Fundamentals of Corporate Finance, International Adaptation
Lýsing:
Fundamentals of Corporate Finance develops the key concepts of corporate finance with an intuitive approach while emphasizing computational skills. Presenting the topics in a logical and stepped-out manner, this book helps students develop an understanding of key financial concepts while also enabling them to develop the critical judgments necessary to apply financial tools in real-world decision-making situations.
It offers a level of rigor that is appropriate for both business and finance majors and yet presents the content in a manner that students find accessible. This International Adaptation includes new examples to help students better understand how to analyze the ethical dilemmas in business. In addition, select chapters include a new feature called Corporate Finance at Work which provides a broader perspective of the content covered in the chapter.
Annað
- Höfundar: Robert Parrino, David S. Kidwell, Thomas Bates, Stuart L. Gillan
- Útgáfa:5
- Útgáfudagur: 06/2022
- Hægt að prenta út 10 bls.
- Hægt að afrita 2 bls.
- Format:ePub
- ISBN 13: 9781119795421
- Print ISBN: 9781119795445
- ISBN 10: 1119795427
Efnisyfirlit
- Front Cover
- Title Page
- Copyright Page
- Dedication
- About the Authors
- Preface
- Organization and Coverage
- Proven Pedagogical Framework
- New to the International Adaptation
- Online Supplements
- Acknowledgments
- Brief Contents
- Contents
- 1 The Financial Manager and the Firm
- 1.1 The Role of the Financial Manager
- Stakeholders
- It’s All About Cash Flows
- Three Fundamental Decisions in Financial Management
- 1.2 Forms of Business Organization
- Sole Proprietorships
- Partnerships
- Corporations
- 1.3 Managing the Financial Function
- Organizational Structure
- Positions Reporting to the CFO
- External Auditor
- The Audit Committee
- The Compliance and Ethics Director
- 1.4 The Goal of the Firm
- What Should Management Maximize?
- Why Not Maximize Profits?
- Maximize the Value of the Firm’s Stock
- Can Management Decisions Affect Stock Prices?
- 1.5 Agency Conflicts: Separation of Ownership and Control
- Ownership and Control
- Agency Relationships
- Do Managers Really Want to Maximize Stock Price?
- Aligning the Interests of Managers and Stockholders
- Sarbanes-Oxley and Other Regulatory Reforms
- 1.6 The Importance of Ethics in Business
- Business Ethics
- Are Business Ethics Different from Everyday Ethics?
- Types of Ethical Conflicts in Business
- The Importance of an Ethical Business Culture
- Serious Consequences
- Corporate Finance at Work
- Summary of Learning Objectives/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Ethics Case
- 1.1 The Role of the Financial Manager
- 2 The Financial System and the Level of Interest Rates
- 2.1 The Financial System
- The Financial System at Work
- How Funds Flow through the Financial System
- 2.2 Direct Financing
- A Direct Market Transaction
- Investment Banks and Direct Financing
- 2.3 Types of Financial Markets
- Primary and Secondary Markets
- Exchanges and Over-the-Counter Markets
- Money and Capital Markets
- Public and Private Markets
- Futures and Options Markets
- 2.4 Market Efficiency
- Efficient Market Hypotheses
- 2.5 Financial Institutions and Indirect Financing
- Indirect Market Transactions
- Financial Institutions and Their Services
- Corporations and the Financial System
- 2.6 The Determinants of Interest Rate Levels
- The Real Rate of Interest
- Loan Contracts and Inflation
- The Fisher Equation and Inflation
- Cyclical and Long-Term Trends in Interest Rates
- Summary of Learning Objectives/Summary of Key Equations/ Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 2.1 The Financial System
- 3 Financial Statements, Cash Flows, and Taxes
- 3.1 Financial Statements and Accounting Principles
- The Annual Report
- Generally Accepted Accounting Principles
- Fundamental Accounting Principles
- International GAAP
- Illustrative Company: Diaz Manufacturing
- 3.2 The Balance Sheet
- Current Assets and Liabilities
- Long-Term Assets and Liabilities
- Equity
- 3.3 Market Value versus Book Value
- A More Informative Balance Sheet
- A Market-Value Balance Sheet
- 3.4 The Income Statement and the Statement of Retained Earnings
- The Income Statement
- The Statement of Retained Earnings
- 3.5 The Statement of Cash Flows
- Sources and Uses of Cash
- 3.6 Tying Together the Financial Statements
- 3.7 International Accounting Issues
- Information, Timeliness, and Language
- Foreign Currency Issues
- Differences in Presentation and Accounting Standards
- Differences in the Business Environment
- 3.8 Corporate Income Tax
- Corporate Income Taxes
- Average versus Marginal Tax Rates
- Unequal Treatment of Dividends and Interest Payments
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 3.1 Financial Statements and Accounting Principles
- 4 Analyzing Financial Statements
- 4.1 Background for Financial Statement Analysis
- Perspectives on Financial Statement Analysis
- Guidelines for Financial Statement Analysis
- 4.2 Common-Size Financial Statements
- Common-Size Balance Sheets
- Common-Size Income Statements
- 4.3 Financial Ratios and Firm Performance
- Why Ratios Are Better Measures
- Short-Term Liquidity Ratios
- Efficiency Ratios
- Leverage Ratios
- Profitability Ratios
- Market-Value Indicators
- Concluding Comments on Ratios
- 4.4 The Dupont System: A Diagnostic Tool
- An Overview of the DuPont System
- The ROA Equation
- The ROE Equation
- The DuPont Equation
- Applying the DuPont System
- Is Maximizing ROE an Appropriate Goal?
