS AND OPTIONS 239 Expected Free Cash Flow Grows at a Constant
Rate 300
CHAPTER 6
Risk and Return 241 The Multistage Model: Valuation when Expected
Short-Term Free Cash Flow Grows at a
Box: Intrinsic Value, Risk, and Return 242
Nonconstant Rate 305
Investment Returns and Risk 242
Application of the FCF Valuation Model to
Measuring Risk for Discrete Distributions 243 MicroDrive 309
Risk in a Continuous Distribution 247 Do Stock Values Reflect Long-Term or Short-Term
Box: What Does Risk Really Mean? 249 Cash Flows? 315
Using Historical Data to Estimate Risk 249 Value-Based Management: Using the Free Cash Flow
Box: The Historic Trade-Off between Risk and Valuation Model to Identify Value Drivers 316
Return 252 Why Are Stock Prices So Volatile? 319
Risk in a Portfolio Context 252 Valuing Common Stocks with the Dividend
The Relevant Risk of a Stock: The Capital Asset Growth Model 320
Pricing Model (CAPM) 256 The Market Multiple Method 328
xii Contents
Comparing the FCF Valuation Model, the Box: How Effective Is the Effective Corporate Tax
Dividend Growth Model, and the Market Rate? 382
Multiple Method 329 Cost of Preferred Stock, rps 384
Preferred Stock 330 Cost of Common Stock: The Market Risk
Summary 331 Premium, RPM 384
Web Extensions Using the CAPM to Estimate the Cost of Common
7A: Derivation of Valuation Equations Stock, rs 388
Using the Dividend Growth Approach to Estimate
CHAPTER 8 the Cost of Common Stock 390
Financial Options and Applications in
The Weighted Average Cost of Capital
Corporate Finance 343 (WACC) 393
Box: The Intrinsic Value of Stock Options 344 Box: Global Variations in the Cost of Capital 395
Overview of Financial Options 344 Adjusting the Cost of Equity for Flotation
The Single-Period Binomial Option Pricing Costs 395
Approach 347 Privately Owned Firms and Small Businesses 397
Box: Financial Reporting for Employee Stock The Divisional Cost of Capital 398
Options 348
Estimating the Cost of Capital for Individual
The Single-Period Binomial Option Pricing Projects 401
Formula 353
Managerial Issues and the Cost of Capital 402
The Multi-Period Binomial Option Pricing
Summary 404
Model 355
The Black-Scholes Option Pricing Model Web Extensions
(OPM) 357 9A: The Required Return Assuming Nonconstant
Dividends and Stock Repurchases
Box: Taxes and Stock Options 362
The Valuation of Put Options 363
CHAPTER 10
Applications of Option Pricing in Corporate The Basics of Capital Budgeting:
Finance 365
Evaluating Cash Flows 413
Summary 367
Box: Corporate Valuation and Capital
Budgeting 414
PART 4 PROJECTS AND THEIR An Overview of Capital Budgeting 414
VALUATION 373 The First Step in Project Analysis 416
Net Present Value (NPV) 417
CHAPTER 9 Internal Rate of Return (IRR) 419
The Cost of Capital 375 Modified Internal Rate of Return (MIRR) 426
Box: Corporate Valuation and the Cost of
Profitability Index (PI) 429
Capital 376
Payback Period 430
The Weighted Average Cost of Capital 376
How to Use the Different Capital Budgeting
Choosing Weights for the Weighted Average Cost Methods 432
of Capital 378
Other Issues in Capital Budgeting 435
After-Tax Cost of Debt: rd 1 T and
rstd 1 T 379 Summary 441
Contents xiii
Web Extensions Additional Funds Needed (AFN) Equation

