公司理财英文版第十四章课件.ppt

Chapter14CostofCapital McGraw Hill Irwin Copyright 2010byTheMcGraw HillCompanies Inc Allrightsreserved PPT学习交流 KeyConceptsandSkills Knowhowtodetermineafirm scostofequitycapitalKnowhowtodetermineafirm scostofdebtKnowhowtodetermineafirm soverallcostofcapitalUnderstandpitfallsofoverallcostofcapitalandhowtomanagethem 14 2 PPT学习交流 ChapterOutline TheCostofCapital SomePreliminariesTheCostofEquityTheCostsofDebtandPreferredStockTheWeightedAverageCostofCapitalDivisionalandProjectCostsofCapitalFlotationCostsandtheWeightedAverageCostofCapital 14 3 PPT学习交流 WhyCostofCapitalIsImportant WeknowthatthereturnearnedonassetsdependsontheriskofthoseassetsThereturntoaninvestoristhesameasthecosttothecompanyOurcostofcapitalprovidesuswithanindicationofhowthemarketviewstheriskofourassetsKnowingourcostofcapitalcanalsohelpusdetermineourrequiredreturnforcapitalbudgetingprojects 14 4 PPT学习交流 RequiredReturn TherequiredreturnisthesameastheappropriatediscountrateandisbasedontheriskofthecashflowsWeneedtoknowtherequiredreturnforaninvestmentbeforewecancomputetheNPVandmakeadecisionaboutwhetherornottotaketheinvestmentWeneedtoearnatleasttherequiredreturntocompensateourinvestorsforthefinancingtheyhaveprovided 14 5 PPT学习交流 CostofEquity ThecostofequityisthereturnrequiredbyequityinvestorsgiventheriskofthecashflowsfromthefirmBusinessriskFinancialriskTherearetwomajormethodsfordeterminingthecostofequityDividendgrowthmodelSML orCAPM 14 6 PPT学习交流 TheDividendGrowthModelApproach StartwiththedividendgrowthmodelformulaandrearrangetosolveforRE 14 7 PPT学习交流 DividendGrowthModelExample Supposethatyourcompanyisexpectedtopayadividendof 1 50persharenextyear Therehasbeenasteadygrowthindividendsof5 1 peryearandthemarketexpectsthattocontinue Thecurrentpriceis 25 Whatisthecostofequity 14 8 PPT学习交流 Example EstimatingtheDividendGrowthRate OnemethodforestimatingthegrowthrateistousethehistoricalaverageYearDividendPercentChange20051 23 20061 3020071 3620081 4320091 50 1 30 1 23 1 23 5 7 1 36 1 30 1 30 4 6 1 43 1 36 1 36 5 1 1 50 1 43 1 43 4 9 Average 5 7 4 6 5 1 4 9 4 5 1 14 9 PPT学习交流 AdvantagesandDisadvantagesofDividendGrowthModel Advantage easytounderstandanduseDisadvantagesOnlyapplicabletocompaniescurrentlypayingdividendsNotapplicableifdividendsaren tgrowingatareasonablyconstantrateExtremelysensitivetotheestimatedgrowthrate anincreaseingof1 increasesthecostofequityby1 Doesnotexplicitlyconsiderrisk 14 10 PPT学习交流 TheSMLApproach UsethefollowinginformationtocomputeourcostofequityRisk freerate RfMarketriskpremium E RM RfSystematicriskofasset 14 11 PPT学习交流 Example SML Supposeyourcompanyhasanequitybetaof 58 andthecurrentrisk freerateis6 1 Iftheexpectedmarketriskpremiumis8 6 whatisyourcostofequitycapital RE 6 1 58 8 6 11 1 SincewecameupwithsimilarnumbersusingboththedividendgrowthmodelandtheSMLapproach weshouldfeelgoodaboutourestimate 14 12 PPT学习交流 AdvantagesandDisadvantagesofSML AdvantagesExplicitlyadjustsforsystematicriskApplicabletoallcompanies aslongaswecanestimatebetaDisadvantagesHavetoestimatetheexpectedmarketriskpremium whichdoesvaryovertimeHavetoestimatebeta whichalsovariesovertimeWeareusingthepasttopredictthefuture whichisnotalwaysreliable 