- 4.5 Selecting a Benchmark
- Trend Analysis
- Industry Analysis
- Peer Group Analysis
- 4.6 Using Financial Ratios
- Performance Analysis of Diaz Manufacturing
- Limitations of Financial Statement Analysis
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Ethics Case
- 4.1 Background for Financial Statement Analysis
- 5 The Time Value of Money
- 5.1 The Time Value of Money
- Consuming Today or Tomorrow
- Time Lines as Aids to Problem Solving
- Financial Calculator
- 5.2 Future Value and Compounding
- Single-Period Investment
- Two-Period Investment
- The Future Value Equation
- Using a Calculator to Compute the Future Value Factor
- Future Value Factor Tables
- Applying the Future Value Formula
- Calculator Tips for Future Value Problems
- 5.3 Present Value and Discounting
- Single-Period Investment
- Multiple-Period Investment
- The Present Value Equation
- Future and Present Value Equations Are the Same
- Applying the Present Value Formula
- The Relations Among Time, the Discount Rate, and Present Value
- Calculator Tips for Present Value Problems
- Future Value Versus Present Value
- 5.4 Additional Concepts and Applications
- Finding the Interest Rate
- Finding How Many Periods It Takes an Investment to Grow to a Certain Amount
- The Rule of 72
- Compound Growth Rates
- Concluding Comments
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 5.1 The Time Value of Money
- 6 Discounted Cash Flows and Valuation
- 6.1 Multiple Cash Flows
- Future Value of Multiple Cash Flows
- Present Value of Multiple Cash Flows
- 6.2 Level Cash Flows: Annuities
- Present Value of an Annuity
- Future Value of an Annuity
- Annuities Due
- 6.3 Level Cash Flows: Perpetuities
- 6.4 Cash Flows That Grow at a Constant Rate
- Growing Annuity
- Growing Perpetuity
- 6.5 The Effective Annual Interest Rate
- Why the Confusion?