10A: The Accounting Rate of Return (ARR) Method 523
Forecasting When the Ratios Change 526
CHAPTER 11
Summary 530
Cash Flow Estimation and Risk
Analysis 453 CHAPTER 13
Corporate Governance 541
Box: Project Valuation, Cash Flows, and Risk
Analysis 454 Box: Corporate Governance and Corporate
Valuation 542
Identifying Relevant Cash Flows 454
Agency Conflicts 542
Analysis of an Expansion Project 459
Box: Mistakes in Cash Flow Estimation Can Kill
Innovation 466 Box: Would the U.S. Government Be an Effective
Board Director? 550
Risk Analysis in Capital Budgeting 467
Box: The Dodd-Frank Act and Say on Pay 552
Measuring Stand-Alone Risk 467
Box: The Sarbanes-Oxley Act of 2002 and
Sensitivity Analysis 468
Scenario Analysis 471
Box: International Corporate Governance 555
Monte Carlo Simulation 474
Employee Stock Ownership Plans (ESOPs) 557
Project Risk Conclusions 477
Summary 560
Replacement Analysis 478
Real Options 480
Phased Decisions and Decision Trees 482 PART 6 CASH DISTRIBUTIONS AND
Summary 485 CAPITAL STRUCTURE 563
Web Extensions CHAPTER 14
11A: Certainty Equivalents and Risk-Adjusted Distributions to Shareholders: Dividends
Discount Rates and Repurchases 565
Box: Uses of Free Cash Flow: Distributions to
PART 5 CORPORATE VALUATION AND Shareholders 566
GOVERNANCE 501 An Overview of Cash Distributions 566
CHAPTER 12 Procedures for Cash Distributions 568
Corporate Valuation and Financial Cash Distributions and Firm Value 571
Planning 503 Clientele Effect 575
Box: Corporate Valuation and Financial Signaling Hypothesis 576
Planning 504
Implications for Dividend Stability 577
Overview of Financial Planning 504
Box: The Great Recession of 2007: Will Dividends
Financial Planning at MicroDrive, Inc. 506 Ever Be the Same? 578
Forecasting Operations 508 Setting the Target Distribution Level: The Residual
Evaluating MicroDrive’s Strategic Initiatives 512 Distribution Model 578
Projecting MicroDrive’s Financial Statements 515 The Residual Distribution Model in Practice 580
Analysis and Selection of a Strategic Plan 519 A Tale of Two Cash Distributions: Dividends
The CFO’s Model 521 versus Stock Repurchases 581
xiv Contents
The Pros and Cons of Dividends and Overview of Supply Chain Management 656
Repurchases 590 Using and Financing Operating Current Assets 658
Box: Dividend Yields around the World 592 The Cash Conversion Cycle 662
Other Factors Influencing Distributions 592 Box: Some Firms Operate with Negative Working
Summarizing the Distribution Policy Decision 594 Capital! 667
Stock Splits and Stock Dividends 595 Inventory Management 668
Box: The Great Recession of 2007: Talk About a Receivables Management 669
Split Personality! 596 Box: Supply Chain Finance 671
Dividend Reinvestment Plans 598 Accruals and Accounts Payable (Trade Credit) 673
Summary 599 Box: A Wag of the Finger or Tip of the Hat? The
Colbert Report and Small Business Payment
CHAPTER 15 Terms 674
Capital Structure Decisions 607
The Cash Budget 677
Box: Corporate Valuation and Capital
Structure 608
Cash Management and the Target Cash
Balance 681
An Overview of Capital Structure 608
Box: Use It or Lose Part of It: Cash Can Be
Business Risk and Financial Risk 610
Costly! 682
Capital Structure Theory: The Modigliani and
Miller Models 614 Cash Management Techniques 682
Box: Yogi Berra on the MM Proposition 616 Managing Short-Term Investments 685
Capital Structure Theory: Beyond the Modigliani Box: Your Check Isn t in the Mail 686
and Miller Models 618 Short-Term Financing 687
Capital Structure Evidence and Implications 623 Short-Term Bank Loans 688
Estimating the Optimal Capital Structure 628 Commercial Paper 692
Anatomy of a Recapitalization 634 Use of Security in Short-Term Financing 692
Box: The Great Recession of 2007: Summary 693
Deleveraging 639
Web Extensions
Risky Debt and Equity as an Option 639
16A: Secured Short-Term Financing
Managing the Maturity Structure of Debt 642
Summary 645
CHAPTER 17
Web Extensions Multinational Financial Management 705
15A: Degree of Leverage
Box: Corporate Valuation in a Global Context 706
15B: Capital Structure Theory: Arbitrage Proofs
of the Modigliani-Miller Theorems Multinational, or Global, Corporations 706
Multinational versus Domestic Financial
PART 7 MANAGING GLOBAL Management 707
OPERATIONS 653 Exchange Rates 709
Exchange Rates and International Trade 714
CHAPTER 16
Supply Chains and Working Capital The International Monetary System and Exchange
Management 655 Rate Policies 715
Box: Corporate Valuation and Working Capital
Trading in Foreign Exchange 720
Management 656 Interest Rate Parity 722
Contents xv
Purchasing Power Parity 724 Web Extensions

Box: Hungry for a Big Mac? Go to Ukraine! 725 18A: Rights Offerings
Inflation, Interest Rates, and Exchange Rates 726
International Money and Capital Markets 726 CHAPTER 19
Lease Financing 791
Box: Greasing the Wheels of International
Business 727 Types of Leases 792
Box: Stock Market Indices around the World 731 Tax Effects 795
Multinational Capital Budgeting 732 Financial Statement Effects 796
Box: Consumer Finance in China 733 Box: Off-Balance Sheet Financing: Is It Going to
Disappear? 798
Box: Double Irish with a Dutch Twist 735
Evaluation by the Lessee 799
International Capital Structures 737
Evaluation by the Lessor 804
Multinational Working Capital Management 738
Other Issues in Lease Analysis 806
Summary 741
Box: What You Don t Know Can Hurt
You! 807
Box: Lease Securitization 809
PART 8 TACTICAL FINANCING
Other Reasons for Leasing 810
DECISIONS 749
Summary 811
CHAPTER 18 Web Extensions
Public and Private Financing: Initial 19A: Leasing Feedback
Offerings, Seasoned Offerings, and 19B: Percentage Cost Analysis
Investment Banks 751 19C: Leveraged Leases
The Financial Life Cycle of a Start-Up
Company 752 CHAPTER 20
The Decision to Go Public 753 Hybrid Financing: Preferred Stock,
The Process of Going Public: An Initial Public Warrants, and Convertibles 819
Offering 755
Preferred Stock 820
Equity Carve-Outs: A Special Type of IPO 765
Box: The Romance Had No Chemistry, but It Had
Other Ways to Raise Funds in the Capital a Lot of Preferred Stock! 822
Markets 766
Box: Hybrids Aren t Only for
Box: Where There s Smoke, There s Fire 770
Corporations 823
Investment Banking Activities 771
Warrants 824
Box: The Great Recession of 2007: What Was the
Role of Investment Banks? 773 Convertible Securities 830
The Decision to Go Private 773 A Final Comparison of Warrants and
Refunding Operations 775 Convertibles 837
Box: TVA Ratchets Down Its Interest Reporting Earnings When Warrants or
Expenses 779 Convertibles Are Outstanding 838
Managing the Risk Structure of Debt with Project Summary 839
Financing 781 Web Extensions
Summary 782 20A: Calling Convertible Issues
xvi Contents
Who Wins: The Empirical Evidence 898

