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Follow the Lasher stream to success! Written with students like you in mind, PRACTICAL FINANCIAL MANAGEMENT is filled with relevant, practical, and easy-to-understand information that covers all of the financial management topics you need to succeed in this course. Author William R. Lasher is not only a top-notch teacher; he's also a former CFO who created a text that allows you to "sit in" on intriguing descriptions of the conflicts that financial managers face every day -- including the hidden agendas and biases that decision makers may bring to the analysis of financial proposals.
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P RACTICAL F INANCIAL M ANAGEMENT fifth edition WILLIAM R. LASHER Nichols College Practical Financial Management, Fifth Edition William R. Lasher VP/Editorial Director: Jack W. Calhoun Content Project Manager: Patrick Cosgrove Editor-in-Chief: Alex von Rosenberg Manager, Editorial Media: John Barans Executive Editor: Mike Reynolds Senior Technology Project Manager: Matt McKinney Senior Developmental Editor: Susanna C. Smart Senior Manufacturing Coordinator: Sandee Milewski Marketing Manager: Jason Krall Production House: Graphic World, Inc. Senior Marketing Communications Manager: Jim Overly Compositor: International Typesetting & Composition COPYRIGHT © 2008, 2005 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution or information storage and retrieval systems, or in any other manner—without the written permission of the publisher. Library of Congress Control Number: 2006935644 For permission to use material from this text or product, submit a request online at http://www.thomsonrights.com. Thomson Higher Education 5191 Natorp Boulevard Mason, OH 45040 USA Printed in the United States of America 1 2 3 4 5 09 08 07 06 Student Edition ISBN 13: 978-0-324-42262-7 Student Edition ISBN 10: 0-324-42262-8 Student Edition (PKG) ISBN 13: 978-0-324-42263-4 Student Edition (PKG) ISBN 10: 0-324-42263-6 Printer: RR Donnelley, Inc. Willard, OH Art Director: Bethany Casey Internal Designer: Nicholas and Diane Gliebe Cover Designer: Bethany Casey Cover and Internal Illustrations: Curtis Parker, Scott Hull Associates For more information about our products, contact us at: Thomson Learning Academic Resource Center 1-800-423-0563 For the lights of my life, Donna and our Amanda Noel B Part 1 C RIEF Introduction to Financial Management, 1 CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 Part 2 6 7 8 9 Time Value of Money, 221 The Valuation and Characteristics of Bonds, 270 The Valuation and Characteristics of Stock, 328 Risk and Return, 369 Business Investment Decisions—Capital Budgeting, 419 CHAPTER CHAPTER CHAPTER CHAPTER Part 4 Foundations, 1 Financial Background: A Review of Accounting, Financial Statements, and Taxes, 24 Cash Flows and Financial Analysis, 63 Financial Planning, 116 The Financial System, Corporate Governance, and Interest, 168 Discounted Cash Flow and the Value of Securities, 219 CHAPTER CHAPTER CHAPTER CHAPTER Part 3 ONTENTS 10 11 12 13 Capital Budgeting, 421 Cash Flow Estimation, 457 Risk Topics and Real Options in Capital Budgeting, 484 Cost of Capital, 514 Long-Term Financing Issues, 547 CHAPTER 14 Capital Structure and Leverage, 549 CHAPTER 15 Dividends, 599 Par