跨国财务管理培训课件

1,ChapterObjective,ThischapterdealswiththeinternationalcapitalstructureandthecostofcapitalofaMNC.,2,CostofCapitalCostofCapitalinSegmentedvs.IntegratedMarketsDoestheCostofCapitalDifferAmongCountries?Cross-BorderListingsofStocksTheEffectofForeignEquityOwnershipRestrictionsTheFinancialStructureofSubsidiaries.,ChapterOutline,17-2,3,Maincontents:,CostofCapitalinSegmentedvs.IntegratedMarketsCross-BorderListingsofStocksTheFinancialStructureofSubsidiaries.,4,Keywords,CapitalassetpricingmodelCapitalstructureCostofcapitalIntegratedworldcapitalmarkets,资本资产定价模型,资本结构,资本成本,一体化世界资本市场,5,Keywords,WorldsystematicriskWorldmarketportfolio,世界系统风险,世界市场投资组合,6,Introduction,Recently,manymajorfirmsthroughouttheworldhavebeguntointernationalizetheircapitalstructurebyraisingfundsfromforeignaswellasdomesticsources.Asaresult,thesecorporationsarebecomingmultinationalnotonlyinthescopeoftheirbusinessactivitiesbutalsointheircapitalstructure.,7,Introduction,Ifinternationalfinancialmarketswerecompletelyintegrated,itwouldnotmatterwhetherfirmsraisedcapitalfromdomesticorforeignsourcesbecausethecostofcapitalwouldbeequalizedacrosscountries.,If,ontheotherhand,thesemarketsarelessthanfullyintegrated,firmsmaybeabletocreatevaluefortheirshareholdersbyissuingsecuritiesinforeignaswellasdomesticmarkets.,8,1.CostofCapital,Thecostofcapitalistheminimumrateofreturnaninvestmentprojectmustgenerateinordertopayitsfinancingcosts.Foraleveredfirm,thefinancingcostscanberepresentedbytheweightedaveragecostofcapital.,9,1.1WeightedAverageCostofCapital,WhereK=weightedaveragecostofcapitalKl=costofequitycapitalforaleveredfirmi=pretaxcostofdebtcapitalt=marginalcorporateincometaxrate=debt-to-total-market-valueratio,10,1.2TheFirmsInvestmentDecisionandtheCostofCapital,Afirmthatcanreduceitscostofcapitalwillincreasetheprofitablecapitalexpendituresthatthefirmcantakeonandincreasethewealthoftheshareholders.,11,2.CostofCapitalinSegmentedvs.IntegratedMarkets,Thecostofequitycapital(Ke)ofafirmistheexpectedreturnonthefirmsstockthatinvestorsrequire.ThisreturnisfrequentlyestimatedusingtheCAPM:,where,12,2.CostofCapitalinSegmentedvs.IntegratedMarkets,Clearlyintegrationorsegmentationofinternationalfinancialmarketshasmajorimplicationsfordeterminingthecostofcapital.(example17.1),13,3.DoestheCostofCapitalDifferamongCountries?,Theredoappeartobedifferencesinthecostofcapitalindifferentcountries.(Exhibit17.5）Whenmarketsareimperfect,internationalfinancingcanlowerthefirmscostofcapital.(Caseonpp423)Onewaytoachievethisistointernationalizethefirmsownershipstructure.,14,4.Cross-BorderListingsofStocks,Cross-borderlistingsofstockshavebecomequitepopularamongmajorcorporations.ThelargestcontingentofforeignstocksarelistedonU.S.exchanges.TheLondonStockExchangeattractedthenextlargestcontingentofforeignstocks.,15,4.1BenefitofCross-Border,4.1.1Thecompanycanexpanditspotentialinvestorbase,whichwillleadtoahigherstockpriceandlowercostofcapital.4.1.2Cross-listingcreatesasecondarymarketforthecompanysshares,whichfacilitatesraisingnewcapitalinforeignmarkets.,16,4.1BenefitofCross-Border,4.1.3Cross-listingcanenhancetheliquidityofthecompanysstock.4.1.4Cross-listingenhancesthevisibilityofthecompanysnameanditsproductsinforeignmarketplaces.,17,4.1BenefitofCross-Border,4.1.5Cross-listingsharesmaybeusedasthe“acquisitioncurrency”fortakingoverforeigncompanies.4.1.6Cross-listingmayimprovethecompanyscorporategovernanceandtransparency.,18,4.2CostofCross-Border,4.2.1Itcanbecostlytomeetthedisclosureandlistingrequirementsimposedbytheforeignexchangeandregulatoryauthorities.4.2.2Onceacompanysstockistradedinoverseasmarkets,therecanbevolatilityspilloverfromthesemarkets.,19,4.2CostofCross-Border,4.2.3Onceacompanysstockismakeavailabletoforeigners,theymightacquireacontrollinginterestandchallengethedomesticcontrolofthecompany.Onaverage,cross-borderlistingsofstocksappearstobeaprofitabledecision.So,Thebenefitsoutweighthecosts.,20,5.TheEffectofForeignEquityOwnershipRestrictions,Whilecompanieshaveincentivestointernationalizetheirownershipstructuretolowerthecostofcapitalandincreasemarketshare,theymaybeconcernedwiththepossiblelossofcorporatecontroltoforeigners.Insomecountries,therearelegalrestrictionsonthepercentageofafirmthatforeignerscanown.Theserestrictionsareimposedasameansofensuringdomesticcontroloflocalfirms.,21,5.1Pricing-to-MarketPhenomenon,Supposeforeigners,ifallowed,wouldliketobuy30percentofaKoreanfirm.Buttheyareconstrainedbyownershipconstraintsimposedonforeignerstopurchaseatmost20percent.Becausethisconstraintiseffectiveinlimitingdesiredforeignownership,foreignanddomesticinvestorsmayfacedifferentmarketshareprices.Thisdualpricingisthepricing-to-marketphenomenon.,NestlsForeignOwnershipRestrictions,Source:FinancialTimes,November26,1988p.1.Adaptedwithpermission.,SF,5.2AnExampleofForeignOwnershipRestrictions:Nestl,ForeignersholdingNestlbearershareswereexposedtopoliticalriskinacountrythatiswidelyviewedasahavenfromsuchrisk.TheNestlepisodeillustratesTheimportanceofconsideringmarketimperfections.Theperilofpoliticalrisk.Thebenefitstothefirmofinternationalizingitsownershipstructure.,17-23,24,6.TheFinancialStructureofSubsidiaries,Therearethreedifferentapproachestodeterminingthesubsidiarysfinancialstructure.Conformtotheparentcompanysnorm.Conformtothelocalnormofthecountrywherethesubsidiaryoperates.,25,6.TheFinancialStructureofSubsidiaries.,3.Varyjudiciouslytocapitalizeonopportunitiestolowertaxes,reducefinancingcostsandrisk,andtakeadvantageofvariousmarketimperfections.,Thethirdapproachappearstobethemostreasonableandconsistentwiththegoalofminimizingtheparentsoverallcostofcapital.,26,6.TheFinancialStructureofSubsidiaries.,Inadditiontotaxes,politicalriskshouldbegivendueconsiderationinthechoiceofasubsidiarysfinancialstructure.,27,Questions,1.Explainwhyandhowafirmscostofcapitalmaydecreasewhenthefirmsstockiscross-listedonforeignstockexchanges.Answer:Ifastockbecomesinternationallytradableuponoverseaslisting,therequiredreturnonthestockislikelytogodownbecausethestockwillbepricedaccordingtotheinternationalsystematicriskratherthanthelocalsystematicrisk.Itiswellknownthatforatypicalstock,theinternationalsystematicriskislowerthanthelocalsystematicrisk.,28,Answers,6.Ifcapitalmarketsaresegmented,theninvestorscanonlyinvestdomestically.Thismeansthatthemarketportfolio(M)intheCAPMformulawouldbethedomesticportfolioinsteadoftheworldportfolio.Inintegratedinternationalfinancialmarkets,thesamefuturecashflowswillbepricedinthesamewayeverywhere.Clearlyintegrationorsegmentationofinternationalfinancialmarketshasmajorimplicationsfordeterminingthecostofcapital.,29,Answers,10.Becauseownershipconstraintsiseffectiveinlimitingdesiredforeignownership,foreignanddomesticinvestorsmayfacedifferentmarketshareprices.Thisdualpricingisthepricing-to-marketphenomenon.,30,Answers,12.Theparentfirmiswillingtoletitssubsidiarydefault,ortheguaranteeofitssubsidiarysfinancialobligationsbecomesdifficulttoenforceacrossnationalborders.,31,Answers,13.whentheparentisnotresponsibleforthesubsidiarysobligations,andthesubsidiaryhastodependonlocalfinancingdueto,say,segmentationoffinancialmarkets.,1.Inthenotationofthebook,K=(1l)Kl+l(1-t)iWhichofthefollowingarecorrect?a)Thedebt-equityratioislb)Thetaxrateistc)Theafter-taxcostofdebtcapitalisid)Alloftheabove,32,Answer:b,2.Attheoptimalcapitalstructure,a)K=(1l)Kl+l(1-t)iwillbeminimizedb)Thedebt-equityratiowillbeequaltothedebt-to-valueratio.c)K=(1l)Kl+l(1-t)iwillbemaximizedd)Noneoftheabove,33,Answer:a,3.Findtheweightedaveragecostofcapitalforafirmthathasadebt-to-equityratioof1,ataxrateof34%,aleveredcostofequityof12%andanafter-taxcostofdebtof8%a)9.6%b)7.968%c)14%d)noneoftheabove,34,Answer:a,4.Thecostofequitycapitalis:a)theexpectedreturnonthefirmsstockthatinvestorsrequireb)frequentlyestimatedbyusingtheCapitalAssetPricingModel(CAPM)c)generallyconsideredtobealinearfunctionofthesystematicriskinherentinthesecurityd)alloftheabove,35,Answer:d,5.Areducedcostofequitycapitalincreasesthefirmsvalue:a)Throughrevaluationofthefirmsexistingcashflowsfromexistingprojects.b)ThroughincreasedinvestmentasmoreprojectsbecomepositiveNPVsc)Botha)andb)d)Noneoftheabove,36,Answer:c,6.Avalue-maximizingfirmswould:a)UndertakeaninvestmentprojectaslongastheIRRexceedstheNPVb)UndertakeaninvestmentprojectaslongastheIRRislessthanthecostofcapital.c)UndertakeaninvestmentprojectaslongastheIRRexceedsthecostofcapital.d)Noneoftheabove,37,Answer:c,7.ThecommonstockofKansasCityPowerandLighthasabetaof0.80.TheTreasurybillrateis4percentandthemarketriskpremiumis8percent.KCPthefirmsdebt-to-equityratiois4;therisk-freerateis3%;thebetaofthefirmscommonstockis1.5;themarketriskpremiumis9%.Whatisthefirmscostofequitycapital?a)33.33%b)10.85%c)13.12%d)16.5%,39,Answer:d,9.Thefirmstaxrateis34%.Thefirmspre-taxcostofdebtis8%;thefirmsdebt-to-equityratiois4;therisk-freerateis3%;thebetaofthefirmscommonstockis1.5;themarketriskpremiumis9%.Calculatetheweightedaveragecostofcapital.a)33.33%b)7.52%c)9.02%d)16.5%,40,Answer:b,10.AssumethatXYZCorporationisaleveragedcompanywiththefollowinginformation:Kl=costofequitycapitalforXYZ=13%;i=before-taxborrowingcost=8%;t=marginalcorporateincometaxrate=30%;IfXYZsdebt-to-total-market-valueratiois40%,thenits.weightedaveragecostofcapital,K,is:a)8%b)9%c)10%d)12%,41,Answer:c,11.Calculatethedebt-to-total-market-valueratiothatwouldresultinXYZhavingaweightedaveragecostofcapitalof9.3%.a)35%b)40%c)45%d)50%,42,Answer:d,12.Assumethattherisk-freerateofreturnis4%,andtheexpectedreturnonthemarketportfoliois10%.IfthesystematicriskinherentinthestockofABCCorporationis1.80,usingtheCapitalAssetPricingModel(CAPM)calculatetheexpectedreturnofABC.a)14.0%b)14.8%c)16.0%d)16.8%,43,Answer:b,13.Oneexplanationforforeignequityownershiprestrictionsa)Istomakeitdifficultorimpossibleforforeignerstogaincontrolofadomesticcompany.b)Istoexpropriatewealthfromdomesticshareholders.c)Istheargumentsinfavoroffreetraded)Noneoftheabove,44,Answer:a,14.ThePricing-to-Marketphenomenona)Describesthepotentialeffectofforeignequityownershiprestrictions.b)Describesthepremiumordiscountfacedbyforeignshareholdersrelativetodomesticinvestorsinthepriceofastockduetolegalrestrictionsimposedonforeignequityownership.c)WasevidencedintherelativepricesofNestlsharespriortoNovember17,1988.d)Alloftheabove,45,Answer:d,15.Withregardtothefinancialstructureofaforeignsubsidiarya)Usinglocalfinancingcanreducepoliticalriskb)AMNCthatfinancesaforeigninvestmentwithhome-countryequityfacesgreaterriskofexpropriationthanifithadfinancedtheinvestmentwithatleastsomelocaldebtorequity.c)TheremaybeadvantagesotherthanareductioninpoliticalriskthatencourageMNCstofinanceforeignsubsidiarieswithlocalmoney.d)Alloftheabove,46,Answer:d,16.Whentheparentcompanyfullyresponsibleforthesubsidiarysobligations,a)Theindependentfinancialstructureofthesubsidiaryisirrelevant.b)Potentialcreditorswillexaminetheparentsoverallfinancialcondition,notthesubsidiarys.c)Theindependentfinancialsubsidiarycanhavethesamecapitalstructureastheparent.d)Alloftheabove,47,Answer:d,17.Whenthechoiceoffinancingaforeignsubsidiaryisbetweenexternaldebtandequityfinancinga)Politicalriskconsiderationstendtofavorthelatter.b)Politicalriskconsiderationstendtofavortheformer.c)Politicalriskisseparatefromfinancialriskandsodoesnotenterintoadiscussionofdebtequityratios.d)Noneoftheabove,48,Answer:b,18.Theparentcompanyshoulddecidethefinancingmethodforitsownsubsidiariesa)Withaviewtowardminimizingtheparentsoverallcostofcapitalb)Bycopyingthenormsofthehostcountryc)Withaviewtowardgamingthebankruptcysystemofthehostcountryd)Noneoftheabove,49,Answer:a,50,Chapter18,InternationalCapitalBudgeting,51,ChapterObjective,Thischapterdiscussesthemethodologythatamultinationalfirmcanusetoanalyzetheinvestmentofcapitalinaforeigncountry.,52,ChapterOutline,ReviewofDomesticCapitalBudgetingTheAdjustedPresentValueModelCapitalBudgetingfromtheParentFirmsPerspectiveRiskAdjustmentintheCapitalBudgetingProcessSensitivityAnalysisRealOptions,53,Keywords,AdjustedpresentvalueAll-equitycostofcapitalIncrementalcashflow,调整现值,纯权益资本成本,增量现金流,54,1.IdentifytheSIZEandTIMINGofallrelevantcashflowsonatimeline.2.IdentifytheRISKINESSofthecashflowstodeterminetheappropriatediscountrate.3.FindNPVbydiscountingthecashflowsattheappropriatediscountrate.,1.ReviewofCapitalBudgeting,1.1ThebasicNPVequation,Where:CFt=expectedincrementalafter-taxcashflowinyeart,TVT=expectedaftertaxcashflowinyearT,includingrecaptureofworkingcapital,C0=initialinvestmentatinception,K=weightedaveragecostofcapital.T=economiclifeoftheprojectinyears.,18.1,56,1.2TheexpansionofNPVequation,ForourpurposesitisnecessarytorewritethetermofCFt.18.2c18.2f,RtisincrementalrevenueOCtisincrementaloperatingcost,Dtisincrementaldepreciationthemarginaltaxrate,57,1.2TheexpansionofNPVequation,So,18.3,58,2.TheAdjustedPresentValueModel,FromMMtheory,weknowthevalueofleveredfirmwouldbe,18.4a,59,2.TheAPVmodel,So,wecanconverttheNPVmodelintotheAPVmodel,Thevalueincreasedbydebt.,18.6,60,2.TheAPVModel,TheAPVmodelisavalue-additivityapproachtocapitalbudgeting.Eachcashflowthatisasourceofvaluetothefirmisconsideredindividually.NotethatwiththeAPVmodel,eachcashflowisdiscountedataratethatisappropriatetotheriskofthecashflow.,DomesticAPVExample,Considerthisproject,thetimingandsizeoftheincrementalafter-taxcashflowsforanall-equityfirmare:,Theunleveredcostofequityisr0=10%:,Theprojectwouldberejectedbyanall-equityfirm:,CF0,=$1000,CF1,=$125,CF2,=,CF3,=$375,r0,=10%,NPV,=$56.50,CF4,=$500,$250,DomesticAPVExample(continued),Now,imaginethatthefirmfinancestheprojectwith$600ofdebtatr=8%.Thetaxrateis40%,sotheyhaveaninteresttaxshieldworthtI=.40$600.08=$19.20eachyear.,APV=,01234,-$1,000$125$250$375$500,$1,000,APV=$7.09,TheAPVoftheprojectunderleverageis:,Thefirmshouldaccepttheprojectifitfinanceswithdebt.,2.TheAPVModel,TheAPVmodelisusefulforadomesticfirmanalyzingadomesticcapitalexpenditureorforaforeignsubsidiaryofaMNCanalyzingaproposedcapitalexpenditurefromthesubsidiarysviewpoint.TheAPVmodelisNOTusefulforaMNCinanalyzingaforeigncapitalexpenditurefromtheparentfirmsperspective.,65,Keywords,BorrowingcapacityConcessionaryloanLostsalesRealoptionRestrictedfunds,贷款能力,优惠贷款,销售收缩,实物期权,限制性资金,66,3.CapitalBudgetingfromtheParentFirmsPerspective,DonaldLessarddevelopedanAPVmodelforaMNCanalyzingaforeigncapitalexpenditure.Themodelrecognizesthatthecashflowwillbedenominatedinaforeigncurrencyandwillhavetobeconvertedintothecurrencyoftheparent.,67,3.CapitalBudgetingfromtheParentFirmsPerspective,Lessardmodelrecognizesmanyoftheparticularssectorsinforeigndirectinvestment.UsingthebasicstructureoftheAPVmodel,Lessardmodelcanbestatedas:,68,Thecashflowsareassumedtobeconvertedtothecurrencyoftheparentfirmattheexpectedspotexchangerate.,WhenEstimatingtheFutureExpectedExchangeRates,WecanappealtoPPP:,69,Themarginalcorporatetaxrate,isthelargeroftheparentsorforeignsubsidiarys.,70,Itisnotedthateachofthediscountrateshasthesubscriptd,indicatingthatoncetheforeigncashflowsconvertedintotheparentshomecurrency,theappropriatediscountratesarethoseofthedomesticcountry.,71,OCFtrepresentsonlytheportionofoperatingcashflowsavailableforremittancethatcanbelegallyremittedtotheparentfirm.,OCFt=totalsalesrevenue-lostsalesrevenue,OCFtincludeonlyincrementrevenuesandoperatingcosts.,72,S0RF0representsthevalueofaccumulatedrestrictedfunds(intheamountofRF0)thatarefreedupbytheproject.,73,Denotesthepresentvalue(intheparentscurrency)ofanyconcessionaryloans,CL0,andloanpayments,LPt,discountedatid.,74,Theinteresttaxshieldterm,intheAPVmodelrecognizesthetaxshieldsoftheborrowingcapacitycreatedbytheprojectregardlesshowtheprojectisfinanced.,75,Arecipeforinternationaldecisionmakers:1.Estimatefuturecashflowsinforeigncurrency.2.ConverttoU.S.dollarsatthepredictedexchangerate.3.CalculateAPVusingthehomecurrencycostofcapital.,InternationalCapitalBudgeting,CapitalBudgetingfromtheParentFirmsPerspective:Example,AU.S.-basedMNCisconsideringaEuropeanopportunity.ItsasimpleexampleThereisnoincrementaldebtThereisnoincrementaldepreciationTherearenoconcessionaryloansTherearenorestrictedfunds,18-76,CapitalBudgetingfromtheParentFirmsPerspective:Example,WecanuseasimplifiedAPV:,18-77,CapitalBudgetingfromtheParentFirmsPerspective:Example,Theinflationrateintheeurozoneis=3%,theinflationrateindollarsisp$=6%,andthebusinessriskoftheinvestmentwouldleadanunleveredU.S.-basedfirmtodemandareturnofKud=i$=15%.,AU.S.MNCisconsideringaEuropeanopportunity.Thesizeandtimingoftheafter-taxcashflowsare:,18-78,CapitalBudgetingfromtheParentFirmsPerspective:Example,IsthisagoodinvestmentfromtheperspectiveoftheU.S.shareholders?,Toaddressthatquestion,letsconvertallofthecashflowstodollarsandthenfindtheNPVati$=15%.,18-79,CapitalBudgetingfromtheParentFirmsPerspective:Example,$750,Findingthedollarvalueoftheinitialcashflowiseasy;convertatthespotrate:,18-80,CapitalBudgetingfromtheParentFirmsPerspective:Example,$750,$257.28,=$1.2864/,18-81,CapitalBudgetingfromtheParentFirmsPerspective:Example,$661.94,$750,$257.28,=$661.94,18-82,CapitalBudgetingfromtheParentFirmsPerspective:Example,$408.73,$661.94,$750,$257.28,18-83,CapitalBudgetingfromtheParentFirmsPerspective:Example,FindtheNPVusingthecashflowmenuofyourfinancialcalculatorandandinterestratei$=15%:,CF0,=$750,CF1,=$257.28,CF2,=$661.94,CF3,=$408.73,I,=15,NPV,=$242.99,18-84,85,4.RiskAdjustmentintheCapitalBudgetingProcess,Clearlyriskandreturnarecorrelated.1.Risk-adjusteddiscountmethod2.Certaintyequivalentmethod,86,5.SensitivityAnalysis,IntheAPVmodel,eachcashflowhasaprobabilitydistributionassociatedwithit.Hence,therealizedvaluemaybedifferentfromwhatwasexpected.Insensitivityanalysis,differentestimatesareusedforexpectedinflationrates,costandpricingestimates,andotherinputsfortheAPVtogivethemanageramorecompletepictureoftheplannedcapitalinvestment.,87,6.RealOptions,Theapplicationofoptionspricingtheorytotheevaluationofinvestmentoptionsinrealprojectsisknownasrealoptions.Atimingoptionisanoptiononwhentomaketheinvestment.Agrowthoptionisanoptiontoincreasethescaleoftheinvestment.Asuspensionoptionisanoptiontotemporarilyceaseproduction.Anabandonmentoptionisanoptiontoquittheinvestmentearly.,88,3.Discusswhatismeantbytheincrementalc