- Calculating the Effective Annual Interest Rate
- Comparing Interest Rates
- Consumer Protection Acts and Interest Rate Disclosure
- The Appropriate Interest Rate Factor
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Appendix: Deriving the Formula for the Present Value of an Ordinary Annuity
- Ethics Case
- 6.1 Multiple Cash Flows
- 7 Risk and Return
- 7.1 Risk and Return
- 7.2 Holding Period Returns
- 7.3 Expected Returns
- 7.4 Variance and Standard Deviation as Measures of Risk
- Calculating Variance and Standard Deviation
- Interpreting Variance and Standard Deviation
- Historical Market Performance
- 7.5 Arithmetic Average and Geometric (Compounded) Average Returns
- 7.6 Risk and Diversification
- Single-Asset Portfolios
- Portfolios with More Than One Asset
- The Limits of Diversification
- 7.7 Systematic Risk
- Why Systematic Risk Is All That Matters
- Measuring Systematic Risk
- Compensation for Bearing Systematic Risk
- 7.8 The Capital Asset Pricing Model
- The Security Market Line
- The Capital Asset Pricing Model and Portfolio Returns
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Ethics Case
- 8 Bond Valuation and the Structure of Interest Rates
- 8.1 Corporate Bonds
- Market for Corporate Bonds
- Bond Price Information
- Types of Corporate Bonds
- 8.2 Bond Valuation
- The Bond Valuation Formula
- Calculator Tip: Bond Valuation Problems
- Par, Premium, and Discount Bonds
- Semiannual Compounding
- Zero Coupon Bonds
- 8.3 Bond Yields
- Yield to Maturity
- Effective Annual Yield
- Realized Yield
- 8.4 Interest Rate Risk
- Bond Theorems
- Bond Theorem Applications
- 8.5 The Determinants of Corporate Borrowing Costs
- Marketability
- Call Provision
- Default Risk
- 8.6 The Term Structure of Interest Rates
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Ethics Case
- 8.1 Corporate Bonds
- 9 Stock Valuation
- 9.1 The Market for Stocks
- Secondary Markets
- Major Secondary Markets
- Efficiency of Secondary Markets
- Stock Market Indexes
- Reading Stock Market Quotes
- 9.2 Common and Preferred Stock
- 9.3 Common Stock Valuation
- A One-Period Model
- A Perpetuity Model
- 9.4 The General Dividend-Valuation Model
- The Growth Stock Pricing Paradox
- 9.5 Stock Valuation: Some Simplifying Assumptions
- Zero-Growth Dividend Model
- Constant-Growth Dividend Model
- Computing Future Stock Prices
- 9.6 The Relation between R and
- Mixed (Supernormal) Growth Dividend Model
- 9.7 Valuing Preferred Stock
- Preferred Stock with a Fixed Maturity
- Preferred Stock with No Maturity
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Ethics Case
- 9.1 The Market for Stocks
- 10 The Fundamentals of Capital Budgeting
- 10.1 An Introduction to Capital Budgeting
- The Importance of Capital Budgeting
- The Capital Budgeting Process
- Sources of Information
- Classification of Investment Projects
- Basic Capital Budgeting Terms
- 10.2 Net Present Value
- Valuation of Real Assets
- NPV—The Basic Concept
- NPV and Value Creation
- Framework for Calculating NPV
- Net Present Value Techniques
- Concluding Comments on NPV
- 10.3 The Payback Period
- Computing the Payback Period
- How the Payback Period Performs
- Discounted Payback Period
- Evaluating the Payback Rule
- 10.4 The Accounting Rate of Return
- 10.5 Internal Rate of Return
- Calculating the IRR
- When the IRR and NPV Methods Agree
- When the NPV and IRR Methods Disagree
- Modified Internal Rate of Return (MIRR)
- IRR versus NPV: A Final Comment
- 10.6 Investment Decisions with Capital Rationing
- Capital Rationing in a Single Period
- Capital Rationing across Multiple Periods
- 10.7 Capital Budgeting in Practice
- Practitioners’ Methods of Choice
- Postaudit and Periodic Reviews
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Ethics Case
- 10.1 An Introduction to Capital Budgeting
- 11 Cash Flows and Capital Budgeting
- 11.1 Calculating Project Cash Flows
- Incremental After-Tax Free Cash Flows
- The FCF Calculation
- Cash Flows from Operations
- Cash Flows Associated with Capital Expenditures and Net Working Capital
- The FCF Calculation: An Example
- FCF versus Accounting Earnings
- 11.2 Estimating Cash Flows in Practice
- Five General Rules for Incremental After-Tax Free Cash Flow Calculations
- Nominal versus Real Cash Flows
- Tax Rates and Depreciation
- Computing the Terminal-Year FCF
- Expected Cash Flows
- 11.3 Forecasting Free Cash Flows
- Cash Flows from Operations
- Cash Flows Associated with Capital Expenditures and Net Working Capital
