aiwan财务管理_lecture11(ch11)(PPT 24页)

,Irwin/McGraw-Hill,Chapter11,FundamentalsofCorporateFinanceThirdEdition,TheCostofCapital,BrealeyMyersMarcusslidesbyMatthewWill,Irwin/McGraw-Hill,TheMcGraw-HillCompanies,Inc.,2001,TopicsCovered,GeothermalsCostofCapitalWeightedAverageCostofCapital(WACC)CapitalStructureRequiredRatesofReturnBigOilsWACCInterpretingWACCFlotationCosts,CostofCapital,CostofCapital-Thereturnthefirmsinvestorscouldexpecttoearniftheyinvestedinsecuritieswithcomparabledegreesofrisk.CapitalStructure-Thefirmsmixoflongtermfinancingandequityfinancing.,CostofCapital,ExampleGeothermalInc.hasthefollowingstructure.Giventhatgeothermalpays8%fordebtand14%forequity,whatistheCompanyCostofCapital?,CostofCapital,Example-GeothermalInc.hasthefollowingstructure.Giventhatgeothermalpays8%fordebtand14%forequity,whatistheCompanyCostofCapital?,CostofCapital,Example-GeothermalInc.hasthefollowingstructure.Giventhatgeothermalpays8%fordebtand14%forequity,whatistheCompanyCostofCapital?,CostofCapital,Example-GeothermalInc.hasthefollowingstructure.Giventhatgeothermalpays8%fordebtand14%forequity,whatistheCompanyCostofCapital?,Interestistaxdeductible.Givena35%taxrate,debtonlycostsus5.2%(i.e.8%x.65).,WACC,WeightedAverageCostofCapital(WACC)-Theexpectedrateofreturnonaportfolioofallthefirmssecurities.Companycostofcapital=Weightedaverageofdebtandequityreturns.,WACC,WACC,ThreeStepstoCalculatingCostofCapital1.Calculatethevalueofeachsecurityasaproportionofthefirmsmarketvalue.2.Determinetherequiredrateofreturnoneachsecurity.3.Calculateaweightedaverageoftheserequiredreturns.,WACC,Taxesareanimportantconsiderationinthecompanycostofcapitalbecauseinterestpaymentsaredeductedfromincomebeforetaxiscalculated.,WACC,Weighted-averagecostofcapital=,WACC,Example-ExecutiveFruithasissueddebt,preferredstockandcommonstock.Themarketvalueofthesesecuritiesare$4mil,$2mil,and$6mil,respectively.Therequiredreturnsare6%,12%,and18%,respectively.Q:DeterminetheWACCforExecutiveFruit,Inc.,WACC,Example-continuedStep1FirmValue=4+2+6=$12milStep2RequiredreturnsaregivenStep3,WACC,IssuesinUsingWACCDebthastwocosts.1)returnondebtand2)increasedcostofequitydemandedduetotheincreaseinriskBetasmaychangewithcapitalstructureCorporatetaxescomplicatetheanalysisandmaychangeourdecision,MeasuringCapitalStructure,InestimatingWACC,donotusetheBookValueofsecurities.InestimatingWACC,usetheMarketValueofthesecurities.BookValuesoftendonotrepresentthetruemarketvalueofafirmssecurities.,MeasuringCapitalStructure,MarketValueofBonds-PVofallcouponsandparvaluediscountedatthecurrentinterestrate.,MarketValueofEquity-Marketpricepersharemultipliedbythenumberofoutstandingshares.,MeasuringCapitalStructure,MeasuringCapitalStructure,Ifthelongtermbondspayan8%couponandmaturein12years,whatistheirmarketvalueassuminga9%YTM?,MeasuringCapitalStructure,RequiredRatesofReturn,BondsCommonStock,RequiredRatesofReturn,DividendDiscountModelCostofEquityPerpetuityGrowthModel=solveforre,RequiredRatesofReturn,ExpectedReturnonPreferredStockPriceofPreferredStock=solveforpreferred,FlotationCosts,Thecostofimplementinganyfinancingdeci