Spreadsheet Modeling in Corporate Finance

If you build it, you will learn. \*Comes as a book and CD-ROM that teaches students how to build financial models in Excel \*Provides instructions for building financial models, not templates \*Progresses from simple examples to complex real-world applications \*Is available is alternative versions that match the notation of most Prentice Hall Corporate Finance textbooks and other popular textbooks \*Includes end-of-chapter problems \*Has been extensively classroom-tested SPREADSHEET MODELING IN CORPORATE FINANCE......Page 1 CONTENTS......Page 3 Why I Wrote This Book......Page 6 Conventions Used In This Book......Page 7 Craig’s Challenge......Page 8 Suggestions for Faculty Members......Page 9 Alternative Notation Versions......Page 10 Acknowledgements......Page 11 About The Author......Page 12 1.1 Present Value......Page 13 1.2 Future Value......Page 14 Problems......Page 15 2.1 Present Value......Page 16 2.2 Future Value......Page 17 2.3 System of Four Annuity Variables......Page 18 3.1 Constant Discount Rate......Page 20 3.2 General Discount Rate......Page 22 Problems......Page 23 4.1 Constant Discount Rate......Page 24 4.2 General Discount Rate......Page 25 5.1 Basics......Page 26 5.2 Sensitivity Analysis......Page 28 Problems......Page 30 6.1 Basics......Page 31 6.2 By Yield To Maturity......Page 34 6.3 Dynamic Chart......Page 35 6.4 System of Five Bond Variables......Page 37 Problems......Page 39 7.1 Two Stage......Page 40 7.2 Dynamic Chart......Page 42 Problems......Page 44 8.1 Obtaining It From Bond Listings......Page 45 8.2 Using It To Price A Coupon Bond......Page 47 8.3 Using It To Determine Forward Rates......Page 49 Problems......Page 50 9.1 Dynamic Chart......Page 51 Problems......Page 57 10.1 Basics......Page 58 10.2 Forecasting Cash Flows......Page 61 10.3 Working Capital......Page 63 10.4 Sensitivity Analysis......Page 65 11 Cost-Reducing Project......Page 68 11.1 Basics......Page 69 11.2 Sensitivity Analysis......Page 72 Problems......Page 73 12.1 Based On Accounting Profit......Page 74 12.2 Based On NPV......Page 77 Problems......Page 82 13.1 Adjusted Present Value......Page 83 13.2 Flows To Equity......Page 84 13.3 Weighted Average Cost of Capital......Page 86 Problems......Page 88 14.1 Actual......Page 89 14.2 Forecast......Page 92 14.3 Cash Flow......Page 98 14.4 Ratios......Page 99 14.5 Sensitivity......Page 101 14.6 Full-Scale Real Data......Page 103 Problems......Page 111 15.1 Basics......Page 114 Problems......Page 115 16.1 Basics......Page 116 Problems......Page 125 17.1 Single Period......Page 126 17.2 Multi-Period......Page 128 17.3 Risk Neutral......Page 134 17.4 Full-Scale Real Data......Page 137 Problems......Page 143 18.1 Basics......Page 145 18.2 Continuous Dividend......Page 147 18.4 Implied Volatility......Page 153 Problems......Page 155 19 Debt And Equity Valuation......Page 156 19.1 Two Methods......Page 157 19.2 Impact of Risk......Page 159 Problems......Page 160 20.1 Using Black Scholes......Page 161 20.2 Using The Binomial Model......Page 163 20.3 Sensitivity to Std Dev......Page 165 Problems......Page 167 SPREADSHEET MODELING IN CORPORATE FINANCE 1 CONTENTS 3 Preface 6 Why I Wrote This Book 6 Conventions Used In This Book 7 Craig’s Challenge 8 The Spreadsheet Modeling Series 9 The Spreadsheet Modeling Community 9 Suggestions for Faculty Members 9 Alternative Notation Versions 10 Acknowledgements 11 About The Author 12 PART 1 TIME VALUE OF MONEY 13 1 Single Cash Flow 13 1.1 Present Value 13 1.2 Future Value 14 Problems 15 2 Annuity 16 2.1 Present Value 16 2.2 Future Value 17 2.3 System of Four Annuity Variables 18 Problems 20 3 Net Present Value 20 3.1 Constant Discount