Overview

Reflecting the highly globalized nature of tastes, production, labor markets, and financial markets in today's world, Managerial Economics in a Global Economy, Seventh Edition, is ideal for undergraduate and MBA courses in managerial economics. Thoroughly adopting a global perspective, it synthesizes economic theory, decision science, and business administration studies, examining how they interact as a firm strives to reach optimal profitability and efficiency in the face of modern constraints. FEATURES: * Integrates examples, data, and theories on the international ramifications of managerial decisions into the entire text, rather than segregating the material in a separate chapter * Demonstrates how firms actually reach managerial decisions with 122 real-world case studies and 11 more extensive integrating studies, along with additional case studies and applications on the Companion Website * Prominently features those tools of decision making, such as spreadsheet applications, that are so in demand by students * Introduces many new and exciting topics, including firm architecture, firm governance, and business ethics; Porter's strategic framework and the evolution of the creative firm; electronic commerce and risk management; and more * Offers instructors maximum flexibility with a modular structure that is suitable for both full-term and briefer courses, and can be used with or without calculus NEW TO THIS EDITION: * Extensive revisions to every chapter that consider the consequences and lessons of the 2008 global financial crisis * A new Chapter 2: Demand, Supply, and Equilibrium Analysis, to refresh students on relevant principles of economic analysis * Expanded coverage of spreadsheets and Microsoft Excel, including new appendices and spreadsheet-based problems in every chapter * Nearly 80 new or completely updated case studies and 5 new integrating case studies * An updated and expanded Companion Website at www.oup. com/us/salvatore featuring student resources: an online study guide, an extra chapter on linear programming, and additional case studies * An extensive instructor ancillary package, including online resources, making this text the perfect choice for lecture-based, online, or hybrid managerial economics courses

Full Product Details

Author:   Dominick Salvatore
Publisher:   Oxford University Press Inc
Imprint:   Oxford University Press Inc
Edition:   7th Revised edition
Dimensions:   Width: 20.10cm , Height: 3.80cm , Length: 24.30cm
Weight:   1.403kg
ISBN:  

9780199811786

ISBN 10:   0199811784
Pages:   784
Publication Date:   22 July 2011
Audience:   College/higher education ,  Professional and scholarly ,  Tertiary & Higher Education ,  Professional & Vocational
Format:   Hardback
Publisher's Status:   Out of Print
Availability:   In Print  
Limited stock is available. It will be ordered for you and shipped pending supplier's limited stock.

Table of Contents

About the Author ; Preface ; PART ONE. INTRODUCTION ; CHAPTER 1. THE NATURE AND SCOPE OF MANAGERIAL ECONOMICS ; 1-1. THE SCOPE OF MANAGERIAL ECONOMICS ; Definition of Managerial Economics ; Relationship to Economic Theory ; Relationship to the Decision Sciences ; Relationship to the Functional Areas of Business Administration Studies ; 1-2. THE BASIC PROCESS OF DECISION MAKING ; 1-3. THE THEORY OF THE FIRM ; Reasons for the Existence of Firms and Their Functions ; The Objective and Value of the Firm ; Constraints on the Operation of the Firm ; Limitations of the Theory of the Firm ; 1-4. THE NATURE AND FUNCTION OF PROFITS ; Business versus Economic Profit ; Theories