- 11.4 Special Cases
- Projects with Different Lives
- When to Replace an Existing Asset
- The Cost of Using an Existing Asset
- 11.5 Harvesting an Asset
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Ethics Case
- 11.1 Calculating Project Cash Flows
- 12 Evaluating Project Economics
- 12.1 Variable Costs, Fixed Costs, and Project Risk
- Cost Structure and Sensitivity of EBITDA to Revenue Changes
- Cost Structure and Sensitivity of EBIT to Revenue Changes
- 12.2 Calculating Operating Leverage
- Degree of Pretax Cash Flow Operating Leverage
- Degree of Accounting Operating Leverage
- 12.3 Break-Even Analysis
- Pretax Operating Cash Flow Break-Even
- Accounting Operating Profit (EBIT) Break-Even
- 12.4 The Economic Break-Even Point
- 12.5 Risk Analysis
- Sensitivity Analysis
- Scenario Analysis
- Simulation Analysis
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 12.1 Variable Costs, Fixed Costs, and Project Risk
- 13 The Cost of Capital
- 13.1 The Firm’s Overall Cost of Capital
- The Finance Balance Sheet
- Estimating a Firm’s Cost of Capital
- 13.2 The Cost of Debt
- Key Concepts for Estimating the Cost of Debt
- Estimating the Current Cost of a Bond or an Outstanding Loan
- Taxes and the Cost of Debt
- Estimating the Cost of Debt for a Firm
- 13.3 The Cost of Equity
- Common Stock
- Preferred Stock
- 13.4 Using the WACC in Practice
- Calculating WACC: An Example
- Limitations of WACC as a Discount Rate for Evaluating Projects
- Alternatives to Using WACC for Evaluating Projects
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 13.1 The Firm’s Overall Cost of Capital
- 14 Working Capital Management
- 14.1 Working Capital Basics
- Working Capital Terms and Concepts
- Working Capital Accounts and Trade-Offs
- 14.2 The Operating and Cash Conversion Cycles
- Operating Cycle
- Cash Conversion Cycle
- 14.3 Working Capital Management Strategies
- Flexible Current Asset Management Strategy
- Restrictive Current Asset Management Strategy
- The Working Capital Trade-Off
- 14.4 Accounts Receivable
- Terms of Sale
- Aging Accounts Receivable
- 14.5 Inventory Management
- Economic Order Quantity
- Just-in-Time Inventory Management
- 14.6 Cash Management and Budgeting
- Reasons for Holding Cash
- Cash Collection
- 14.7 Financing Working Capital
- Strategies for Financing Working Capital
- Financing Working Capital in Practice
- Sources of Short-Term Financing
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 14.1 Working Capital Basics
- 15 How Firms Raise Capital
- 15.1 Bootstrapping
- How New Businesses Get Started
- Initial Funding of the Firm
- 15.2 Venture Capital
- The Venture Capital Industry
- Why Venture Capital Funding Is Different
- The Venture Capital Funding Cycle
- Venture Capitalists Provide More Than Financing
- The Cost of Venture Capital Funding
- 15.3 Initial Public Offering
- Advantages and Disadvantages of Going Public
- Investment Banking Services
- Origination
- Underwriting
- Distribution
- The Proceeds
- 15.4 IPO Pricing and Cost
- The Underpricing Debate
- IPOs Are Consistently Underpriced
- The Cost of an IPO
- 15.5 General Cash Offer by a Public Company
- Competitive versus Negotiated Sale
- The Cost of a General Cash Offer
- 15.6 Private Markets
- Private versus Public Markets
- Private Placements
- Private Equity Firms
- Private Investments in Public Equity
- 15.7 Commercial Bank Loans
- Prime-Rate Loans
- Bank Term Loans
- The Loan Pricing Model
- Concluding Comments on Funding the Firm
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Ethics Case
- 15.1 Bootstrapping
- 16 Capital Structure Policy
- 16.1 Capital Structure and Firm Value
- The Optimal Capital Structure
- The Modigliani and Miller Propositions
- 16.2 The Benefits and Costs of Using Debt
- The Benefits of Debt
- The Costs of Debt
- 16.3 Two Theories of Capital Structure
- The Trade-Off Theory
- The Pecking Order Theory
- The Empirical Evidence
- 16.4 Practical Considerations in Choosing a Capital Structure
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- Appendix: Leasing
- Summary of Learning Objective/Self-Study Problems/Solution to Self-Study Problem/Discussion Questions/Questions and Problems
- 16.1 Capital Structure and Firm Value
- 17 Dividends, Stock Repurchases, and Payout Policy
- 17.1 Dividends
- Types of Dividends
- The Dividend Payment Process
- 17.2 Stock Repurchases
- How Stock Repurchases Differ from Dividends
- How Stock Is Repurchased