Rate 20 3.2 General Discount Rate 22 Problems 23 4 Real And Inflation 24 4.1 Constant Discount Rate 24 4.2 General Discount Rate 25 Problems 26 5 Loan Amortization 26 5.1 Basics 26 5.2 Sensitivity Analysis 28 Problems 30 PART 2 VALUATION 31 6 Bond Valuation 31 6.1 Basics 31 6.2 By Yield To Maturity 34 6.3 Dynamic Chart 35 6.4 System of Five Bond Variables 37 Problems 39 7 Stock Valuation 40 7.1 Two Stage 40 7.2 Dynamic Chart 42 Problems 44 8 The Yield Curve 45 8.1 Obtaining It From Bond Listings 45 8.2 Using It To Price A Coupon Bond 47 8.3 Using It To Determine Forward Rates 49 Problems 50 9 US Yield Curve Dynamics 51 9.1 Dynamic Chart 51 Problems 57 PART 3 CAPITAL BUDGETING 58 10 Project NPV 58 10.1 Basics 58 10.2 Forecasting Cash Flows 61 10.3 Working Capital 63 10.4 Sensitivity Analysis 65 Problems 68 11 Cost-Reducing Project 68 11.1 Basics 69 11.2 Sensitivity Analysis 72 Problems 73 12 Break-Even Analysis 74 12.1 Based On Accounting Profit 74 12.2 Based On NPV 77 Problems 82 13 Three Valuation Methods 83 13.1 Adjusted Present Value 83 13.2 Flows To Equity 84 13.3 Weighted Average Cost of Capital 86 Problems 88 PART 4 FINANCIAL PLANNING 89 14 Corporate Financial Planning 89 14.1 Actual 89 14.2 Forecast 92 14.3 Cash Flow 98 14.4 Ratios 99 14.5 Sensitivity 101 14.6 Full-Scale Real Data 103 Problems 111 15 Du Pont System Of Ratio Analysis 114 15.1 Basics 114 Problems 115 16 Life-Cycle Financial Planning 116 16.1 Basics 116 Problems 125 PART 5 OPTIONS AND CORPORATE FINANCE 126 17 Binomial Option Pricing 126 17.1 Single Period 126 17.2 Multi-Period 128 17.3 Risk Neutral 134 17.4 Full-Scale Real Data 137 Problems 143 18 Black Scholes Option Pricing 145 18.1 Basics 145 18.2 Continuous Dividend 147 18.4 Implied Volatility 153 Problems 155 19 Debt And Equity Valuation 156 19.1 Two Methods 157 19.2 Impact of Risk 159 Problems 160 20 Real Options 161 20.1 Using Black Scholes 161 20.2 Using The Binomial Model 163 20.3 Sensitivity to Std Dev 165 Problems 167 Pt. 1. Time Value Of Money -- Ch. 1. Single Cash Flow -- Ch. 2. Annuity -- Ch. 3. Net Present Value -- Ch. 4. Real And Inflation -- Ch. 5. Loan Amortization -- Pt. 2. Valuation -- Ch. 6. Bond Valuation -- Ch. 7. Stock Valuation -- Ch. 8. Yield Curve -- Ch. 9. U.s. Yield Curve Dynamics -- Pt. 3. Capital Budgeting -- Ch. 10. Project Npv -- Ch. 11. Cost-reducing Project -- Ch. 12. Break-even Analysis -- Ch. 13. Three Valuation Methods -- Pt. 4. Financial Planning -- Ch. 14. Corporate Financial Planning -- Ch. 15. Du Pont System Of Ratio Analysis -- Ch. 16. Life-cycle Financial Planning -- Pt. 5. Options And Corporate Finance -- Ch. 17. Binomial Option Pricing -- Ch. 18. Black Scholes Option Pricing -- Ch. 19. Debt And Equity Valuation -- Ch. 20. Real Options. Craig W. Holden. To Accompany Financial Management Theory And Practice By Brigham, Gapenski, And Ehrhardt And Intermediate Financial Management By Brigham, Gapenski, And Daves. System Requirements For Accompanying Cd-rom: Windows 98, Nt, 2000, Me; Mac Compatible; 4x Cd-rom Drive. Spreadsheet Modeling in Corporate Finance teaches readers how to build financial models in Excel. This book and CD provide step-by-step instructions so that learners can build models themselves (active learning), rather than handing learners canned "templates" (passive learning). The spreadsheet models progress from simple examples to practical, real-world applications, and span nearly all of the quantitative models in the fundamentals of corporate finance. The basic philosophy of this product is "If they build it, they will learn!." A five-part organization covers the time value of money, valuation, capital budgeting, financial planning, and options and corporate finance.