PART 9 STRATEGIC FINANCE IN
Box: Merger Mistakes 898
A DYNAMIC ENVIRONMENT 847
Corporate Alliances 899
CHAPTER 21 Divestitures 900
Dynamic Capital Structures and
Holding Companies 901
Corporate Valuation 849
Summary 902
Box: Corporate Valuation and Capital Structure
Decisions 850
The Adjusted Present Value (APV) Approach 850 CHAPTER 23
Enterprise Risk Management 911
The Modigliani and Miller Models 853
Box: Corporate Valuation and Risk
The Compressed Adjusted Present Value (CAPV)
Management 912
Model 855
Reasons to Manage Risk 912
Multistage Valuation When the Capital Structure Is
Stable 856 An Overview of Enterprise Risk
Management 915
Illustration of the Three Valuation Approaches for
A Framework for Enterprise Risk
a Constant Capital Structure 860
Management 917
Analysis of a Dynamic Capital Structure 866 Categories of Risk Events 920
Summary 867 Foreign Exchange (FX) Risk 922
Web Extensions Commodity Price Risk 923
21A: Projecting Consistent Debt and Interest Interest Rate Risk 927
Expenses
Box: The Game of Truth or LIBOR 933
Project Selection Risks 935
CHAPTER 22
Managing Credit Risks 938
Mergers and Corporate Control 873
Risk and Human Safety 940
Rationale for Mergers 874
Summary 941
Types of Mergers 877
Level of Merger Activity 877 CHAPTER 24
Hostile versus Friendly Takeovers 878 Bankruptcy, Reorganization, and
Merger Regulation 879 Liquidation 947
Overview of Merger Analysis 881 Financial Distress and Its Consequences 948
Estimating a Target’s Value 882 Issues Facing a Firm in Financial Distress 949
Setting the Bid Price 886 Settlements without Going through Formal
Analysis When the Capital Structure Bankruptcy 950
Changes during the Explicit Forecast Federal Bankruptcy Law 952
Period 888 Reorganization in Bankruptcy (Chapter 11 of
Taxes and the Structure of the Takeover Bid 889 Bankruptcy Code) 953
Box: Tempest in a Teapot? 891 Liquidation in Bankruptcy 962
Financial Reporting for Mergers 892 Box: A Nation of Defaulters? 966
Analysis for a “True Consolidation” 895 Anatomy of a Bankruptcy: Transforming the GM
The Role of Investment Bankers 896 Corporation into the GM Company 967
Contents xvii
Other Motivations for Bankruptcy 968 The Growth Option: An Illustration 1027
Some Criticisms of Bankruptcy Laws 969 Concluding Thoughts on Real Options 1033
Summary 970 Summary 1034
Web Extensions Web Extensions
24A: Multiple Discriminant Analysis 26A: The Abandonment Real Option
26B: Risk-Neutral Valuation
PART 10 SPECIAL TOPICS 979
CHAPTER 25 APPENDIXES
Portfolio Theory and Asset Pricing
Appendix a Solutions to Self-Test Problems 1041
Models 981
Appendix b Answers to End-of-Chapter
Box: Intrinsic Value, Risk, and Return 982
Problems 1075
Efficient Portfolios 982 Appendix c Selected Equations 1085
Choosing the Optimal Portfolio 987 Appendix d Values of the Areas under the Standard
The Basic Assumptions of the Capital Asset Pricing Normal Distribution Function 1099
Model 990
The Capital Market Line and the Security Market
Line 991 GLOSSARY AND INDEXES
Calculating Beta Coefficients 995 Glossary 1101

Box: Skill or Luck? 996 Name Index 1149
Empirical Tests of the CAPM 1004 Subject Index 1153
Arbitrage Pricing Theory 1006
Summary 1009 WEB CHAPTERS:
Chapter 27 Providing and Obtaining Credit
CHAPTER 26 Chapter 28 Advanced Issues in Cash
Real Options 1015 Management and Inventory Control
Valuing Real Options 1016 Chapter 29 Pension Plan Management
The Investment Timing Option: An Chapter 30 Financial Management in Not-for-
Illustration 1017 Profit Businesses
Preface
© EpicStockMedia/Shutterstock.com
When we wrote the first edition of Financial Management: Theory and Practice, we
resource
Students: Access the
had four goals: (1) to create a text that would help students make better financial
Financial Management: decisions; (2) to provide a book that could be used in the introductory MBA course,
Theory and Practice but one that was complete enough for use as a reference text in follow-on case courses
(15th Edition)
companion site and and after graduation; (3) to motivate students by demonstrating that finance is both
online student resources interesting and relevant; and (4) to make the book clear enough so that students could
by visiting www
.cengagebrain.com, go through the material without wasting either their time or their professors’ time
searching ISBN trying to figure out what we were saying.
9781305632295, and
clicking “Access Now”
The events precipitating the recession of 2007, the dramatic changes in financial
under “Study Tools” to technology at stock exchanges across the world, and the sovereign debt crisis in
go to the student
textbook companion
Greece make it more important than ever for students and managers to understand
site. the role that finance plays in a global economy, in their own companies, and in their
own lives. So in addition to the four goals listed above, this edition has a fifth goal: to
Instructors: Access the
Financial Management: prepare students for a changed world.
Theory and Practice
(15th Edition)
Intrinsic Valuation as a Unifying Theme

companion site and
instructor resources by
going to login.cengage
.com, logging in with Our emphasis throughout the book is on the actions that a manager can and should
your faculty account
username and password, take to increase the intrinsic value of the firm. Structuring the book around intrinsic
and using ISBN valuation enhances continuity and helps students see how various topics are related
9781305632295 to reach
the site through your
to one another.
account. As the title indicates, this book combines theory and practical applications. An
understanding of finance theory is essential for anyone developing and/or implement-
ing effective financial strategies. But theory alone isn’t sufficient, so we provide
numerous examples in the book and the accompanying Excel spreadsheets to illus-
trate 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. Therefore, many exhibits in the book come directly from the
accompanying Excel spreadsheets. Many of the spreadsheets also provide brief “tutor-
ials” 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 background,
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
xix
xx Preface
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.
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.
Improvements in the 15th 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 GREAT RECESSION OF 2007