- 17.3 Dividends and Firm Value
- Benefits and Costs of Dividends
- Stock Price Reactions to Dividend Announcements
- Dividends versus Stock Repurchases
- 17.4 Stock Dividends and Stock Splits
- Stock Dividends
- Stock Splits
- Reasons for Stock Dividends and Splits
- 17.5 Setting a Dividend Payout
- What Managers Tell Us
- Practical Considerations in Setting a Dividend Payout
- Summary of Learning Objectives/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 17.1 Dividends
- 18 Business Formation, Growth, and Valuation
- 18.1 Starting a Business
- Making the Decision to Proceed
- Choosing the Right Organizational Form
- Financial Considerations
- 18.2 The Role of the Business Plan
- Why Business Plans Are Important
- The Key Elements of a Business Plan
- 18.3 Valuing a Business
- Fundamental Business Valuation Principles
- Business Valuation Approaches
- 18.4 Important Issues in Valuation
- Public versus Private Companies
- Young (Rapidly Growing) versus Mature Companies
- Controlling Interest versus Minority Interest
- Key People
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 18.1 Starting a Business
- 19 Financial Planning and Managing Growth
- 19.1 Financial Planning
- The Planning Documents
- Concluding Comments on Financial Planning
- 19.2 Financial Planning Models
- The Sales Forecast
- Building a Financial Planning Model
- A Simple Planning Model
- 19.3 A Better Financial Planning Model
- The Blackwell Sales Company
- The Income Statement
- The Balance Sheet
- The Preliminary Pro Forma Balance Sheet
- The Final Pro Forma Balance Sheet
- 19.4 Beyond the Basic Planning Models
- Improving Financial Planning Models
- 19.5 Managing and Financing Growth
- External Funding Needed
- A Graphical View of Growth
- The Sustainable Growth Rate
- Growth Rates and Profits
- Growth as a Planning Goal
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 19.1 Financial Planning
- 20 Corporate Risk Management
- 20.1 Why Companies Manage Corporate Risks
- The Risk Management Process
- 20.2 Managing Operational, Business, and Financial Risks
- Operational and Business Risks
- Risk Management Methods
- 20.3 Forwards and Futures
- Valuing a Forward Contract
- The Value of a Forward Contract Prior to Maturity
- Futures Contracts
- 20.4 Swaps
- Valuing Interest Rate Swaps
- Cross-Currency Swaps
- Valuing Cross-Currency Swaps
- 20.5 Financial Options
- Call Options
- Put Options
- American, European, and Bermudan Options
- More on the Shapes of Option Payoff Functions
- 20.6 Option Valuation
- Limits on Option Values
- Variables That Affect Option Values
- The Binomial Option Pricing Model
- Put-Call Parity
- Options and Risk Management
- Valuing Options Associated with the Financial Securities That Firms Issue
- 20.7 Real Options
- Options to Defer Investment
- Options to Make Follow-On Investments
- Options to Change Operations
- Options to Abandon Projects
- Concluding Comments on NPV Analysis and Real Options
- 20.8 Agency Costs
- Agency Costs of Debt
- Agency Costs of Equity
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 20.1 Why Companies Manage Corporate Risks
- 21 International Financial Management
- 21.1 Introduction to International Financial Management
- Globalization of the World Economy
- The Rise of Multinational Corporations
- Factors Affecting International Financial Management
- Goals of International Financial Management
- Basic Principles Remain the Same
- 21.2 Foreign Exchange Markets
- Market Structure and Major Participants
- Foreign Exchange Rates
- The Equilibrium Exchange Rate
- Foreign Currency Quotations
- 21.3 International Capital Budgeting
- Determining Cash Flows
- Exchange Rate Risk
- Country Risk
- The Barcelona Example
- 21.4 Global Money and Capital Markets
- The Emergence of the Euromarkets
- The Eurocurrency Market
- The Eurocredit Market
- International Bond Markets
- 21.5 International Banking
- Risks Involved in International Bank Lending
- Eurocredit Bank Loans
- 21.6 Islamic Finance
- Islamic Finance Instruments
- Corporate Finance at Work
- Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
- 21.1 Introduction to International Financial Management
- Appendix A Future Value and Present Value Tables
- Appendix B The 2017 Tax Cuts and Jobs Act: Implications for Cash Flow to Investors, the Cost of Capital, and Capital Structure
- Glossary
- Subject Index
- Company Index
- EULA
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