14 13 PPT学习交流 Example CostofEquity Supposeourcompanyhasabetaof1 5 Themarketriskpremiumisexpectedtobe9 andthecurrentrisk freerateis6 Wehaveusedanalysts estimatestodeterminethatthemarketbelievesourdividendswillgrowat6 peryearandourlastdividendwas 2 Ourstockiscurrentlysellingfor 15 65 Whatisourcostofequity UsingSML RE 6 1 5 9 19 5 UsingDGM RE 2 1 06 15 65 06 19 55 14 14 PPT学习交流 CostofDebt Thecostofdebtistherequiredreturnonourcompany sdebtWeusuallyfocusonthecostoflong termdebtorbondsTherequiredreturnisbestestimatedbycomputingtheyield to maturityontheexistingdebtWemayalsouseestimatesofcurrentratesbasedonthebondratingweexpectwhenweissuenewdebtThecostofdebtisNOTthecouponrate 14 15 PPT学习交流 Example CostofDebt Supposewehaveabondissuecurrentlyoutstandingthathas25yearslefttomaturity Thecouponrateis9 andcouponsarepaidsemiannually Thebondiscurrentlysellingfor 908 72per 1 000bond Whatisthecostofdebt N 50 PMT 45 FV 1000 PV 908 72 CPTI Y 5 YTM 5 2 10 14 16 PPT学习交流 CostofPreferredStock RemindersPreferredstockgenerallypaysaconstantdividendeachperiodDividendsareexpectedtobepaideveryperiodforeverPreferredstockisaperpetuity sowetaketheperpetuityformula rearrangeandsolveforRPRP D P0 14 17 PPT学习交流 Example CostofPreferredStock Yourcompanyhaspreferredstockthathasanannualdividendof 3 Ifthecurrentpriceis 25 whatisthecostofpreferredstock RP 3 25 12 14 18 PPT学习交流 TheWeightedAverageCostofCapital Wecanusetheindividualcostsofcapitalthatwehavecomputedtogetour average costofcapitalforthefirm This average istherequiredreturnonthefirm sassets basedonthemarket sperceptionoftheriskofthoseassetsTheweightsaredeterminedbyhowmuchofeachtypeoffinancingisused 14 19 PPT学习交流 CapitalStructureWeights NotationE marketvalueofequity ofoutstandingsharestimespricepershareD marketvalueofdebt ofoutstandingbondstimesbondpriceV marketvalueofthefirm D EWeightswE E V percentfinancedwithequitywD D V percentfinancedwithdebt 14 20 PPT学习交流 Example CapitalStructureWeights Supposeyouhaveamarketvalueofequityequalto 500millionandamarketvalueofdebtequalto 475million Whatarethecapitalstructureweights V 500million 475million 975millionwE E V 500 975 5128 51 28 wD D V 475 975 4872 48 72 14 21 PPT学习交流 TaxesandtheWACC Weareconcernedwithafter taxcashflows sowealsoneedtoconsidertheeffectoftaxesonthevariouscostsofcapitalInterestexpensereducesourtaxliabilityThisreductionintaxesreducesourcostofdebtAfter taxcostofdebt RD 1 TC Dividendsarenottaxdeductible sothereisnotaximpactonthecostofequityWACC wERE wDRD 1 TC 14 22 PPT学习交流 ExtendedExample WACC I EquityInformation50millionshares 80pershareBeta 1 15Marketriskpremium 9 Risk freerate 5 DebtInformation 1billioninoutstandingdebt facevalue Currentquote 110Couponrate 9 semiannualcoupons15yearstomaturityTaxrate 40 14 23 PPT学习交流 ExtendedExample WACC II Whatisthecostofequity RE 5 1 15 9 15 35 Whatisthecostofdebt N 30 PV 1 100 PMT 45 FV 1 000 CPTI Y 3 9268RD 3 927 2 7 854 Whatistheafter taxcostofdebt RD 1 TC 7 854 1 4 4 712 14 24 PPT学习交流 ExtendedExample WACC III Whatarethecapitalstructureweights E 50million 80 4billionD 1billion 1 10 1 1billionV 4 1 1 5 1billionwE E V 4 5 1 7843wD D V 1 1 5 1 2157WhatistheWACC WACC 7843 15 35 2157 4 712 13 06 14 25 PPT学习交流 EastmanChemicalI ClickonthewebsurfertogotoYahooFinancetogetinformationonEastmanChemical EMN UnderProfileandKeyStatistics youcanfindthefollowinginformation ofsharesoutstandingBookvaluepersharePricepershareBetaUnderanalystsestimates youcanfindanalystsestimatesofearningsgrowth useasaproxyfordividendgrowth TheBondssectionatYahooFinancecanprovidetheT billrateUsethisinformation alongwiththeCAPMandDGMtoestimatethecostofequity 14 26 PPT学习交流 EastmanChemicalII GotoFINRAtogetmarketinformationonEastmanChemical sbondissuesEnterEastmanChtofindthebondinformationNotethatyoumaynotbeabletofindinformationonallbondissuesduetotheilliquidityofthebondmarketGototheSECsitetogetbookvalveinformationfromthefirm smostrecent10Q 14 27 PPT学习交流 EastmanChemicalIII FindtheweightedaveragecostofthedebtUsemarketvaluesifyouwereabletogettheinformationUsethebookvaluesifmarketinformationwasnotavailableTheyareoftenverycloseComputetheWACCUsemarketvalueweightsifavailable 14 28 PPT学习交流 Example WorktheWeb FindestimatesofWACCLookattheassumptionsHowdotheassumptionsimpacttheestimateofWACC 14 29 PPT学习交流 Table14 1CostofEquity 14 30 PPT学习交流 Table14 1CostofDebt 14 31 PPT学习交流 Table14 1WACC 14 32 PPT学习交流 DivisionalandProjectCostsofCapital UsingtheWACCasourdiscountrateisonlyappropriateforprojectsthathavethesameriskasthefirm scurrentoperationsIfwearelookingataprojectthatdoesNOThavethesameriskasthefirm thenweneedtodeterminetheappropriatediscountrateforthatprojectDivisionsalsooftenrequireseparatediscountrates 14 33 PPT学习交流 UsingWACCforAllProjects Example WhatwouldhappenifweusetheWACCforallprojectsregardlessofrisk AssumetheWACC 15 ProjectRequiredReturnIRRA20 17 B15 18 C10 12 14 34 PPT学习交流 ThePurePlayApproach FindoneormorecompaniesthatspecializeintheproductorservicethatweareconsideringComputethebetaforeachcompanyTakeanaverageUsethatbetaalongwiththeCAPMtofindtheappropriatereturnforaprojectofthatriskOftendifficulttofindpureplaycompanies 14 35 PPT学习交流 SubjectiveApproach Considertheproject sriskrelativetothefirmoverallIftheprojecthasmoreriskthanthefirm useadiscountrategreaterthantheWACCIftheprojecthaslessriskthanthefirm useadiscountratelessthantheWACCYoumaystillacceptprojectsthatyoushouldn tandrejectprojectsyoushouldaccept butyourerrorrateshouldbelowerthannotconsideringdifferentialriskatall 14 36 PPT学习交流 SubjectiveApproach Example 14 37 PPT学习交流 FlotationCosts Therequiredreturndependsontherisk nothowthemoneyisraisedHowever thecostofissuingnewsecuritiesshouldnotjustbeignoredeitherBasicApproachComputetheweightedaverageflotationcostUsethetargetweightsbecausethefirmwillissuesecuritiesinthesepercentagesoverthelongterm 14 38 PPT学习交流 NPVandFlotationCosts Example Yourcompanyisconsideringaprojectthatwillcost 1million Theprojectwillgenerateafter taxcashflowsof 250 000peryearfor7years TheWACCis15 andthefirm stargetD Eratiois 6Theflotationcostforequityis5 andtheflotationcostfordebtis3 WhatistheNPVfortheprojectafteradjustingforflotationcosts fA 375 3 625 5 4 25 PVoffuturecashflows 1 040 105NPV 1 040 105 1 000 000 1 0425 4 281TheprojectwouldhaveapositiveNPVof40 105withoutconsideringflotationcostsOnceweconsiderthecostofissuingnewsecurit