Revised 3/24/08

Essentials of Managerial Finance, 14th Edition

Besley and Brigham
ERRATA SHEET
To provide a textbook that is free of errors, in the preface of the book we offer a monetary reward to the first person to report an error.
The list below includes errors reported to us as well errors we have discovered, including typographical and other minor changes
recommended for subsequent printings of the text. The errors reported to us and compiled on this list are corrected in subsequent
printings of the text; so if you have a text from a later printing, many, if not all, of these errors are already corrected. Changes/errors are
in bold print. Those errors that could cause confusion or are considered significant are marked with the symbol ►.

PROPORTIONALITY OF FIGURES
To help illustrate the concepts discussed
in the text, figures are located
throughout the book. In a few instances,
the locations of the hash marks on an
axis are not exactly proportional. These
figures were drawn in this manner to
avoid clutter and to better present the
concept at hand; the accuracy of the
figures is not compromised.
CHAPTER 1
p. 9 The phrase in the second box
from the top in Figure 1-1
should be “President; Chief
Executive Officer (CEO).”
p. 12 In the section titled “S
Corporation,” change 75 to 100.
An S corporation can now have
up to 100 stockholders.
p. 20 In the margin definition for
“stakeholders,” change the word
mangers to managers.
p. 30 The Thomson One problems
should be labeled 1-2 and 1-3.
CHAPTER 2
► p. 36 In Figure 2-1, the list of in the
Current Asset box should be
switched with the list in the
Long-Term Assets box.
► p. 51 The answer given for the firm’s
free cash flow in the Self-Test
Questions should be $4,000
rather than $74,000.
p. 60 The label for the ROA equation
at the top of the page should be
“Return on total assets.”
► p. 63 In the equation below Equation
2-2, change the plus sign (+) to a
multiplication sign (x).
► p. 213 In ST-3 part c, the yield for the
► p. 63 In Equation 2-3, the term
Net income
should be
Sales
Net income
. top of Figure 6-2 should be
Total assets
► p. 74 The value given for accounts
receivable in part b of ST-4
should be $111.1 million rather
than $109.6 million.
p. 81 On the right side of the balance
sheet given at the top of the
page, change “Total current
assets” to “Total current
liabilities.”
CHAPTER 3
p. 98 The fourth sentence in the
discussion of specialists should
be: “To accomplish his or her
job, a specialist might have to
buy stock when not enough
buyers exist or sell stock when
not enough sellers exist.
p. 101 In the second complete sentence
at the top of the page (the fourth
line down), “traded though”
should be written “traded
through.”
CHAPTER 4
p. 133 In Figure 4-1, cell B3 should
contain -100 rather than ?, and
row 6 should be blank.
p. 139 In footnote 6, change In to Ln.
p. 143 The first term in Equation 4-4
should be:
 n 1
 ► p. 345 The probability given for State 3
PMT   (1  r ) t 
 t 0 
p. 170 In problem 4-28 part b, change
$2,000 and $102,000 to $3,000
and $103,000, respectively.
CHAPTER 5
p. 197 In Figure 5-5 the colors of the
lines that depict the years 2006
and 2003 should be switched so
that they match the colors that
are highlighted in the table
below the figure.
p. 211 In the middle of the second
paragraph in the Ethical
Dilemma, the phrase “other
charges association with” should
be “other charges associated
with...”
5-year bond should be 8 percent.
CHAPTER 6
p. 236 The far-right date given at the
12/31/21.
p. 236 In the section titled “Financial
Calculator Solution,” the images
that show what values to enter
into the calculator should follow
the paragraph that ends with:
“Here is the setup.”
p. 238 In the equation at the top of the
page, rd should be rd.
p. 246 The green curve in Figure 6-5
should be labeled 15-Year
Bond.
Revised 3/24/08
p. 255 In part a of question 6-7, the
beginning of the sentence should
be “Do you think it would make
sense …”
p. 258 The maturity date given for the
bond in problem 6-10 should be
December 31, 2035.
CHAPTER 7
p. 266 In the last sentence on the page,
change 10 percent to 1 percent.
p. 273 The equation to compute the
expected rate of return (at the
top of the page) should be:
D̂1 Pˆ 1  P0
r̂s  
P0 P0
CHAPTER 8
should be 0.4, not 0.5.
p. 347 In problem 8-19, the dollar
investment for Stock A should
be $400,000 rather than
$400.000.
CHAPTER 9
► p. 385 The table given for problem 9-
17 is the table that should be
used in Problem 9-18.
► p. 369 The numerator in left portion of
the second line in Equation 9-3
should be (1 + r)t, not (1 - r)t.
► p. 386 The table given for problem 9-
18 is the table that should be
used for Problem 9-17.
► p. 388 The numbering in parts d e f g,
and h is incorrect.
CHAPTER 10
p. 430 In the table at the top of the
page, the third column should be
labeled IRR rather than RR.
CHAPTER 11
p. 457 The results of the computation
for rs should be: rs = 0.093 +
0.04 = 0.133 = 13.3%
p. 463 In the fourth line from the top of
the page, the amount given for
the total long-term capital
should be $415 million rather
than $715 million.
p. 464 In the table in the middle of the
page, the dollar amount that is
given in the title for the third
(middle) column should be $64
rather than $61.
 Revised 12/16/02
p. 484 Problem 11-13: In the table that
gives the cost of debt for various
amounts of debt, the second-to-
last line should be labeled
450,501 – 840,000.
CHAPTER 16
► p. 611 The second sentence in the
section titled “Days Sales
Outstanding (DSO)” should be
written “DSO is computed by
dividing average accounts
receivable by daily credit sales.
CHAPTER 17
p. 689 In Equation 17-4a, the subscript
for DOL should be S rather than
Q.
p. 695 In the first equation in footnote
7, change DLF = to DFL =.
p. 696 In both equations on the page,
change DLF = to DFL =.
p. 697 In Equation 17-9, change DLF
to DFL.
p. 701 In the second sentence in the
Small Businesses section, the
phrase “fewer than 75” should
be “not more than 100.”
CHAPTER 18
p. 742 In the seventh line of the Ethical
Dilemma, separate “mentthat”
so that it is “ment that.”
APPENDIX C
► p. 795 The answer given for 4-28 (b)
should be PMT(Bank of Middle
Texas) = $1,587.13.
► p. 795 The answer given for 5-7 should
be DRP = 1.5%.
p. 795 The answer given for 5-9 should
be labeled Year 3 = 7.0%.
► p. 795 The answer given for 5-11 (d)
should be 8.1%.
► p. 796 The answer given for problem 6-
3 should be $832.32.
► p. 798 The answer given for problem 9-
9 should be 10.6%.
► p. 799 For problem 9-14, DPBP =
4.81.