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
“Great Recession of 2007” boxes that focus on important issues related to the recent
recession.
CONTINUED 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 appro-
priate 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.
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.
Another random document with
no related content on Scribd:
reflector is then opened and the operator sights through the tube to
locate the station with which he is to communicate, and signals by
means of the push button key. It is essential that the lamp be held
rigidly and the sighting tube be continuously aimed exactly at the
receiving station during signaling. A slight movement of the lamp
makes the signals appear blurred or entirely invisible to the receiving
station. A lamp station should always be located in the shade or
protected from direct sun rays, which would otherwise produce a
continuous glare from the reflector and make the electric light signals
invisible. A lamp may be held in the hand while signaling or fastened
to anything that will aid stability. In permanent and semi-permanent
stations an arrangement for holding the lamp in a fixed position,
directed at the receiving station, should be installed. In addition, a
wooden tube tapering down in size toward the outer end and being 6
ft. to 9 ft. long and approximately the size of the lamp at the inner
end, should be constructed and also permanently aligned on the
receiving station. This reduces the diffusion of the rays of the lamp,
and also minimizes the possibility of the signals being read where
not intended.
Adjustments of Lamps.—The reflecting apparatus of a lamp is
carefully adjusted before it is issued. However, it is possible that a
slightly different adjustment will give better results when a new bulb
is inserted. To focus the lamp the light is flashed on some dark
background, such as wall a few yards away, and the screws
supporting the parabolic mirror carefully turned until the light
becomes concentrated in the smallest possible circle. The
adjustment screws are then tightened, but they should never be set
tight. If the receiving operator is having trouble in receiving signals,
he will inform the sending station by sending a series of dots. The
sending operator will then examine his apparatus to see if the lamp
is properly directed at the receiving station, if the reflector is out of
focus, or if the battery has become weak. The receiving operator
indicates the manner in which he is receiving the signals by the
method in which he sends the dots. If the signals become worse, the
dots are made more rapidly. As the adjustment becomes better, the
dots are made more slowly. When a good readable adjustment has
been obtained, he will signal BR, meaning “go ahead.”
PRECAUTIONS IN LAMP SIGNALING.
Don’t leave the lamp cover open when not in use.
Don’t forget to open it when you start to transmit.
Don’t touch the mirror. If necessary, it should be cleaned by wiping
with gauze or cotton or wiped with clean water.
Don’t pull the wire cable fastened to the bottom of the lamp when
removing from the box.
Don’t return broken or burned-out globes to the pouch, but throw
them away unless ordered to turn them in. Don’t use the lamp for
illuminating purposes.
Don’t neglect to keep a constant watch on the stations with which
you are supposed to communicate.
SIGNALING RANGE OF LAMPS.

Day. Night.
14 cm 1 to 3 kilometers 2 to 6 kilometers.
Signals may be transmitted by using either white or red bulbs, but
the range when using red bulbs is reduced approximately 50%.
GENERAL SERVICE CODE AND CONVENTIONAL

SIGNALS FOR USE WITH PROJECTORS,
BUZZERS AND WIGWAG.
A .- G --. M -- S ... Y -.-- 5 .....

B -... H .... N -. T- Z --.. 6 -....
C -.-. I .. O --- U ..- 1 .--- 7 --...
D -.. J .--- P .--. V ...- 2 ..--- 8 ---..
E. K -.- Q --.- W .--. 3 ...-- 9 ----.
F ..-. L .-.. R .-. X -..- 4 ....- 10 -----
Manner of Sending Messages.

Messages are sent by using the General Service Code and should
always be as short as possible. Every time a letter can be omitted,
the chance of error is reduced. A dot is made by a short flash of
about ½ second duration. A dash is a longer flash of about two
seconds duration. The interval between dot and dash is about ½
second duration. The interval between letters is about 2 seconds
duration. The interval between words is about 4 seconds duration. In
order that lamp signals may be easily read, it is necessary that the
signals be not too rapid, 15 to 20 characters per minute should be
taken as the upper limit. Successive letters must be well spaced. An
interval of 2 seconds between letters will enable the receiving
operator to call off each letter to his assistant as he receives it. In
general, two men for each shift are necessary to operate a lamp
station. At the sending station one man dictates the message letter
by letter, and watches the receiving station for breaks. The other
sends the message. At the receiving stations, one man receives the
message and calls it off by letter to his helper who writes it down. To
call a station, its call letter should be sent several times and at
intervals the station calling should signal its own call letter. As soon
as a station observes that it is being called, it will answer by
signaling its call letter and the signal BR, “go ahead.” The message
is then transmitted and the receiving station acknowledges receipt of
each word. By one dot, if it has been understood. By the
interrogation mark, if it has not been understood and repetition is
desired. (While the interrogation is official, two dots are invariably
used for this signal.) At the end of a message the sending station
signals AR, meaning, “end of message.” The receiving station sends
a dot if the message has been understood.
Signaling by Means of Fireworks.
The use of fireworks in modern battles for sending signals has
been greatly developed and is now one of the most important means
relied upon to send a few fundamental signals from the front line of
the infantry to the supporting artillery within the division and between
the ground and the airplanes.
The Fireworks Code.

