New Features

• New Mini-Cases are located at the end of each of the book's eight parts. These cases focus on company situations that reflect important corporate finance topics. Each case presents a new scenario, data, and a dilemma. Several questions at the end of each case require students to synthesize the material they should have learned from the chapters in that part.
• Expanded DuPont analysis in Chapter 3 shows the interrelationships between a firm's operating and financial performance. This concept is illustrated by using real data from Standard & Poor's educational version of Market Insight.
• Chapter 4 includes a new explanation of alternative formulas for sustainable and internal growth rates. This is important because it clears up a misunderstanding about the formulas used to calculate these growth rates and shows the circumstances under which alternative formulas are correct.
• Interest Rates and Bond Valuation (Ch. 7) provides new discussions of "Co-co and "No-no" bonds, which are a hot trend that students should know about; an intuitive presentation on "clean" versus "dirty" bond prices and accrued interest, which clears up the pricing of bonds between coupon dates without introducing unnecessarily complicated calculations; and the NASD's new TRACE system and the increased transparency in the bond market.
• Extensively updated Capital Markets History (Ch. 12), along with new coverage explaining the calculation and interpretation of geometric versus arithmetic returns. This clarifies some common misconceptions about the appropriate use of these numbers.
• New and thoroughly updated presentation of IPOs (Ch. 16, Raising Capital), including the role of "lockup" agreements and the current thinking on IPO underpricing; a discussion of Dutch auction IPOs, which are very common in the fixed income markets, and the highly anticipated Google IPO was sold via Dutch auction; a discussion of IPO "quiet periods" which is an important part of the IPO process not typically presented is textbooks; a discussion of rights as warrants to clarify the option-like nature of rights prior to their expiration dates.
• Chapter 18 (Dividends and Dividend Policy) includes new coverage of the implications of the new tax laws on dividends and capital gains, which have been dramatically changed in the last two years; presents new recent survey evidence on dividend policy that clearly lays out the relative importance of various factors in making dividend decisions.
• Chapter 25 (Mergers & Acquisitions-alternate edition only) includes new coverage on alternatives to mergers and acquisitions, such as strategic alliances and joint ventures. There is also a new section on divestitures and restructurings includes why they occur, and describes the different types such as outright sales, carve-outs, spin-offs, and split-ups.
• All chapter openers and in-chapter examples have been updated to reflect the most current and interesting situations in corporate finance.
• Chapter 26 (Leasing-alternate edition only) includes a new brief discussion of synthetic leases, which were highlighted in the collapse of Enron and other scandals to avoid balance sheet disclosure of lease exposure.
• Improved Self-Study Software CD-ROM is packaged free with every new textbook. It contains Self-Study Software that allows students to test their knowledge of one or several chapters by using questions written specifically for the textbook. There are at least 100 questions per chapter. The CD-ROM also includes new PowerPoints narrated specifically for students. Each chapter's slides follow the chapter topics and provide steps and explanations using real-life examples. A quick click on each slide will "talk through" its contents for a richer learning experience. There are also new Interactive Modules that highlight a key concept and simulate how to solve it, asking students to input certain variables. This hands-on approach reinforces the most important corporate finance topics. Excel Templates that correspond to many end-of-chapter problems are also included on the CD, along with additional Web links to the book's Online Learning Center and other important Web sites.
• New Homework Manager Packaging Option! This exciting new Web-based program will help your students learn corporate finance by duplicating problems from each chapter in the textbook and by providing automatic grading and feedback to both students and instructors. Instructors have great flexibility by controlling the rules and policies for assignments, which can range from self-study sessions to homework sessions to proctored exams. Homework Manager can also be set in "algorithmic" mode to present students with new data each time an assignment is worked, so they can work on fresh problems with the same structure until they master the concept. Immediate scoring and feedback helps guide and optimize student learning. Instructors can assign problems and have them automatically graded— a great time saver! The 7th edition Test Bank is also included in Homework Manager for online testing and grading. Homework Manager is available packaged with Fundamentals of Corporate Finance for an additional $10.
• New "One Pass" Packaging Option! This packaging option combines all the great features of Homework Manager, along with access to an online version of Fundamentals of Corporate Finance, linked to additional study features, so students can easily refer back to the text for review and guidance. Also free with One Pass is access to McGraw-Hill's PowerWeb— a unique online resource providing high-quality, peer-reviewed content for your course; including up-to-date articles from leading periodicals and journals, current news, weekly updates with assessment, interactive exercises, Web research guide, study tips, and much more! One Pass is available for an additional $12.

Retained Features

• Abundant and extremely high-quality end-of-chapter material — includes Summary and Conclusions, Chapter Review and Self-Test Problems with answers, Concepts Review and Critical Thinking Questions, Questions and Problems (segregated into three learning levels: basic, intermediate, and challenge), Web exercise, S&P problems, and Spreadsheet Template problems.
• Incorporates a concept building approach to learning. Chapter sections are intentionally kept short to promote a step-by-step, building-block approach to learning. Each section is followed by a series of short concept questions that highlight the key ideas just presented before moving on to new material. Also, the crucial topic of time value of money is covered in two chapters (5 & 6), allowing for a patient, building block approach.
• Spreadsheet Strategies introduce or help students brush up on their Excel™ spreadsheet skills, particularly as they relate to corporate finance. This feature appears in self-contained sections and shows students how to set up spreadsheets to analyze common financial problems— a vital part of every business student's education! This section is complemented by Calculator Hints sections.
• Calculator Hints are brief calculator tutorials that have been added in selected chapters to help students learn or brush up on their financial calculator skills. These complement the Spreadsheet Strategies mentioned above.
• S&P Market Insight Problems, included in the end of chapter problems in most every chapter, require the use of the Educational Version of Market Insight, taking advantage of Standard & Poor's powerful and well-known Compustat® database. These problems provide instructors with an easy, online way to incorporate current, real-world data into the classroom. Access to this rich online resource is FREE with every new copy of the book.
• Emphasis on the Internet! FCF makes extensive use of the Web. Work the Web boxes are found throughout the text, and show students how to research financial issues using the web and how to use the information they find to make business decisions. Web links are provided in the margins of the text. These links are specifically selected to accompany text material and provide students and instructors with a quick way to check for current and additional information using the Internet. Web exercises at the end of the chapter, called "What's on the Web," show students how to use and learn from the vast amount of financial resources available on the Internet.
• Includes many Real World Examples to help students apply concepts to real situations, and reinforce the relevance of the material. Each chapter begins with interesting vignettes to pique student interest; after studying the chapter, students can fully analyze each situation. Questions based on the vignette are posed in the end-of-chapter material.
• Highlighted Concepts, found throughout the text, are important ideas pulled out and presented in a shaded box. They signal to students that this material is particularly relevant and critical for their understanding. This is vital, since many students have prioritizing the most important concepts for themselves.
• "In Their Own Words" boxes are popular articles updated from previous editions written by a distinguished scholar or practitioner on key topics in the text. Boxes include essays by Merton Miller on capital structure, Fischer Black on dividends, and Roger Ibbotson on capital market history.
• Pedagogical use of color — this learning tool uses color in an extensive, non-schematic and largely self-evident role that alerts students to the relationship between numbers in a discussion and an accompanying table or figure. The use of color is defined in the end sheets for quick reference.
• Flexible Versions Available - The Standard Edition includes 22 core chapters; The Alternate Edition includes all of the 22 chapters in the Standard Edition, plus four additional chapters covering more advanced topics: Risk Management: An Introduction to Financial Engineering, Option Valuation, Mergers and Acquisitions, and Leasing.