of Profit ; Function of Profit ; 1-5. BUSINESS ETHICS ; 1-6. THE INTERNATIONAL FRAMEWORK OF MANAGERIAL ECONOMICS ; 1-7. MANAGERIAL ECONOMICS AND THE INTERNET ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS ; APPENDIX: SOLVING MANAGERIAL DECISION PROBLEMS USING SPREADSHEETS ; Microsoft Excel ; Example ; Solution ; SPREADSHEET PROBLEM * SUPPLEMENTARY READINGS ; CHAPTER 2. DEMAND, SUPPLY, AND EQUILIBRIUM ANALYSIS ; 2-1. MARKET ANALYSIS ; 2-2. MARKET DEMAND ; Demand Schedule and Demand Curve ; Changes in Demand ; 2-3. MARKET SUPPLY ; Supply Schedule and Supply Curve ; Changes in Supply ; 2-4. WHEN IS A MARKET IN EQUILIBRIUM? ; 2-5. ADJUSTMENT TO CHANGES IN DEMAND AND SUPPLY: COMPARATIVE STATIC ANALYSIS ; Adjustment to Changes in Demand ; Adjustment to Changes in Supply ; 2-6. DOMESTIC DEMAND AND SUPPLY, IMPORTS, AND PRICES ; 2-7. INTERFERING WITH VERSUS WORKING THROUGH THE MARKET ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS ; APPENDIX: THE ALGEBRA OF DEMAND, SUPPLY, AND EQUILIBRIUM ; Market Equilibrium Algebraically ; Shifts in Demand and Supply, and Equilibrium ; The Effect of an Excise Tax ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 3. OPTIMIZATION TECHNIQUES AND NEW MANAGEMENT TOOLS ; 3-1. METHODS OF EXPRESSING ECONOMIC RELATIONSHIPS ; 3-2. TOTAL, AVERAGE, AND MARGINAL RELATIONSHIPS ; Total, Average, and Marginal Cost ; Geometric Derivation of the Average- and Marginal-Cost Curves ; 3-3. OPTIMIZATION ANALYSIS ; Profit Maximization by the Total-Revenue and Total-Cost Approach ; Optimization by Marginal Analysis ; 3-4. CONSTRAINED OPTIMIZATION ; 3-5. NEW MANAGEMENT TOOLS FOR OPTIMIZATION ; Benchmarking ; Total Quality Management ; Reengineering ; The Learning Organization ; 3-6. OTHER MANAGEMENT TOOLS FOR OPTIMIZATION ; 3-7. NEW MANAGEMENT TOOLS AND FUNCTIONAL SPECIALIZATION ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS ; APPENDIX 1: OPTIMIZATION USING SPREADSHEETS ; APPENDIX PROBLEM ; APPENDIX 2: DIFFERENTIAL CALCULUS AND OPTIMIZATION TECHNIQUES ; THE DERIVATIVE AND RULES OF DIFFERENTIATION ; The Concept of the Derivative ; Rules of Differentiation ; OPTIMIZATION WITH CALCULUS ; Determining a Maximum or a Minimum by Calculus ; Distinguishing between a Maximum and a Minimum: The Second Derivative ; MULTIVARIATE OPTIMIZATION ; Partial Derivatives ; Maximizing a Multivariable Function ; CONSTRAINED OPTIMIZATION ; Constrained Optimization by Substitution ; Constrained Optimization by the Lagrangian Multiplier Method ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; INTEGRATING CASE STUDY 1: THE DECADE OF STEVE: HOW APPLE'S IMPERIOUS, BRILLIANT CEO TRANSFORMED AMERICAN BUSINESS ; The Decade of Steve ; Apple's Future ; PART TWO. DEMAND ANALYSIS ; CHAPTER 4. DEMAND THEORY ; 4-1. THE DEMAND FOR A COMMODITY ; An Individual's Demand for a Commodity ; From Individual to Market Demand ; The Demand Faced by a Firm ; 4-2. PRICE ELASTICITY OF DEMAND ; Point Price Elasticity of Demand ; Arc Price Elasticity of Demand ; Price Elasticity, Total Revenue, and Marginal Revenue ; Factors Affecting the Price Elasticity of Demand ; 4-3. INCOME ELASTICITY OF DEMAND ; 4-4. CROSS-PRICE ELASTICITY OF DEMAND ; 4-5. USING ELASTICITIES IN MANAGERIAL DECISION MAKING ; 4-6. INTERNATIONAL CONVERGENCE OF TASTES ; 4-7 ELECTRONIC COMMERCE ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS ; APPENDIX: BEHIND THE MARKET DEMAND CURVE-THE THEORY OF CONSUMER CHOICE ; The Consumer's Tastes: Indifference Curves ; The Consumer's Constraints: The Budget Line ; The Consumer's Equilibrium ; Derivation of the Consumer's Demand Curve ; Income and Substitution