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
firms 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. 63 In Equation 2-3, the term

Net income
Sales

should be

CHAPTER 5

Net income
.
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

(1 r )

PMT

t 0

change $2,000 and

$102,000 to $3,000 and
$103,000, respectively.

p. 170 In problem 4-28 part b,

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...
p. 213 In ST-3 part c, the yield
for the 5-year bond
should be 8 percent.
CHAPTER 6
p. 236 The far-right date given at the
top of Figure 6-2 should be
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.
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 610 should be December
31, 2035.

Revised 12/16/02

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:

rs

P
P
D
0
1
1
P0
P0

CHAPTER 8
p. 345 The probability given for
State 3 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.
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 63 should be $832.32.
p. 798 The answer given for problem 99 should be 10.6%.
p. 799 For problem 9-14, DPBP =

4.81.