公司理财第十章.ppt

Chapter10MakingCapitalInvestmentDecisions McGraw Hill Irwin Copyright 2010byTheMcGraw HillCompanies Inc Allrightsreserved KeyConceptsandSkills UnderstandhowtodeterminetherelevantcashflowsforvarioustypesofproposedinvestmentsUnderstandthevariousmethodsforcomputingoperatingcashflowUnderstandhowtosetabidpriceforaprojectUnderstandhowtoevaluatetheequivalentannualcostofaproject 10 2 ChapterOutline ProjectCashFlows AFirstLookIncrementalCashFlowsProFormaFinancialStatementsandProjectCashFlowsMoreaboutProjectCashFlowAlternativeDefinitionsofOperatingCashFlowSomeSpecialCasesofDiscountedCashFlowAnalysis 10 3 RelevantCashFlows Thecashflowsthatshouldbeincludedinacapitalbudgetinganalysisarethosethatwillonlyoccur ornotoccur iftheprojectisacceptedThesecashflowsarecalledincrementalcashflowsThestand aloneprincipleallowsustoanalyzeeachprojectinisolationfromthefirmsimplybyfocusingonincrementalcashflows 10 4 AskingtheRightQuestion Youshouldalwaysaskyourself WillthiscashflowoccurONLYifweaccepttheproject Iftheansweris yes itshouldbeincludedintheanalysisbecauseitisincrementalIftheansweris no itshouldnotbeincludedintheanalysisbecauseitwilloccuranywayIftheansweris partofit thenweshouldincludethepartthatoccursbecauseoftheproject 10 5 CommonTypesofCashFlows Sunkcosts coststhathaveaccruedinthepastOpportunitycosts costsoflostoptionsSideeffectsPositivesideeffects benefitstootherprojectsNegativesideeffects coststootherprojectsChangesinnetworkingcapitalFinancingcostsTaxes 10 6 ProFormaStatementsandCashFlow Capitalbudgetingreliesheavilyonproformaaccountingstatements particularlyincomestatementsComputingcashflows refresherOperatingCashFlow OCF EBIT depreciation taxesOCF Netincome depreciation whenthereisnointerestexpense CashFlowFromAssets CFFA OCF netcapitalspending NCS changesinNWC 10 7 Table10 1ProFormaIncomeStatement 10 8 Table10 2ProjectedCapitalRequirements 10 9 Table10 5ProjectedTotalCashFlows 10 10 MakingTheDecision Nowthatwehavethecashflows wecanapplythetechniquesthatwelearnedinChapter9EnterthecashflowsintothecalculatorandcomputeNPVandIRRCF0 110 000 C01 51 780 F01 2 C02 71 780 F02 1NPV I 20 CPTNPV 10 648CPTIRR 25 8 Shouldweacceptorrejecttheproject 10 11 Danielle sisafurniturestorethatisconsideringaddingappliancestoitsofferings Whichofthefollowingshouldbeconsideredincrementalcashflowsofthisproject I utilizingthecreditofferedbyasuppliertopurchasetheapplianceinventoryII benefitingfromincreasedfurnituresalestoappliancecustomersIII borrowingmoneyfromabanktofundtheapplianceprojectIV purchasingpartsforinventorytohandleanyappliancerepairsthatmightbenecessaryA IandIIonlyB IIIandIVonlyC I II andIVonlyD II III andIVonly 复习题 Whichofthefollowingshouldbeincludedintheanalysisofanewproduct I moneyalreadyspentforresearchanddevelopmentofthenewproductII reductioninsalesforacurrentproductoncethenewproductisintroducedIII increaseinaccountsreceivableneededtofinancesalesofthenewproductIV marketvalueofamachineownedbythefirmwhichwillbeusedtoproducethenewproductA IandIIIonlyB IIandIVonlyC I II andIIIonlyD II III andIVonlyE I II III andIV 复习题 Allofthefollowingarerelatedtoaproposedproject Whichoftheseshouldbeincludedinthecashflowattimezero I purchaseof 1 400ofpartsinventoryneededtosupporttheprojectII loanof 125 000usedtofinancetheprojectIII depreciationtaxshieldof 1 100IV 6 500ofequipmentneededtocommencetheprojectA IandIIonlyB IandIVonlyC IIandIVonlyD I II andIVonlyE I II III andIV 复习题 MoreonNWC WhydowehavetoconsiderchangesinNWCseparately GAAPrequiresthatsalesberecordedontheincomestatementwhenmade notwhencashisreceivedGAAPalsorequiresthatwerecordcostofgoodssoldwhenthecorrespondingsalesaremade whetherwehaveactuallypaidoursuppliersyetFinally wehavetobuyinventorytosupportsales althoughwehaven tcollectedcashyet 10 15 Depreciation ThedepreciationexpenseusedforcapitalbudgetingshouldbethedepreciationschedulerequiredbytheIRSfortaxpurposesDepreciationitselfisanon cashexpense consequently itisonlyrelevantbecauseitaffectstaxesDepreciationtaxshield DTD depreciationexpenseT marginaltaxrate 10 16 ComputingDepreciation