Effects of a Price Change ; The Theory of Consumer Choice Mathematically ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 5. DEMAND ESTIMATION ; 5-1. THE IDENTIFICATION PROBLEM ; 5-2. MARKETING RESEARCH APPROACHES TO DEMAND ESTIMATION ; Consumer Surveys and Observational Research ; Consumer Clinics ; Market Experiments ; Virtual Shopping and Virtual Management ; 5-3. INTRODUCTION TO REGRESSION ANALYSIS ; 5-4. SIMPLE REGRESSION ANALYSIS ; The Ordinary Least-Squares Method ; Tests of Significance of Parameter Estimates ; Other Aspects of Significance Tests and Confidence Intervals ; Test of Goodness of Fit and Correlation ; 5-5. MULTIPLE REGRESSION ANALYSIS ; The Multiple Regression Model ; The Coefficient of Determination and Adjusted R2 ; Analysis of Variance ; Point and Interval Estimates ; 5-6. PROBLEMS IN REGRESSION ANALYSIS ; Multicollinearity ; Heteroscedasticity ; Autocorrelation ; 5-7. DEMAND ESTIMATION BY REGRESSION ANALYSIS ; Model Specification ; Collecting Data on the Variables ; Specifying the Form of the Demand Equation ; Testing the Econometric Results ; 5-8. ESTIMATING THE DEMAND FOR U.S. IMPORTS AND EXPORTS ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS ; APPENDIX: REGRESSION ANALYSIS WITH EXCEL ; Simple Regression ; Multiple Regression Analysis ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 6. DEMAND FOREUASTING ; 6-1. QUALITATIVE FORECASTS ; Survey Techniques ; Opinion Polls ; Soliciting a Foreign Perspective ; 6-2. TIME-SERIES ANALYSIS ; Reasons for Fluctuations in Time-Series Data ; Trend Projection ; Seasonal Variations ; 6-3. SMOOTHING TECHNIQUES ; Moving Averages ; Exponential Smoothing ; 6-4. BAROMETRIC METHODS ; 6-5. ECONOMETRIC MODELS ; Single-Equation Models ; Multiple-Equation Models ; 6-6. INPUT-OUTPUT FORECASTING ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS ; APPENDIX: FORECASTING FLUCTUATIONS IN TIME-SERIES ANALYSIS USING EXCEL ; Forecasting New-Housing Starts with Regression Analysis ; Adjusting the Trend Forecasts of New-Housing Starts for Seasonal Variations by the Ratio-to-Trend Method ; Adjusting the Trend Forecasts of New-Housing Starts for Seasonal Variations by Using Seasonal Dummies ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; INTEGRATING CASE STUDY 2: FORD'S BET: IT'S A SMALL WORLD AFTER ALL ; INTEGRATING CASE STUDY 3: ESTIMATING AND FORECASTING THE U.S. DEMAND FOR ELECTRICITY ; PART THREE. PRODUCTION AND COST ANALYSIS ; CHAPTER 7. PRODUCTION THEORY AND ESTIMATION ; 7-1. THE ORGANIZATION OF PRODUCTION AND THE PRODUCTION FUNCTION ; The Organization of Production ; The Production Function ; 7-2. THE PRODUCTION FUNCTION WITH ONE VARIABLE INPUT ; Total, Average, and Marginal Product ; The Law of Diminishing Returns and Stages of Production ; 7-3. OPTIMAL USE OF THE VARIABLE INPUT ; 7-4. THE PRODUCTION FUNCTION WITH TWO VARIABLE INPUTS ; Production Isoquants ; Economic Region of Production ; Marginal Rate of Technical Substitution ; Perfect Substitutes and Complementary Inputs ; 7-5. OPTIMAL COMBINATION OF INPUTS ; Isocost Lines ; Optimal Input Combination for Minimizing Costs or Maximizing Output ; Profit Maximization ; Effect of Change in Input Prices ; 7-6. RETURNS TO SCALE ; 7-7. EMPIRICAL PRODUCTION FUNCTIONS ; 7-8. THE INNOVATION PROCESS ; Meaning and Importance of Innovations ; The Open Innovation Model ; The Next Step in Open Innovation ; 7-9. INNOVATION AND GLOBAL COMPETITIVENESS ; Innovations and the International Competitiveness of U.S. Firms ; The New Computer-Aided Production Revolution and the International Competitiveness of U.S. Firms ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS ; APPENDIX: PRODUCTION ANALYSIS WITH CALCULUS ; Constrained Output Maximization ; Constrained Cost Minimization ; Profit Maximization ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 8. COST THEORY AND ESTIMATION ; 8-1. THE NATURE OF COSTS ; 8-2. SHORT-RUN COST FUNCTIONS ; Short-Run Total and Per-Unit Cost Functions ; Short-Run Total and Per-Unit Cost Curves ; 8-3. LONG-RUN COST CURVES ; Long-Run Total Cost Curves ; Long-Run Average and Marginal Cost Curves ; 8-4. PLANT SIZE AND ECONOMIES OF SCALE ; 8-5. LEARNING CURVES ; 8-6. MINIMIZING COSTS INTERNATIONALLY-THE NEW ECONOMIES OF SCALE ; International Trade in Inputs ; The New International Economies of Scale ; Immigration of Skilled Labor ; 8-7. LOGISTICS OR SUPPLY-CHAIN MANAGEMENT ; 8-8. COST-VOLUME-PROFIT ANALYSIS AND OPERATING LEVERAGE ; Cost-Volume-Profit Analysis ; Operating Leverage ; 8-9. EMPIRICAL ESTIMATION OF COST FUNCTIONS ; Data and Measurement Problems in Estimating Short-Run Cost Functions ; The Functional Form of Short-Run Cost Functions ; Estimating Long-Run Cost Functions with Cross-Sectional Regression Analysis ; Estimating Long-Run Cost Functions with Engineering and Survival Techniques ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS ; APPENDIX: COST ANALYSIS WITH CALCULUS 3 ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; INTEGRATING CASE STUDY 4: PRODUCTION AND COST FUNCTIONS IN THE PETROLEUM INDUSTRY ; INTEGRATING CASE STUDY 5: TOYOTA: THE MACHINE THAT RAN TOO HOT ; INTEGRATING CASE STUDY 6: STREAMLINED PLANE MAKING ; PART FOUR. MARKET STRUCTURE AND PRICING PRACTICES ; CHAPTER 9. MARKET STRUCTURE: PERFECT COMPETITION, MONOPOLY, AND MONOPOLISTIC COMPETITION ; 9-1. MARKET STRUCTURE AND DEGREE OF COMPETITION ; 9-2. PERFECT COMPETITION ; Meaning and Importance of Perfect Competition ; Price Determination under Perfect Competition ; Short-Run Analysis of a Perfectly Competitive Firm ; Short-Run Supply Curve of the Competitive Firm and Market ; Long-Run Analysis of a Perfectly Competitive Firm ; 9-3. COMPETITION IN THE GLOBAL ECONOMY ; Domestic Demand and Supply, Imports, and Prices ; The Dollar Exchange Rate and the International Competitiveness of U.S. Firms ; 9-4. MONOPOLY ; Sources of Monopoly ; Short-Run Price and Output Determination under Monopoly ; Long-Run Price and Output Determination under Monopoly ; Comparison of Monopoly and Perfect Competition ; 9-5. MONOPOLISTIC COMPETITION ; Meaning and Importance of Monopolistic Competition ; Short-Run Price and Output Determination under Monopolistic Competition ; Long-Run Price and Output Determination under Monopolistic Competition ; Product Variation and Selling Expenses under Monopolistic Competition ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS ; APPENDIX: PROFIT MAXIMIZATION WITH CALCULUS ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 10. OLIGOPOLY AND FIRM ARCHITECTURE ; 10-1. OLIGOPOLY AND MARKET CONCENTRATION ; Oligopoly: Meaning and Sources ; Concentration Ratios, the Herfindahl Index, and Contestable Markets ; 10-2. OLIGOPOLY MODELS ; The Cournot Model ; The Kinked Demand Curve Model ; Cartel Arrangements ; PRICE LEADERSHIP ; 10-3. PROFITABILITY AND EFFICIENCY IMPLICATIONS OF OLIGOPOLY ; Porter's Strategic Framework ; Efficiency Implications of Oligopoly ; 10-4. THE SALES MAXIMIZATION MODEL ; 10-5. MARCH OF GLOBAL OLIGOPOLISTS ; 10-6. THE ARCHITECTURE OF THE IDEAL FIRM AND THE CREATIVE COMPANY ; The Architecture of the Ideal Firm ; The Evolution of the Creative Company ; 10-7. THE VIRTUAL CORPORATION AND RELATIONSHIP ENTERPRISES ; The Virtual Corporation ; Relationship Enterprises ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS ; APPENDIX: OLIGOPOLY THEORY MATHEMATICALLY ; The Cournot Model ; The Kinked Demand Curve Model ; The Centralized Cartel Model ; The Market-Sharing Cartel ; The Sales Maximization Model ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 11. GAME THEORY AND STRATEGIC BEHAVIOR ; 11-1. STRATEGIC BEHAVIOR AND GAME THEORY ; 11-2. DOMINANT STRATEGY AND NASH EQUILIBRIUM ; Dominant Strategy ; Nash Equilibrium ; 11-3. THE PRISONERS' DILEMMA ; 11-4. PRICE AND NONPRICE COMPETITION, CARTEL CHEATING, AND THE PRISONERS' DILEMMA ; Price Competition and the Prisoners' Dilemma ; Nonprice Competition, Cartel Cheating, and the Prisoners' Dilemma ; 11-5. REPEATED GAMES AND TIT-FOR-TAT STRATEGY ; 11-6. STRATEGIC MOVES ; Threat, Commitments, and Credibility ; Entry Deterrence ; 11-7. STRATEGIC BEHAVIOR AND INTERNATIONAL COMPETITIVENESS ; 11-8. SEQUENTIAL GAMES AND DECISION TREES ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 12. PRICING PRACTICES ; 12-1. PRICING OF MULTIPLE PRODUCTS ; Pricing of Products with Interrelated Demands ; Plant Capacity Utilization and Optimal Product Pricing ; Optimal Pricing of Joint Products Produced in Fixed Proportions ; Optimal Pricing and Output of Joint Products Produced in Variable Proportions ; 12-2. PRICE DISCRIMINATION ; Meaning of and Conditions for Price Discrimination ; First- and Second-Degree Price Discrimination ; Third-Degree Price Discrimination Graphically ; Third-Degree Price Discrimination Algebraically ; 12-3. INTERNATIONAL PRICE DISCRIMINATION AND DUMPING ; 12-4. TRANSFER PRICING ; Meaning and Nature of Transfer Pricing ; Transfer Pricing with No External Market for the Intermediate Product ; Transfer Pricing with a Perfectly Competitive Market for the Intermediate Product ; Transfer Pricing with an Imperfectly Competitive Market for the Intermediate Product ; 12-5. PRICING IN PRACTICE ; Cost-Plus Pricing ; Evaluation of Cost-Plus Pricing ; Incremental Analysis in Pricing ; Peak-Load Pricing, Two-Part Tariff, Tying, and Bundling ; Other Pricing Practices ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS ; APPENDIX: THIRD-DEGREE PRICE DISCRIMINATION WITH CALCULUS ; APPENDIX PROBLEMS * SUPPLEMENTARY READINGS ; INTEGRATING CASE STUDY 7: EBAY AND COMPETITION ON THE INTERNET ; INTEGRATING CASE STUDY 8: E-BOOKS REWRITE BOOKSELLING ; INTEGRATING CASE STUDY 9: THE ART OF DEVISING AIRFARES ; PART FIVE. REGULATION, RISK ANALYSIS, AND CAPITAL BUDGETING ; CHAPTER 13. REGULATION AND ANTITRUST: THE ROLE OF GOVERNMENT IN THE ECONOMY ; 13-1. GOVERNMENT REGULATION TO SUPPORT BUSINESS AND TO PROTECT CONSUMERS, WORKERS, AND THE ENVIRONMENT ; Government Regulations that Restrict Competition ; Government Regulations to Protect Consumers, Workers, and the Environment ; 13-2. EXTERNALITIES AND REGULATION ; The Meaning and Importance of Externalities ; Policies to Deal with Externalities ; 13-3. PUBLIC UTILITY REGULATION ; Public Utilities as Natural Monopolies ; Difficulties in Public Utility Regulation ; 13-4. ANTITRUST: GOVERNMENT REGULATION OF MARKET STRUCTURE AND CONDUCT ; Sherman Act (1890) ; Clayton Act (1914) ; Federal Trade Commission Act (1914) ; Robinson-Patman Act (1936) ; Wheeler-Lea Act (1938) ; Celler-Kefauver Antimerger Act (1950) ; 13-5. ENFORCEMENT OF ANTITRUST LAWS AND THE DEREGULATION MOVEMENT ; Enforcement of Antitrust Laws: Some General Observations ; Enforcement of Antitrust Laws: Structure ; Enforcement of Antitrust Laws: Conduct ; The Deregulation Movement ; 13-6. REGULATION OF INTERNATIONAL COMPETITION ; 13-7. THE EFFECT OF