Introduction to Corporate Finance

Ross et al.: Fundamentals

of Corporate Finance, Sixth

Edition, Alternate Edition

Front Matter Preface © The McGraw−Hill^31

Companies, 2002

Exclusionary Self-Tenders 860
Poison Pills and Share Rights Plans 860
Going Private and Leveraged Buyouts 862
Other Devices and Jargon of Corporate
Takeovers 863
25.8 Some Evidence on Acquisitions 864
25.9 Summary and Conclusions 865

Chapter 26
Leasing 873

26.1 Leases and Lease Types 874
Leasing versus Buying 874
Operating Leases 875
Financial Leases 875
Tax-Oriented Leases 876
Leveraged Leases 876
Sale and Leaseback Agreements 876
26.2 Accounting and Leasing 876
26.3 Taxes, the IRS, and Leases 878
26.4 The Cash Flows from Leasing 879
The Incremental Cash Flows 879
A Note on Taxes 881
26.5 Lease or Buy? 881
A Preliminary Analysis 881
Three Potential Pitfalls 882
NPV Analysis 882

A Misconception 882

26.6 A Leasing Paradox 884

26.7 Reasons for Leasing 885

Good Reasons for Leasing 886

Tax Advantages 886

A Reduction of Uncertainty 887

Lower Transactions Costs 887

Fewer Restrictions and Security Requirements 887

Dubious Reasons for Leasing 887

Leasing and Accounting Income 887

100 Percent Financing 888

Low Cost 888

Other Reasons for Leasing 888

26.8 Summary and Conclusions 889

Appendix A

Mathematical Tables A-1

Appendix B

Key Equations B-1

Appendix C

Answers to Selected End-of-Chapter Problems C

Index I

CONTENTS xxxi