杠杆企业的估价与资本预算讲义PPT通用课件

1、杠杆企业的估价与资本预算讲义Chapter Outline17.1 Adjusted Present Value Approach17.2 Flows to Equity Approach17.3 Weighted Average Cost of Capital Method17.4 A Comparison of the APV, FTE, and WACC Approaches17.5 Capital Budgeting When the Discount Rate Must Be Estimated17.6 APV Example17.7 Beta and Leverage17.8 Su

2、mmary and Conclusions17.1 Adjusted Present Value ApproachThe value of a project to the firm can be thought of as the value of the project to an unlevered firm (NPV) plus the present value of the financing side effects (NPVF):There are four side effects of financing:The Tax Subsidy to DebtThe Costs o

3、f Issuing New SecuritiesThe Costs of Financial DistressSubsidies to Debt FinancingAPV ExampleConsider a project of the Pearson Company, the timing and size of the incremental after-tax cash flows for an all-equity firm are: 01 2 3 4 -$1,000$125 $250 $375 $500The unlevered cost of equity is r0 = 10%:

4、The project would be rejected by an all-equity firm: NPV 0.APV Example (continued)Now, imagine that the firm finances the project with $600 of debt at rB = 8%. Pearsons tax rate is 40%, so they have an interest tax shield worth TCBrB = .40$600.08 = $19.20 each year.The net present value of the proje

5、ct under leverage is:So, Pearson should accept the project with debt.APV Example (continued)Note that there are two ways to calculate the NPV of the loan. Previously, we calculated the PV of the interest tax shields. Now, lets calculate the actual NPV of the loan:Which is the same answer as before.1

6、7.2 Flows to Equity ApproachDiscount the cash flow from the project to the equity holders of the levered firm at the cost of levered equity capital, rS.There are three steps in the FTE Approach:Step One: Calculate the levered cash flowsStep Two: Calculate rS.Step Three: Valuation of the levered cash

7、 flows at rS.Step One: Levered Cash Flows for PearsonSince the firm is using $600 of debt, the equity holders only have to come up with $400 of the initial $1,000.Thus, CF0 = -$400Each period, the equity holders must pay interest expense. The after-tax cost of the interest is BrB(1-TC) = $600.08(1-.

8、40) = $28.80 01 2 3 4-$400$221.20CF2 = $250 -28.80$346.20CF3 = $375 -28.80-$128.80 CF4 = $500 -28.80 -600CF1 = $125-28.80$96.20Step Two: Calculate rS for PearsonTo calculate the debt to equity ratio, B/S, start with the debt to value ratio. Note that the value of the project isB = $600 when V = $1,0

9、07.09 so S = $407.09. Step Three: Valuation for PearsonDiscount the cash flows to equity holders at rS = 11.77% 01 2 3 4 -$400 $96.20 $221.20 $346.20 -$128.80 17.3 WACC Method for PearsonTo find the value of the project, discount the unlevered cash flows at the weighted average cost of capital.Suppo

10、se Pearson Inc. target debt to equity ratio is 1.50Valuation for Pearson using WACCTo find the value of the project, discount the unlevered cash flows at the weighted average cost of capital17.4 A Comparison of the APV, FTE, and WACC ApproachesAll three approaches attempt the same task:valuation in

11、the presence of debt financing.Guidelines:Use WACC or FTE if the firms target debt-to-value ratio applies to the project over the life of the project.Use the APV if the projects level of debt is known over the life of the project.In the real world, the WACC is the most widely used by far.Summary: AP

12、V, FTE, and WACCAPVWACCFTEInitial Investment AllAllEquity PortionCash FlowsUCFUCFLCFDiscount Rates r0 rWACCrSPV of financing effectsYesNoNoWhich approach is best?Use APV when the level of debt is constantUse WACC and FTE when the debt ratio is constant17.5 Capital Budgeting When the Discount Rate Mu

13、st Be EstimatedA scale-enhancing project is one where the project is similar to those of the existing firm.In the real world, executives would make the assumption that the business risk of the non-scale-enhancing project would be about equal to the business risk of firms already in the business.No e

14、xact formula exists for this. Some executives might select a discount rate slightly higher on the assumption that the new project is somewhat riskier since it is a new entrant.17.6 APV Example: Worldwide Trousers, Inc. is considering a $5 million expansion of their existing business. The initial exp

15、ense will be depreciated straight-line over 5 years to zero salvage value; the pretax salvage value in year 5 will be $500,000. The project will generate pretax earnings of $1,500,000 per year, and not change the risk level of the firm. The firm can obtain a 5-year $3,000,000 loan at 12.5% to partia

16、lly finance the project. If the project were financed with all equity, the cost of capital would be 18%. The corporate tax rate is 34%, and the risk-free rate is 4%. The project will require a $100,000 investment in net working capital. Calculate the APV.17.6 APV Example: CostThe cost of the project

17、 is not $5,000,000.We must include the round trip in and out of net working capital and the after-tax salvage value. Lets work our way through the four terms in this equation:NWC is riskless, so we discount it at rf. Salvage value should have the same risk as the rest of the firms assets, so we use

18、r0.17.6 APV Example: PV unlevered projectThe PV unlevered project is the present value of the unlevered cash flows discounted at the unlevered cost of capital, 18%.Turning our attention to the second term,17.6 APV Example: PV depreciation tax shieldThe PV depreciation tax shield is the present value

19、 of the tax savings due to depreciation discounted at the risk free rate , at rf = 4%Turning our attention to the third term,17.6 APV Example: PV interest tax shieldThe PV interest tax shield is the present value of the tax savings due to interest expense discounted at the firms debt rate, at rD = 1

20、2.5%Turning our attention to the last term,17.6 APV Example: Adding it all upSince the project has a positive APV, it looks like a go.Lets add the four terms in this equation:17.7 Beta and LeverageRecall that an asset beta would be of the form:17.7 Beta and Leverage: No Corp.TaxesIn a world without corporate taxes, and with riskless corporate debt, it can be shown that the relationship between the beta of the unlevered firm and the