As the signals that are made by fireworks are always of the most
important character, it is essential that the system for their use be so
perfectly worked out that there will be no chance of confusion. The
smaller the number of signals to be sent by fireworks, the less
chance there is of confusion.
Classification of Fireworks.
The fireworks now being used by the American Army are divided
into the following classes:
1. Very Pistol cartridges.
2. VB cartridges (commonly called “Tromblons”).
3. Rockets.
4. Flares.
The complete directions for firing these various fireworks are
generally attached to the container or box in which they are packed.
They are fully discussed in Annex 14, Translation of the 1917
“Instruction on Liaison for Troops of all Arms, A. E. F.”
1. Very Pistol Cartridges.
The Very pistol cartridges are made in two sizes, a 25-mm size,
which is issued to the companies of infantry, and a 35-mm size,
which is used by the airplanes. These Very pistols fire both signal
and illuminating cartridges.
2. VB Cartridges.
The VB cartridges are fired from a cylinder which is attached to the

end of a rifle. This cylinder, on account of its resemblance to the old-
fashioned blunderbuss (which the French call “Tromblon”) has taken
the name of tromblon and now even the VB cartridges, which are
fired from this cylinder, are often spoken of as Tromblons.
3. Rockets.
The rockets comprise fireworks which are made in the form of

cartridges attached to a wooden stick and fired from a tube or
trough. They are used both for signaling and illuminating.
4. Flares.
Flares are used only in the front lines to mark the position of the
advanced troops when called for by an airplane.
THE USES OF VARIOUS CLASSES OF

FIREWORKS.
It will be seen that the above classification of fireworks is an
arbitrary one, made according to the method of projecting them. The
same signal can be made by several different means. The means
employed depend upon the type of fireworks issued to the particular
unit using them and also upon the distance through which the signal
must be read.
Flares are not projected at all and consequently have the most
limited range of visibility in any but a perpendicular direction.
The 25-mm Very pistol projects its signals about 200 ft. and can be
seen from the immediate vicinity.
The tromblon projects its signals to a height of 300 ft. and is next
in range of visibility.
The rockets which project a signal at the height of 1000 ft. or over
have the maximum range of visibility.
The 35-mm Very pistol projects signals which are larger than those
of the 25-mm pistol, but throws them a shorter distance (about 150
ft.). As its use is confined to the airplane this is not a factor in its
visibility.
The following are important uses that may be made of fireworks:
1. By the infantry platoon, company or battalion commander in
signaling to the artillery for a barrage, or otherwise directing the fire
of the artillery.
2. For signaling between the front line troops and the contact
airplane in an advance.
3. Warning of enemy gas attack given by the fireworks signaler
nearest to where the gas is discovered.
4. As a method of acknowledging various visual signals.
5. Occasionally, during the preparation of an attack and upon
orders from the General Staff, fireworks may be used in liaison
between the artillery and the artillery airplanes.
Signaling by Means of Panels.

The increasing use of the airplane in modern warfare has
necessitated the development of reliable communication between it
and the earth. This has gradually been worked out in the following
methods:
1. The direct dropping of messages by the airplane.
2. The use of radio apparatus.
3. The use of visual signaling by means of lamps, fireworks and
panels.
Panels are pieces of cloth or other materials of various designs
which are spread out on the ground in a manner to be easily seen by
the airplane. They are for three purposes.
1. To signal to an airplane the identity and location of a unit’s
headquarters by the use of its distinctive panel, called its
“identification panel.” This is displayed either when the airplane
requests it (by means of radio) or when the headquarters desires to
attract the attention of the airplane.
2. To signal to the airplane other brief information by the use of
rectangular panels known as “signaling panels” and arranged in
various ways, either by themselves or in conjunction with the unit’s
identification panel.
3. To signal to the airplane the position of the front line in a
daylight advance by the use of special panels called “marking
panels.” These are displayed only when called for by the airplane.
All panels are removed as soon as an acknowledgment is
received from the airplane.
As the use of panels is always in conjunction with airplanes, all
panel signallers should understand some of the uses of the various
airplanes.
Miscellaneous Methods of Visual Signaling.

Wig-Wag Flags.—Flags for use in wig-wagging are now issued to
divisions under the name of “kits, flag, combination, standard.” Each
kit includes one wig-wag staff and two wig-wag flags, and also two
semaphore staff and two semaphore flags. A division is supplied with
1,022 of these kits. The use of the wig-wag flags is already fairly well
known in the American Army. Signals are transmitted by describing
an arc of 90 degrees to the right and left to form dots and dashes,
and spaces by a downward front motion. The general service can be
transmitted by this means. Wig-wag flag signaling should be
thoroughly understood and practiced by all signal men, as it forms an
excellent method for becoming familiar with the code. Signals can be
sent by this means merely by the use of the hand, and consequently
the system forms an excellent way for troops to put in their time
when traveling by train or on shipboard. Its use in the present war
has been limited, but it will undoubtedly be used more and more,
especially when open warfare is resumed.
Semaphore.—Signals by semaphore are transmitted by the arms,
either alone or with the semaphore flags that are issued in the
standard combination flag kits. It is a standard means of
communication in the American Navy and well known in the army. It
is not used by the armies of Europe, but it might serve a useful
purpose to linemen and others for intercommunication.
Radio Equipment.
The Radio receiving sets, type SCR-53 and SCR-54-A form the
standard units for the reception on the ground of signals from
airplanes, and in general, of all damped wave signals or modulated
wave signals. The use for these sets may perhaps be said to be that
in connection with the work of the fire control airplanes in directing
the fire of the artillery. But in addition, they are used for so many
other classes of radio work, that they may indeed be considered
among the most important radio sets.
Type SCR-54 Set.

