Table Of ContentGLOBAL GLOBAL
EDITION EDITION
EG
DL
ITO
IOB
A
NL
The eighth edition, Principles of Managerial Finance, Brief, continues to help students develop
Principles of
P
a variety of skills—Excel modeling, ethical reasoning, and critical thinking—to succeed in
r
a rapidly changing financial and managerial environment. A strong pedagogy and generous i
n
use of examples, including personal finance examples, make this text an easily accessible c
i
resource for in- and out-of-class learning. p Managerial Finance
l
e
New to This Global Edition s
• Tax Cuts and Jobs Act of 2017, which made sweeping changes to the American corporate and o
f
personal tax codes, has been included Brief
M
• Highlights on how tax changes may alter firms’ incentives in a variety of ways B
r a
• Content and feature updates throughout the text and inclusion of global examples in the ie n
end-of-chapter homework assignments—from Britain, Scotland, Thailand, and Singapore—reflect f a
g
global application in managerial finance
e EIGHTH EDITION
• MyLab Finance now includes the following features r
i
a
° New chapter introduction videos and animations that explain the importance of the l Chad J. Zutter • Scott B. Smart
chapter content within the context of managerial finance
F
° New and updated solution videos of the author discussing or solving in-chapter examples in
a
n
c
e
This is a special edition of an established title widely
used by colleges and universities throughout the world.
Pearson published this exclusive edition for the benefit
E E
of students outside the United States and Canada. If you D I
I G
purchased this book within the United States or Canada, T H
I
you should be aware that it has been imported without O T
N H
the approval of the Publisher or Author.
Pearson Global Edition
SZ
mu
at
rte
t
r
Zutter_08_1292267143_Final.indd 1 03/09/18 11:11 AM
Prepare, Apply, Confirm and Develop Using proven, field-tested technology, auto-graded
Excel Projects allow instructors to seamlessly
Employability Skills with MyLab Finance integrate Microsoft Excel® content into their course
without having to manually grade spreadsheets.
Students have the opportunity to practice important
MyLabTM Finance is an online homework, finance skills in Excel, helping them to master key
86%
tutorial, and assessment program construct- concepts and gain proficiency with the program.
ed to work with this text to engage students
and improve results. It was designed to help
students develop and assess the skills and
applicable knowledge that they will need
to succeed in their courses and their
of students said it helped
future careers.
them earn higher grades 93% 93%
See what more than 25,000 students had 91%
on homework, exams, Dynamic Study Modules help students study
to say about MyLab Finance:
chapter topics effectively on their own by contin-
or the course
“MyLab Finance offers assistance WHILE doing uously assessing their knowledge application
homework rather than relying on information and performance in real time. These are available
from class to execute later.” as graded assignments prior to class, and acces-
*Source: 2016 Student Survey, n 1317 — Anthony Wilent, Stockton University sible on smartphones, tablets, and computers.
Pearson eText enhances student learning—both
eText Study Dynamic
in and outside the classroom. Take notes, high-
Plan Study
light, and bookmark important content, or en-
Modules
gage with interactive lecture and example videos
Question Help MyLab homework and that bring learning to life (available with select
% of students who found
practice questions are correlated to the titles). Accessible anytime, anywhere via MyLab
learning tool helpful
textbook, and generate algorithmically or the app.
to give students unlimited opportunity
for mastery of concepts. If students get
The MyLab Gradebook offers an easy way
stuck, Learning Aids including Help Me
for students and instructors to view course
Solve This, View an Example, eText Pages,
88%
performance. Item Analysis allows instruc-
and a Financial Calculator walk them
tors to quickly see trends by analyzing
through the problem and identify
details like the number of students who
helpful info in the text, giving them
answered correctly/incorrectly, time on task,
assistance when they need it most.
and median time spend on a question by
question basis. And because it’s correlated
“MyLab Finance’s primary benefit was that it helped me gain a better understanding of students would tell their
with the AACSB Standards, instructors can
of the subject matter. More than just doing calculations but true understanding.”
track students’ progress toward outcomes instructor to keep using
— Robert Irish, that the organization has deemed important
MyLab Finance
Southern New Hampshire University in preparing students to be leaders.
