Fundamentals of Corporate Finance 9th Edition Solution Manual

A capital budgeting problem is a chain of small steps, and one early slip quietly invalidates everything after it. Fundamentals of Corporate Finance, 9th Edition ends its chapters with multi-part problems in which an after-tax cash flow feeds a discounting step, which feeds a decision, so a final number that disagrees with the answer key tells you almost nothing useful. It does not say whether the depreciation tax shield was mishandled, the working capital recovery forgotten, or the discount rate simply applied for the wrong number of periods.

Why this solution manual helps

Worked solutions make the intermediate steps visible, and the intermediate steps are where the learning is. Instead of a total to compare against, you get the sequence: the cash flow identified, the tax effect applied, the period it belongs to, the rate used to discount it. Reading down that sequence until it diverges from your own working locates the earliest error, and fixing the earliest error is usually the only fix required, because everything below it was correct arithmetic on a wrong input.

What’s inside

• Written solutions to the end-of-chapter questions and problems, in the book’s own chapter order.
• Step-by-step working for computational problems rather than final answers alone.
• Full reasoning for the conceptual questions, where the justification is what carries the marks.
• Consistent treatment of the capital budgeting and cost of capital chapters, which generate the longest problems.
• One organized PDF, downloadable as soon as checkout completes.

Topics covered

• Cash flow problems — cash flow from assets, operating cash flow, and reconciling accounting profit with cash
• Time value calculations — annuities, perpetuities, uneven streams, loan amortization and effective annual rates
• Bond and share valuation — pricing from the coupon rate and market yield, yield to maturity and dividend growth models
• Capital budgeting problems — net present value, internal rate of return, payback and profitability index calculations
• Project cash flow estimation — incremental flows, depreciation tax shields, working capital changes and salvage values
• Risk and return — expected return, variance, portfolio weights, beta and required return calculations
• Cost of capital — component costs, weighted average calculations and adjustments for flotation costs
• Capital structure and payout — leverage effects on earnings per share, break-even analysis and dividend problems

Who it’s for

Students working the end-of-chapter problem sets in a first corporate finance course from this edition, particularly where problems are submitted weekly and marked feedback arrives too late to help with the following week’s work.

How to use it (the right way)

Attempt the whole problem before opening the solution, and when you compare, read from the top and stop at the first line that differs rather than jumping to the final figure. Rework from that line yourself. This is a study aid. Use it in line with your institution’s academic-integrity policy — to check and understand your own attempts, not to copy into submitted work and not as a shortcut around the coursework.

Sample worked solution (shows the format — your download contains the full set)

Problem. A project generates sales of $900,000 and cash costs of $600,000. Depreciation for the year is $100,000 and the tax rate is 30 percent. Compute the project’s operating cash flow.

• Step 1. Earnings before interest and taxes: 900,000 − 600,000 − 100,000 = $200,000.
• Step 2. Taxes: 30 percent of $200,000 = $60,000.
• Step 3. Net income: 200,000 − 60,000 = $140,000.
• Step 4. Add back depreciation, which reduced taxable income but used no cash: 140,000 + 100,000 = $240,000.
• Step 5. Check with the tax shield approach: (900,000 − 600,000)(1 − 0.30) + 100,000(0.30) = 210,000 + 30,000 = $240,000.

Answer: operating cash flow is $240,000. The check in step 5 is worth doing on every problem of this type, because the two routes fail in different ways — omitting the depreciation add-back understates the result, while ignoring the tax shield entirely overstates the tax paid. Agreement between them is strong evidence the working is sound.

Edition & format

• Matches: Fundamentals of Corporate Finance, 9th Edition (ISBN 9781259259920).
• Format: Digital PDF, delivered instantly after checkout.
• Access: Lifetime — re-download from your account whenever you need it.

Problem numbers and data change between editions and between the Canadian and US printings. Please confirm the edition and ISBN above match your course text before buying.

Frequently asked questions

Which edition does this cover? The ninth edition, ISBN 9781259259920. Problem numbering differs in other editions, so check the number against your own copy.

How is it delivered? By instant download at the end of checkout, with the file also kept in your account. Nothing is shipped.

Is the working shown, or just the answers? The working is shown. Calculations are built line by line rather than presented as a finished figure.

Is using a solution manual allowed? As a self-checking aid it is a normal study resource. Follow your institution’s academic-integrity policy, and never submit a worked solution as your own work.

More study material for this subject is in Finance Test Banks.