Circuit Diagram of
SCR-54A Radio Telegraph Receiving Set
The type SCR-54 set is very similar to the French type A-1
receiving set. The SCR 54-A set is an improved American product,
designed along the same general lines as the type SCR-54 but
differing in some respects, both mechanical and electrical, to
improve the operating characteristics. The type A-2 and A-2-B
antennae are fully described in Radio Pamphlet No. 2. With their use
the receiving sets have a wave length range of approximately from
150 to 650 meters. If properly operated, they afford quite sharp
tuning. This feature and their compact, rugged and simple
construction have made them of very considerable value on the
Western Front.
As shown in the wiring diagram, Fig. 1, the type SCR-54A
receiving set comprises a primary (antenna) circuit and a secondary
circuit, both of which may be tuned by means of the variable
capacitance and variable inductance comprised in both circuits. The
secondary circuit may also be made aperiodic by placing the switch
M on the position marked “AP.” This connects the condenser in or
disconnects it from the circuit. A separate buzzer circuit is installed in
the cover of the box to excite the set when adjusting the crystal
detector.
The adjustable capacitance in each circuit is a variable air
condenser which is adjusted by means of an insulating handle,
marked “Primary” or “Secondary,” mounted directly on the rotating
shaft of the condenser. The relative amount of capacitance in the
circuit, corresponding to the various positions of these handles, is
indicated by a pointer fastened to the shaft, which moves over a dial
graduated from 0 to 90. The position 0 corresponds to the minimum
and the position 90 to the maximum capacitance of the condenser.
The two condensers are identical in design, and have a maximum
capacitance of 500 micro-mfd.
The primary and secondary inductances are varied by means of
two dial switches marked “P” and “S,” respectively. The primary
inductance comprises 60 turns of wire divided into six steps of 10
turns each, while the secondary inductance comprises 60 turns
divided into four steps of 15 turns each. These two inductance coils
are wound on separate wooden cylinders so arranged that their
relative positions may be readily varied. The coupling of the two
circuits, which is accomplished by the mutual induction effect of
these two coils, is varied by changing the relative mechanical
positions of the coils. The secondary coil may be rotated by means
of a handle marked “Coupling,” and a pointer moving over a scale
graduated from 0 to 90 indicates its position. When in the 0 position
the axes of the two coils are at right angles to each other, and the
degree of coupling is 0. When in the position “90” the axes are
parallel, and the coupling is a maximum.
The telephone and detector circuit shunts the secondary
condenser. This circuit consists of a crystal detector connected in
series with the telephone receiver which are shunted by so-called
stopping condensers. The latter is a .002 mfd. mica condenser. Two
crystal detectors are furnished with a set; one of them is enclosed in
a glass tube, which protects the crystal from dust or dirt. The other is
open, having no such protecting casing. Either one may be used by
screwing it to the two binding posts of the set marked “Detector.”
The buzzer is mounted in a compartment of set box cover, and
consists of a small buzzer connected in series with a dry battery type
BA-4, and a switch. The buzzer is energized when this switch is
closed. A spare dry for the buzzer, a screwdriver, the enclosed
detector, some spare wire and spare crystals are normally stored in
compartments or metal clips in the cover. Two type P-11 telephone
head sets are kept in a special compartment in the box. This set box
when closed may be carried by a leather strap attached to it.
Method of Operating.
The first step in putting the set in operating condition is to select a
suitable place and set up the antenna. The set box is then installed
in a dry and protected place, and the arial and ground (or
counterpoise) leads are connected to their respective terminals on
the operating panel, and the telephone head set plugged into the
jack with the installation thus completed the first step is to adjust the
crystal detector. To do this, place the “Coupling” handle near the
maximum position, and connect the short piece of wire from the
terminal clip in the buzzer circuit to the “Antenna” or “Ground”
terminal of the operating panel. Close the buzzer switch to energize
the buzzer, and carefully explore the surface of the crystal with the
spring contact point until a sensitive spot is found, as evidenced by a
good audible sound in the telephone receiver. The short wire running
from the buzzer to the panel is then removed and the buzzer
stopped by opening the buzzer switch. Care should be taken not to
disturb the crystal adjustment by mechanical vibration or shock. This
adjustment is very delicate, and if destroyed, it must be restored
before any signals can be received. With the crystal adjusted, the set
is then ready for tuning. The procedure varies somewhat according
to whether the wave length of the station it is desired to receive is
known or not.
(a) Wave Lengths of Signals Unknown.—The switch M in the
center of the panel is thrown to the position “AP” (aperiodic). This
disconnects the secondary condenser, and makes the secondary
circuit responsive to signals of any wave length. The coupling is
made a maximum, and the secondary inductance dial switch S
placed at the position “60.” The primary inductance switch P is then
placed successively at the positions marked 10, 20, 30, 40, 50 and
60, and, at each point, the handle of the primary condenser is slowly
turned over its full range, until the loudest signals are obtained in the
telephone. The station is then identified by its call letters, and if it is
the station desired, tuning of the set is completed as explained
below. It may happen however, that in this search for signals, several
stations are heard, simultaneously or for different positions of the
handles. The process of searching is kept up until the desired
station, as identified by its call letters, is heard with the greatest
intensity.
The coupling pointer is then moved toward the minimum position,
so that the signals will be just loud enough to be easily read. The
switch M is placed in the position T (tune), which connects the
secondary condenser in the secondary circuit. The secondary circuit
is then tuned by operating the secondary inductance dial switch S
and the secondary in the same way that was followed in tuning the
primary. The secondary circuit is in tune when the signals are heard
loudest. The set is then ready for operation.
If necessary, the strength of the signals may be increased by
increasing the coupling, but this should not be done unless the signal
become too faint to be read, since increasing the coupling increases
the likelihood of interference by other sending stations. When the
coupling is changed, some slight adjustments of the primary and
secondary condensers will be found to improve the signals.
(b) Wave lengths of Signals Known.—When the receiving
operator has been advised of the wave length of the signals he is to
pick up, the process of tuning in is somewhat facilitated by the use of
the table of wave lengths which is pasted in the cover of the box.
The primary circuit of the set is first tuned, as explained above,
with the switch on “AP,” the secondary inductance on “60” and with
maximum coupling. After the signals have been identified and the
primary has been tuned to give maximum loudness, the coupling is
reduced as before and the switch M moved to T. The secondary
inductance setting to be used is then given in the table. Thus, for a
wave length of 280 meters, the setting may be 30 or 45. It is best to
use the higher value 45. The final secondary adjustment is then
made as before by means of the secondary condenser.
Use of a Vacuum Tube Detector with the SCR-54

Set.
It is sometimes desirable to use a vacuum tube detector in place
of the crystal detector supplied with the set. In this case, the
telephone stopping condenser of the set must be short circuited by
inserting a dummy brass plug in the telephone jack. The crystal
detector is then disconnected, and wires are connected from the
detector binding posts of the set to the proper terminals of the
vacuum tube detector set. The telephone receivers should not be
plugged in, as before, in the jack of the set box, but must be
connected to the proper terminals or jack of the vacuum tube
detector box.
Precautions, Sources of Trouble, Maintenance.