For additional details visit: www.pearson.com/mylab/finance
A01_ZUTT7142_08_GE_FM.indd 1 28/07/18 4:39 PM
The Pearson Series in Finance
Berk/DeMarzo Holden Rejda/McNamara
Corporate Finance*† Excel Modeling in Corporate Finance† Principles of Risk Management and
Corporate Finance: The Core*† Excel Modeling in Investments Insurance†
Berk/DeMarzo/Harford Hughes/MacDonald Smart/Gitman/Joehnk
Fundamentals of Corporate Finance*† International Banking: Text and Cases Fundamentals of Investing*†
Brooks Hull Solnik/McLeavey
Financial Management: Core Fundamentals of Futures Global Investments
Concepts*† and Options Markets†
Titman/Keown/Martin
Options, Futures, and Other
Copeland/Weston/Shastri Financial Management: Principles and
Financial Theory and Corporate Derivatives† Applications*†
Policy Keown
Titman/Martin
Personal Finance: Turning Money into
Dorfman/Cather Valuation: The Art and Science of
Wealth*
Introduction to Risk Management and Corporate Investment Decisions
Insurance Keown/Martin/Petty
Weston/Mitchell/Mulherin
Foundations of Finance: The
Eakins/McNally Takeovers, Restructuring, and
Logic and Practice of Financial
Corporate Finance Online Corporate Governance
Management*†
Eiteman/Stonehill/Moffett Zutter/Smart
Multinational Business Finance*† Madura Principles of Managerial Finance*†
Personal Finance*
Principles of Managerial Finance—
Fabozzi
Bond Markets: Analysis and Strategies† McDonald Brief Edition*†
Derivatives Markets
Foerster Fundamentals of Derivatives Markets
Financial Management: Concepts and
Applications*† Mishkin/Eakins
Financial Markets and Institutions†
Frasca
Moffett/Stonehill/Eiteman
Personal Finance
Fundamentals of Multinational
Haugen Finance*†
The Inefficient Stock Market: What
Pennacchi
Pays Off and Why
Theory of Asset Pricing
Modern Investment Theory
*denotes titles with MyLab Finance: Log onto www.pearson.com/mylab/finance to learn more.
† denotes Global Edition titles.
A01_ZUTT7142_08_GE_FM.indd 2 13/08/18 11:21 AM
EIGHTH EDITION
GLOBAL EDITION
Principles of
Managerial Finance
BRIEF
Chad J. Zutter
University of Pittsburgh
Scott B. Smart
Indiana University
Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
Tokyo • Seoul • Taipei • New Delhi • Cape Town • Sao Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan
A01_ZUTT7142_08_GE_FM.indd 3 28/07/18 4:39 PM
Vice President, Business, Economics, and UK Courseware: Donna Battista Senior Manufacturing Controller, Global Edition: Kay Holman
Director of Portfolio Management: Adrienne D’Ambrosio Operations Specialist: Carol Melville
Senior Portfolio Manager: Kate Fernandes Design Lead: Kathryn Foot
Editorial Assistant: Caroline Fenn Manager, Learning Tools: Brian Surette
Associate Acquisitions Editor, Global Edition: Ananya Srivastava Content Developer, Learning Tools: Sarah Peterson
Editor, Global Edition: Paromita Banerjee Managing Producer, Digital Studio and GLP, Media Production and
Assistant Project Editor, Global Edition: Jyotis Elizabeth Jacob Development: Ashley Santora
Vice President, Product Marketing: Roxanne McCarley Managing Producer, Digital Studio: Diane Lombardo
Product Marketer: Kaylee Carlson Digital Studio Producer: Melissa Honig
Product Marketing Assistant: Marianela Silvestri Digital Studio Producer: Alana Coles
Manager of Field Marketing, Business Publishing: Adam Goldstein Digital Content Team Lead: Noel Lotz
Executive Field Marketing Manager: Thomas Hayward Digital Content Project Lead: Miguel Leonarte
Vice President, Production and Digital Studio, Arts and Business: Etain O’Dea Manager, Media Production, Global Edition: Vikram Kumar
Director of Production, Business: Jeff Holcomb Project Manager: Kathy Smith, Cenveo® Publisher Services
Managing Producer, Business: Alison Kalil Interior Design: Cenveo Publisher Services
Content Producer: Meredith Gertz Cover Design: Lumina Datamatics
Content Producer, Global Edition: Purnima Narayanan Cover Art: Africa Studio/Shutterstock
Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics pub-
lished as part of the services for any purpose. All such documents and related graphics are provided “as is” without warranty of any kind. Microsoft and/or its
respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability,
whether express, implied or statutory, fitness for a particular purpose, title and non-infringement. In no event shall Microsoft and/or its respective suppliers be
liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract,
negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services.
The documents and related graphics contained herein could include technical inaccuracies or typographical errors. Changes are periodically added to the
information herein. Microsoft and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described
herein at any time. Partial screen shots may be viewed in full within the software version specified.
Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. This book is not sponsored or
endorsed by or affiliated with the Microsoft Corporation.
Acknowledgments of third-party content appear on the appropriate page within the text.
PEARSON, ALWAYS LEARNING, and MYLAB are exclusive trademarks owned by Pearson Education, Inc. or its affiliates in the U.S. and/or other countries.
Pearson Education Limited
KAO Two
KAO Park
Harlow
CM17 9NA
United Kingdom
and Associated Companies throughout the world
Visit us on the World Wide Web at: www.pearsonglobaleditions.com
© Pearson Education Limited 2019
The rights of Chad J. Zutter and Scott B. Smart, to be identified as the author of this work, have been asserted by them in accordance with the Copyright,
Designs and Patents Act 1988.
Authorized adaptation from the United States edition, entitled Principles of Managerial Finance, Brief, 8th Edition, ISBN 978-0-13-447630-8 by Chad J. Zutter
and Scott B. Smart, published by Pearson Education © 2019.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in
the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.
All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher
any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such
owners. For information regarding permissions, request forms, and the appropriate contacts within the Pearson Education Global Rights and Permissions
department, please visit www.pearsoned.com/permissions/.
ISBN 10: 1-292-26714-3
ISBN 13: 978-1-292-26714-2
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
10 9 8 7 6 5 4 3 2 1
Typeset in Times NR MT Pro by Cenveo® Publisher Services
Printed and bound by Vivar in Malaysia
A01_ZUTT7142_08_GE_FM.indd 4 04/09/18 11:44 AM
Dedicated to our good friend and mentor,
Dr. Lawrence J. Gitman,
who trusted us as coauthors and successors
of Principles of Managerial Finance, Brief Edition.
CJZ
SBS
A01_ZUTT7142_08_GE_FM.indd 5 04/09/18 11:57 AM
This page intentionally left blank
A01_MISH4182_11_GE_FM.indd 6 10/06/15 11:46 am
Brief Contents
Contents 9
About the Authors 25
Preface 27
Acknowledgments 40
PART 1 Introduction to Managerial PART 5 Long-Term Investment
Finance 43 Decisions 447
1 The Role of Managerial Finance 44 10 Capital Budgeting Techniques 448
2 The Financial Market Environment 81 11 Capital Budgeting Cash Flows and Risk
Refinements 487
PART 2 Financial Tools 113
PART 6 Long-Term Financial
3 Financial Statements and Ratio
Decisions 547
Analysis 114
4 Long- and Short-Term Financial 12 Leverage and Capital Structure 548
Planning 179 13 Payout Policy 600
5 Time Value of Money 225
PART 7 Short-Term Financial
PART 3 Valuation of Securities 285 Decisions 635
6 Interest Rates and Bond Valuation 286 14 Working Capital and Current Assets
7 Stock Valuation 333 Management 636
15 Current Liabilities Management 678
PART 4 Risk and the Required Rate of
Return 369
Appendix 709
8 Risk and Return 370 Glossary 737
9 The Cost of Capital 418 Index 761
7
A01_ZUTT7142_08_GE_FM.indd 7 04/09/18 10:33 AM
This page intentionally left blank
A01_MISH4182_11_GE_FM.indd 6 10/06/15 11:46 am
Contents
About the Authors 25
Preface 27
Acknowledgments 40
PART 1 Introduction to Managerial Finance
43
1 1.1 Finance and the Firm 45 1.4 Developing Skills for Your
The Role of What Is Finance? 45 Career 72
Managerial What Is a Firm? 46 Critical Thinking 72
Finance 44 What Is the Goal of the Firm? 46 Communication and Collaboration 73
The Role of Business Ethics 50 Financial Computing Skills 73
in practice FOCUS ON PRACTICE:
Summary 73
Must Search Engines Screen Out Fake
News? 52 Self-Test Problem 75
➔ REVIEW QUESTIONS 52 Warm-Up Exercises 75
Problems 77
1.2 Managing the Firm 52 Spreadsheet Exercise 80
The Managerial Finance Function 53
➔ REVIEW QUESTIONS 61
1.3 Organizational Forms,
Taxation, and the Principal–Agent
Relationship 61
Legal Forms of Business Organization 61
Agency Problems and Agency Costs 68
Corporate Governance 68
➔ REVIEW QUESTIONS 72
9
A01_ZUTT7142_08_GE_FM.indd 9 31/08/18 3:39 PM