Straight linedepreciationD Initialcost salvage numberofyearsVeryfewassetsaredepreciatedstraight linefortaxpurposesMACRSNeedtoknowwhichassetclassisappropriatefortaxpurposesMultiplypercentagegivenintablebytheinitialcostDepreciatetozeroMid yearconvention 10 17 After taxSalvage Ifthesalvagevalueisdifferentfromthebookvalueoftheasset thenthereisataxeffectBookvalue initialcost accumulateddepreciationAfter taxsalvage salvage T salvage bookvalue 10 18 Example DepreciationandAfter taxSalvage Youpurchaseequipmentfor 100 000 anditcosts 10 000tohaveitdeliveredandinstalled Basedonpastinformation youbelievethatyoucanselltheequipmentfor 17 000whenyouaredonewithitin6years Thecompany smarginaltaxrateis40 Whatisthedepreciationexpenseeachyearandtheafter taxsalvageinyear6foreachofthefollowingsituations 10 19 Example Straight line Supposetheappropriatedepreciationscheduleisstraight lineD 110 000 17 000 6 15 500everyyearfor6yearsBVinyear6 110 000 6 15 500 17 000After taxsalvage 17 000 4 17 000 17 000 17 000 10 20 Example Three yearMACRS BVinyear6 110 000 36 663 48 895 16 291 8 151 0 After taxsalvage 17 000 4 17 000 0 10 200 10 21 Example Seven YearMACRS BVinyear6 110 000 15 719 26 939 19 239 13 739 9 823 9 812 14 729 After taxsalvage 17 000 4 17 000 14 729 16 091 60 10 22 OtherMethodsforComputingOCF Bottom UpApproachWorksonlywhenthereisnointerestexpenseOCF NI depreciationTop DownApproachOCF Sales Costs TaxesDon tsubtractnon cashdeductionsTaxShieldApproachOCF Sales Costs 1 T Depreciation T 10 23 Example ReplacementProblem OriginalMachineInitialcost 100 000Annualdepreciation 9 000Purchased5yearsagoBookValue 55 000Salvagetoday 65 000Salvagein5years 10 000 NewMachineInitialcost 150 0005 yearlifeSalvagein5years 0Costsavings 50 000peryear3 yearMACRSdepreciationRequiredreturn 10 Taxrate 40 10 24 ReplacementProblem ComputingCashFlows RememberthatweareinterestedinincrementalcashflowsIfwebuythenewmachine thenwewillselltheoldmachineWhatarethecashflowconsequencesofsellingtheoldmachinetodayinsteadofin5years 10 25 ReplacementProblem ProFormaIncomeStatements 10 26 ReplacementProblem IncrementalNetCapitalSpending Year0Costofnewmachine 150 000 outflow After taxsalvageonoldmachine 65 000 4 65 000 55 000 61 000 inflow Incrementalnetcapitalspending 150 000 61 000 89 000 outflow Year5After taxsalvageonoldmachine 10 000 4 10 000 10 000 10 000 outflowbecausewenolongerreceivethis 10 27 ReplacementProblem CashFlowFromAssets 10 28 ReplacementProblem AnalyzingtheCashFlows Nowthatwehavethecashflows wecancomputetheNPVandIRREnterthecashflowsComputeNPV 54 801 74ComputeIRR 36 28 Shouldthecompanyreplacetheequipment 10 29 New CashFlowFromAssets straightline 10 30 oringnal CashFlowFromAssets 10 31 ReplacementProblem CashFlowFromAssets 10 32 Example CostCutting Yourcompanyisconsideringanewcomputersystemthatwillinitiallycost 1million Itwillsave 300 000peryearininventoryandreceivablesmanagementcosts Thesystemisexpectedtolastforfiveyearsandwillbedepreciatedusing3 yearMACRS Thesystemisexpectedtohaveasalvagevalueof 50 000attheendofyear5 Thereisnoimpactonnetworkingcapital Themarginaltaxrateis40 Therequiredreturnis8 ClickontheExcelicontoworkthroughtheexample 10 33 Example SettingtheBidPrice Considerthefollowinginformation Armyhasrequestedbidformultipleusedigitizingdevices MUDDs Deliver4unitseachyearforthenext3yearsLaborandmaterialsestimatedtobe 10 000perunitProductionspaceleasedfor 12 000peryearRequires 50 000infixedassetswithexpectedsalvageof 10 000attheendoftheproject depreciatestraight line Requireinitial 10 000increaseinNWCTaxrate 34 Requiredreturn 15 10 34 Example EquivalentAnnualCostAnalysis BurnoutBatteriesInitialCost 36each3 yearlife 100peryeartokeepchargedExpectedsalvage 5Straight linedepreciation Long lastingBatteriesInitialCost 60each5 yearlife 88peryeartokeepchargedExpectedsalvage 5Straight linedepreciation Themachinechosenwillbereplacedindefinitelyandneithermachinewillhaveadifferentialimpactonrevenue NochangeinNWCisrequired Therequiredreturnis15 andthetaxrateis34 10 35 QuickQuiz Howdowedetermineifcashflowsarerelev