TAXATION ON BUSINESS DECISIONS ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 14. RISK ANALYSIS ; 14-1. RISK AND UNCERTAINTY IN MANAGERIAL DECISION MAKING ; 14-2. MEASURING RISK WITH PROBABILITY DISTRIBUTIONS ; Probability Distributions ; An Absolute Measure of Risk: The Standard Deviation ; Measuring Probabilities with the Normal Distribution ; A Relative Measure of Risk: The Coefficient of Variation ; 14-3. UTILITY THEORY AND RISK AVERSION ; 14-4. ADJUSTING THE VALUATION MODEL FOR RISK ; Risk-Adjusted Discount Rates ; Certainty-Equivalent Approach ; 14-5. OTHER TECHNIQUES FOR INCORPORATING RISK INTO DECISION MAKING ; Decision Trees ; Simulation ; 14-6. DECISION MAKING UNDER UNCERTAINTY ; The Maximin Criterion ; The Minimax Regret Criterion ; Other Methods of Dealing with Uncertainty ; 14-7. FOREIGN-EXCHANGE RISKS AND HEDGING ; 14-8. INFORMATION AND RISK ; Asymmetric Information and the Market for Lemons ; The Insurance Market and Adverse Selection ; The Problem of Moral Hazard ; The Principal-Agent Problem ; Auctions ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS * SUPPLEMENTARY READINGS ; CHAPTER 15. LONG-RUN INVESTMENT DECISIONS: CAPITAL BUDGETING ; 15-1. CAPITAL BUDGETING: AN OVERVIEW ; Meaning and Importance of Capital Budgeting ; Overview of the Capital Budgeting Process ; 15-2. THE CAPITAL BUDGETING PROCESS ; Projecting Cash Flows ; Net Present Value (NPV) ; Internal Rate of Return (IRR) ; Comparison of NPV and IRR ; 15-3. CAPITAL RATIONING AND THE PROFITABILITY INDEX ; 15-4. THE COST OF CAPITAL ; The Cost of Debt ; The Cost of Equity Capital: The Risk-Free Rate Plus Premium ; The Cost of Equity Capital: The Dividend Valuation Model ; The Cost of Equity Capital: The Capital Asset Pricing Model (CAPM) ; The Weighted Cost of Capital ; 15-5. REVIEWING INVESTMENT PROJECTS AFTER IMPLEMENTATION ; 15-6. THE COST OF CAPITAL AND INTERNATIONAL COMPETITIVENESS ; SUMMARY * DISCUSSION QUESTIONS * PROBLEMS * SPREADSHEET PROBLEMS * SUPPLEMENTARY READINGS ; INTEGRATING CASE STUDY 10: HOW SILICON VALLEY CONQUERED THE CARRIERS ; INTEGRATING CASE STUDY 11: PHONE FIGHT! ; APPENDIXES ; APPENDIX A. COMPOUNDING, DISCOUNTING, AND PRESENT VALUE ; A-1. Future Value and Compounding ; A-2. Present Value and Discounting ; A-3. Future Value of an Annuity ; A-4. Present Value of an Annuity ; A-5. Compounding and Discounting Periods ; A-6. Determining the Interest Rate ; A-7. Perpetuities ; APPENDIX B. INTEREST FACTOR TABLES ; Table B-1. Compound Value of $1 ; Table B-2. Present Value of $1 ; Table B-3. Future Value of an Annuity of $1 for n Periods ; Table B-4. Present Value of an Annuity of $1 for n Periods ; APPENDIX C. STATISTICAL TABLES ; Table C-1. Areas under the Standard Normal Distribution ; Table C-2. Areas in the Tails of the t Distribution ; Table C-3. F Distribution for 5 Percent Significance ; Table C-4. Durbin-Watson Statistic for 5 Percent Significance Points of dL and dU ; APPENDIX D. ANSWERS TO SELECTED (ASTERISKED) PROBLEMS ; GLOSSARY ; SUBJECT INDEX

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Dominick Salvatore is Distinguished Professor of Economics and Business at Fordham University. He is consultant to the Economic Policy Institute (EPI) in Washington, D.C., The World Bank, the International Monetary Fund, the United Nations, and various central banks, multinational banks, and corporations. Dr. Salvatore is the author, coauthor, or editor of 51 books, including International Economics, Tenth Edition (2009), and Microeconomics: Theory and Applications, Fifth Edition (OUP, 2008

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