taiwan财务管理_lecture15(ch15)(PPT 17页)

,Irwin/McGraw-Hill,Chapter15,FundamentalsofCorporateFinanceThirdEdition,TheCapitalStructureDecision,BrealeyMyersMarcusslidesbyMatthewWill,Irwin/McGraw-Hill,TheMcGraw-HillCompanies,Inc.,2001,TopicsCovered,DebtandValueinaTaxFreeEconomyCapitalStructureandCorporateTaxesCostofFinancialDistressExplainingFinancialChoices,M&M(DebtPolicyDoesntMatter),Modigliani&MillerWhentherearenotaxesandcapitalmarketsfunctionwell,itmakesnodifferencewhetherthefirmborrowsorindividualshareholdersborrow.Therefore,themarketvalueofacompanydoesnotdependonitscapitalstructure.,M&M(DebtPolicyDoesntMatter),AssumptionsByissuing1securityratherthan2,companydiminishesinvestorchoice.Thisdoesnotreducevalueif:Investorsdonotneedchoice,ORTherearesufficientalternativesecuritiesCapitalstructuredoesnotaffectcashflowse.g.NotaxesNobankruptcycostsNoeffectonmanagementincentives,Example-RiverCruises-AllEquityFinanced,M&M(DebtPolicyDoesntMatter),Examplecont.50%debt,M&M(DebtPolicyDoesntMatter),Example-RiverCruises-AllEquityFinanced-Debtreplicatedbyinvestors,M&M(DebtPolicyDoesntMatter),WeightedAverageCostofCapitalwithouttaxes(traditionalview),r,DV,rD,rE,IncludesBankruptcyRisk,WACC,WeightedAverageCostofCapitalwithouttaxes(M&Mview),r,DV,rD,rE,IncludesBankruptcyRisk,WACC,FinancialRisk-Risktoshareholdersresultingfromtheuseofdebt.FinancialLeverage-Increaseinthevariabilityofshareholderreturnsthatcomesfromtheuseofdebt.InterestTaxShield-Taxsavingsresultingfromdeductibilityofinterestpayments.,C.S.&CorporateTaxes,Example-YouownalltheequityofSpaceBabiesDiaperCo.Thecompanyhasnodebt.Thecompanysannualcashflowis$1,000,beforeinterestandtaxes.Thecorporatetaxrateis40%.Youhavetheoptiontoexchange1/2ofyourequitypositionfor10%bondswithafacevalueof$1,000.Shouldyoudothisandwhy?,C.S.&CorporateTaxes,C.S.&CorporateTaxes,AllEquity1/2DebtEBIT1,0001,000InterestPmt0100PretaxIncome1,000900Taxes40%400360NetCashFlow$600$540,TotalCashFlowAllEquity=600*1/2Debt=640(540+100),Example-YouownalltheequityofSpaceBabiesDiaperCo.Thecompanyhasnodebt.Thecompanysannualcashflowis$1,000,beforeinterestandtaxes.Thecorporatetaxrateis40%.Youhavetheoptiontoexchange1/2ofyourequitypositionfor10%bondswithafacevalueof$1,000.Shouldyoudothisandwhy?,CapitalStructure,PVofTaxShield=(assumeperpetuity),DxrDxTcrD,=DxTc,Example:Taxbenefit=1000 x(.10)x(.40)=$40PVof40perpetuity=40/.10=$400PVTaxShield=DxTc=1000 x.4=$400,CapitalStructure,FirmValue=ValueofAllEquityFirm+PVTaxShield,ExampleAllEquityValue=600/.10=6,000PVTaxShield=400FirmValuewith1/2Debt=$6,400,FinancialDistress,CostsofFinancialDistress-Costsarisingfrombankruptcyordistortedbusinessdecisionsbeforebankruptcy.MarketValue=ValueifallEquityFinanced+PVTaxShield-PVCostsofFinancialDistress,FinancialDistress,Debt,MarketValueofTheFirm,Valueofunleveredfirm,PVofinteresttaxshields,Costsoffinancialdistress,Valueofleveredfirm,Optimalamountofdebt,Maximumvalueoffirm,FinancialChoices,Trade-offTheory-Theorythatcapitalstructureisbasedonatra