In using this set, care should be taken to always keep it in as dry a
place as possible. It should be kept in a clean condition, especially
the operating panel, the contacts, binding posts, dial switch studs,
and the telephone jacks. Oil or grease on these contacts will make
the connections uncertain and unsteady and impair or even prevent
the satisfactory operation of the set.
The set should be handled carefully to avoid warping the
condenser plates or otherwise damaging the set. No foreign
substance should be placed in the set box. Care should be taken
that the telephone receiver cords do not get wet, for the resulting
leakage of current through them would considerably decrease the
strength of signals and introduce an annoying noise. The telephones
do not require any adjustment, and the earpieces should always be
kept screwed up tight. The telephone receiver should never be taken
apart, since their adjustment at the factory is very accurate and
permanent. If it becomes necessary to remove the cord connections
from either the telephones or the plug, the wires must be connected
as found, according to their different colors. This is important since
otherwise the permanent magnets will be partially demagnetized and
the efficiency of the telephone receivers will be seriously impaired. In
packing the set for transportation the telephone head set receivers
are placed face to face so that the diaphragms will be protected and
kept free of mud and dirt. The telephone cord is then wound around
the head band in such a way as to hold the receivers together. The
telephone plug is finally slipped inside the coil thus formed by the
connection cord, and the entire set is carefully placed in its
compartment in the set box. Among the troubles most frequently
encountered are those considered below. It may happen that the
buzzer does not work. This may be due to a poor adjustment of the
buzzer vibrator, or to a run down dry battery. If the radio does not
work it may be because the crystal detector is not making contact
with the sensitive spot. Readjust it with the aid of the buzzer. No
sound in the receiver may be due to the fact that the telephone is not
all the way in the jack, or that it is dirty. In this case see that the plug
is clear in, or remove it and wipe it off with a clean cloth. Also, the
dummy brass plug may be in the telephone jack. This would prevent
operation entirely with the crystal detector.
Scratching noises in the telephone may be the result of wet
connection cord, or the connection at the plug or either telephone
receiver may be loose.
If the antenna or ground connections is loose, or if the ariel or lead
in wire is grounded through a branch of a tree, or in some other way,
the set will fail to operate. Make sure of good insulation all around. It
sometimes happens that a wire will break inside the set box. This
generally occurs to one of the wires connecting the secondary
induction coils to the various taps to the secondary dial switch. One
way to discover this fault is to turn the “Coupling” handle back and
forth; the signals may then suddenly stop for a certain position of the
handle, although they will be audible with the handle on either side of
this position. Finally, a plate of one of the variable air condensers
may become warped and short circuit the condenser. This is
generally evidenced by the fact that the condenser, when varied over
its whole range, does not change the loudness of the signals. In
active service, the receiving sets are required to be in continuous
working condition. To insure this, spare parts must be kept on hand
at all times in order to replace defective parts with the least possible
delay. Such spare parts should include spare crystals, telephones
and telephone cords. Complete extra set should always be in stock
at the central Radio supply station to provide for replacement
promptly when sets are destroyed. The sets in use should also be
frequently tested to determine and readiness for an intensive and
continuous activity. The condenser and inductance circuits should be
tested to make sure that each part of each circuit is in perfect
working condition. Testing of circuit parts may be simply done with a
head phone and dry cell, a click through closed circuits, and the
absence of a click through the condenser circuits, being the
indication which should be noted.
CHAPTER XVI.
SMALL ARMS.
Notes on the Automatic Pistol, Cal. 45, Model

