Applied Corporate Finance: A User's Manual

by Aswath Damodaran

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Convert theory into solutions

Applied Corporate Finance, Second Edition converts the theory and models in corporate finance into tools that can be used to analyze, understand, and help any business. With this hands-on guide, you can find real solutions to real corporate finance problems, using real-time data.

Offering a user perspective to corporate finance, this text poses three major questions that every business has to answer, and provides the tools and the analytical techniques needed to answer these questions.

1. Where do we invest our resources? (The Investment Decision)

The first part of the book shows how to assess risk and develop a risk profile for a firm, and convert this risk profile into a hurdle rate. You'll also learn basic rules for estimating the returns on any investment.

2. How should we fund these investments? (The Financing Decision)

Firms generally can use debt, equity, or some combination of the two to fund projects. This part of the book examines the relationship between this choice and the hurdle rate for analyzing projects, and shows how to use the financing decision to maximize firm value. You'll also find a framework for picking the right kind of security for any firm.

3. How much cash can and should we return to the owners? (The Dividend Decision)

The third part of the book establishes a process for deciding how much cash should be taken out of the business and in what form (dividends or stock buybacks).

The final chapter in the book ties the value of the firm to these three decisions, and provides insight into how firms can enhance value.

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All Customer Reviews
Average Customer Review: 4.5 out of 5 stars

0 of 0 people found the following review helpful:

5 out of 5 stars

Excellent Service, , 2008-02-13
Love the service, No problems, just what a MBA Student needs. No stress, I will definitely order again!

0 of 0 people found the following review helpful:

5 out of 5 stars

Didactic manual, 2007-09-12
From my point of view the financial knowlagde this book transfer is very well organised. The grafics and figures help a lot. The secuence of chapters has been articstically estructured.
The simplicity of the appendixes is very helpful for non-specialist to have an aproximation to corporate finances.

4 of 4 people found the following review helpful:

5 out of 5 stars

Like Tina Turner once said, "Simply the Best", 2004-10-02
This book is just plain great from top to bottom. Damodaran makes it easy to get both the "bird's eye view" as well as the nitty gritty detail you want in a corporate finance text. I highly recommend this book to anyone who is looking for something beyond an elementary understanding of finance.

3 of 3 people found the following review helpful:

5 out of 5 stars

Awesome, 2002-12-15
Its easily the best book on corporate finance (yeah! I have read brearley and myers, benninga, ...).

Highly recommended. If you want to MASTER corporate finance. simply buy and read the book. The case studies and excel spreadsheets are very good. Another recommendation for a good financial analysis book is the book by eric helfert - financial analysis. Both books teach finance in common speak which goes a long way in understanding this topic for a new student.

6 of 6 people found the following review helpful:

5 out of 5 stars An indispensable guide, 2002-10-21
This book is one of my best investments I have ever made. It is perfectly suited for 1st year MBA students with no prior exposure to finance. The first principles chart appearing at the beginning of each chapter always drags the students to the basics of why we are doing things. Prof Damodaran seems to be an excellent teacher and makes corporate finance a fun subject. The support web site has wealth of information and most importantly solutions to problems(I have never understood why many books hardly bother to give answers to problems)are given. Don't do a corporate finance course without this book.

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