1911.
The pistol is known as the Automatic Pistol, Cal. 45, Model 1911.
By caliber is meant the caliber of the bore. All pistols used in the
service are marked on the left side of the receiver, “United States
Property,” and on the right side with the serial number, which must
be memorized by the person to whom the pistol is issued.
It is important that every man have a thorough knowledge of the
nomenclature, care and repair, method of assembling and
dismounting the pistol as well as its use and operation.
The principal parts of the pistol are the receiver, the barrel and
the slide.
To Dismount and Assemble the Pistol:—Press the magazine
catch and remove the magazine. Press the plug inward, turn the
barrel bushing to the right and by easing off on the spring let the plug
and spring protrude gradually. Draw the slide to the rear until the
small recess is opposite the thumb piece of the slide stop. Press
gently against the end of the pin of the slide stop on the opposite
side and remove the slide stop. This releases the link and allows the
barrel and the slide with all its parts to be slid forward off the guide
rails of the receiver.
To Disassemble the Slide:—Remove the plug by turning it to the
left and withdraw the recoil spring with its guide from the rear; or
remove the recoil spring guide and withdraw the coil spring with its
plug from the front. Turn the barrel bushing to the left and withdraw it
forward from the slide. The barrel may now be withdrawn from the
slide. To remove the firing pin, press the rear end of the pin forward
until it clears the firing pin stop. Then withdraw the stop downward
from its seat, whereupon the firing pin, the firing pin spring, and the
extractor are removed by withdrawing them to the rear.
For ordinary cleaning, no further dismounting will be found
necessary and no disassembling of the receiver should be permitted
except by permission of an officer. When the interior of the pistol has
been exposed to water, or when it is desired to make repairs, the
receiver may be completely dismounted as follows:
Cock the hammer, move the safety lock to a position half way
between its upper and lower position. Press the end of the safety
lock pin on the opposite side and withdraw the safety lock. Now
lower the hammer by pressing the trigger. Push out the hammer pin
and take out the hammer and strut. Next push out the housing pin.
This may require a little extra pressure. It is the only pin pushed out
by pressure from the left side of the receiver. The main-spring
housing may then be withdrawn downward and the grip safety
withdrawn to the rear. This exposes the sear spring, which is easily
removed. By pushing out the sear pin, the sear and the disconnector
are released.
The main-spring housing is disassembled by compressing the
main spring, pushing out the small main-spring cap pin, whereupon
the main-spring cap, the main spring and the housing pin retainer will
come out. The main spring may be easily compressed by using the
pin of the slide stop.
THE AUTOMATIC PISTOL, CALIBER 45, MODEL 1911.
RECEIVER, BARREL AND SLIDE.
To remove the magazine catch, press the button inward. By
means of a small screw driver or the short leaf of the sear spring,
give the screw head of the magazine catch lock a quarter turn to the
left and remove the magazine catch. The trigger can then be
withdrawn to the rear.
The hammer strut, a small nail or the long arm of the screw driver
may be used to push out all pins except the main spring cap pin and
the ejector pin. To remove these a tack or pin may be found
necessary.
To assemble the pistol proceed in the reverse order, except that
the main spring housing should be left to project about one-eighth
inch. Do not push the main-spring housing home and insert the
housing pin until after the safety lock is replaced and the hammer
lowered.
The Operation of the Pistol.—The act of drawing back the slide
in loading cocks the hammer, compresses the recoil spring,
permitting the magazine follower to raise the upper cartridge into the
path of the slide. Upon releasing the slide, the recoil spring forces
the slide forward, carrying the first cartridge into the chamber of the
barrel. As the slide approaches its forward position, it encounters the
rear end of the barrel, forcing the latter forward. Since the front of the
barrel pivots in the barrel bushing and the rear end is free to swing
upward on the link, the rear end of the barrel is raised, causing the
locking ribs on the outside of the barrel and the inside of the slide to
engage, thus positively locking the barrel and the slide together. The
joint forward movement of the barrel and the slide (about three-
eights of an inch) is stopped when the barrel lug encounters the pin
of the slide stop.
The pistol is then ready for firing. When the hammer is cocked, the
hammer strut moves downward, compressing the main spring. The
sear, under the action of the long leaf of the sear spring, engages its
nose in the notch of the hammer. Upon pulling the trigger and
pressing on the grip safety, the sear is moved, thus releasing the
hammer. The latter then strikes the firing pin which transmits the
blow to the primer of the cartridge. The explosion of the cartridge

ebook download Financial Management: Theory &amp; Practice 15th Edition (eBook PDF) all chapter

Uploaded by

Copyright:

Available Formats

You might also like

ebook download Financial Management: Theory &amp; Practice 15th Edition (eBook PDF) all chapter

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

ebook download Financial Management: Theory &amp; Practice 15th Edition (eBook PDF) all chapter

Uploaded by

Copyright:

Available Formats

Financial Management: Theory &

Practice 15th Edition (eBook PDF)

(eBook PDF) Financial Management Theory & Practice 15th

Financial Management: Theory & Practice 15th Edition

(eBook PDF) Financial Management: Theory & Practice

(eBook PDF) Financial Management: Theory and Practice

Financial Management: Theory and Practice 10th 10th

(eBook PDF) Management Theory & Practice 9th Edition

(eBook PDF) Management Theory and Practice, 6th Edition

(eBook PDF) Management Theory and Practice 9th Edition

To learn more about Cengage Learning Solutions, visit www.cengage.com

PART 2 FIXED INCOME SECURITIES 137 PART 4 PROJECTS AND THEIR

CHAPTER 20 Hybrid Financing: Preferred

PART 8 TACTICAL FINANCING Web Extensions 26B: Risk-Neutral Valuation

GLOSSARY AND INDEXS WEB CHAPTERS:

Glossary 1101 CHAPTER 27 Providing and Obtaining Credit

Preface xix CHAPTER 2

Web Extensions Additional Funds Needed (AFN) Equation

Purchasing Power Parity 724 Web Extensions

Who Wins: The Empirical Evidence 898

Calculating Beta Coefficients 995 Glossary 1101

Intrinsic Valuation as a Unifying Theme

Improvements in the 15th Edition

Changes That Affect All Chapters

THE GREAT RECESSION OF 2007

CONTINUED INTEGRATION WITH EXCEL

Notable Changes within Selected Chapters

SIGNALING RANGE OF LAMPS.

GENERAL SERVICE CODE AND CONVENTIONAL

A .- G --. M -- S ... Y -.-- 5 .....

Manner of Sending Messages.

The Fireworks Code.

1. Very Pistol Cartridges.

The VB cartridges are fired from a cylinder which is attached to the

The rockets comprise fireworks which are made in the form of

THE USES OF VARIOUS CLASSES OF

Signaling by Means of Panels.

Miscellaneous Methods of Visual Signaling.

Type SCR-54 Set.

Use of a Vacuum Tube Detector with the SCR-54

Precautions, Sources of Trouble, Maintenance.

Notes on the Automatic Pistol, Cal. 45, Model

You might also like

ebook download Financial Management: Theory & Practice 15th Edition (eBook PDF) all chapter

ebook download Financial Management: Theory & Practice 15th Edition (eBook PDF) all chapter

ebook download Financial Management: Theory & Practice 15th Edition (eBook PDF) all chapter