管理经济学第七版英文教辅 chapter 12

ManagerialEconomics,7e(Keat)Chapter12CapitalBudgetingandRisk(Appendix12A)Multiple-ChoiceQuestionsThetermcapitalbudgetingreferstodecisionswhicharcmadeintheshortrun.whichconcernthespreadingofexpendituresoveraperiodlastinglessthanoneyear.whereexpendituresandreceiptsforaparticularundertakingwillcontinueoverarelativelylongperiodoftime.whereareceiptofcashwilloccursimultaneouslywithanoutflowofcash.Answer:CDiff:2Capitalbudgetingprojectsincludeallofthefollowingexceptthepurchaseofasix-monthtreasurybill.theexpansionofaplant.thedevelopmentofanewproduct.thereplacementofapieceofequipment.Answer:ADiff:2If$1,000isplacedinanaccountearning8%annually,thebalanceattheendofsevenyearswillbe$1,080.$1,560.$2,000.$1,714.Answer:DDiff:3Thepaybackperiodforaproject,requiringaninitialoutlayof$10,000andproducingtenuniformannualcashinflowsof$1,500,issixyears.sixyearsandeightmonths.sixyearsandsixmonths.sevenyears.Answer:BDiff:3Thenetpresentvalueofaprojectiscalculatedasthefuturevalueofallcashinflowsminusthepresentvalueofalloutflows.thesumofallcashinflowsminusthesumofallcashoutflows.thepresentvalueofallcashinflowsminusthepresentvalueofallcashoutflows.NoneoftheaboveThedifferencebetweensensitivityanalysisandscenarioanalysisissensitivityanalysisisamethodforevaluatingriskwhilescenarioanalysisisnot.sensitivityanalysisisbasedonregressionanalysiswhilescenarioanalysisisnot.sensitivityanalysisexaminestheimpactontheoverallresultsofachangeinonevariablewhilescenarioanalysisexaminestheimpactsonoverallresultsofchangesinseveralvariablesatthesametime.NoneoftheaboveAnswer:CDiff:3AnalyticalQuestionsYoudeposit$10,000inasavingsaccounttoday.Iftheinterestrateis3%,whatisthevaluein20years?Answer:FV=PV(1+i)n=10,000(1.03)20=$18,061Youstartworkingatage20andyouplantodeposit$5,000inasavingsaccounteveryyearforthenext45years.Attheendofthistime,howmuchmoneywillyouhaveiftheinterestrateis5%?Youdecidethat'snotenoughmoney.Howmuchwillyouhavetosaveeveryyearifyouwishtohave$1,000,000whenyouretire?Answer:FV=5,000{((1+i)n-l)/i)=$798,500Youwillhavetosave$6,261peryear.Anaircraftcompanyhassignedacontracttodeliveraplane3yearsfromnow.Thepricetheywillreceiveattheendof3yearsis$20million.Ifthefirm'scostofcapitalis6%,whatisthepresentvalueofthispayment?Answer:PV=20/(1.06)3=$16.79millionAnaircraftcompanyhassignedacontracttosellaplanefor$20million.Thefirmbuyingtheplanewillpayforitin5annualpayments(atyearend)of$4million.Ifthefirm'scostofcapitalis6%,whatisthenetpresentvalueofthispayment?Answer:PV=$16.85millionAfirmmustspend$10milliontodayonaprojectthatisexpectedtobringinannualrevenuesof$1.5millionfbrthenext10years(beginningattheendofyear1).Ifthefirm'scostofcapitalis5%,whatistheNPVofthisproject?Ifthefirm'scostofcapitalis10%,whatistheNPVofthisproject?Whatistheinternalrateofreturn?Answer:Presentvalueoftherevenues=$11.58million,soNPV=$1.58million.Presentvalueoftherevenues=$9.22million,soNPV=-$0.78million.c.8.15%Ifanexpansionproposalisaccepted,allowinganotherwiseidle(anduseless)machinewithamarketvalueandbookvalueof$2,000tobeutilized,shoulditberecordedasacashoutflow,andifso,howmuch?Answer:Yes,$2,000Youwinthe$20millionstatelottery,andyouhaveachoiceoftakinganamountofmoneyperyearforthenext20yearsoraflatpaymentnow.Theflatpaymentthatthestateoffersyouis$9.82million.Whatdiscountrateisthestateusing?Shouldyoutakethemoneyortheannuity?Answer:8%(Thisisessentiallytheinternalrateofreturnontheproject.)Ingeneral,itdependsonwhatreturnyouthinkyoucangetonthemoney.Ifyouthinkyoucandobetterthan8%,you'rebetteroffwiththecash.Iftheinterestrateis7%andthetaxraleis15%,whatistheafter-taxcostofcapitalforthefirm?Answer:.07(1-.15)=5.95%Inc.'sstockiscurrently$50,Thelastdividendthattheypaidwas$1.Ifdividendsareexpectedtoincreaseata10%annualrate,whatisthefirm'sequitycostofcapital?Answer:ke=Di/Po+g=1.10/50+.10=12.2%Ifacompany'sstockisperceivedtobemoreriskythanaverage,whatwillhappentotheirequitycostofcapital?Explainusingthecapitalassetpricingmodel.Answer:Astockthatismorevolatile(riskier)thanthemarketaveragewillhaveabetaofgreaterthan1.Thismeansthatthereturnthatstockholderswillrequirewillbegreaterthanaverage[kj=Rf+P(km-Rf)].Inotherwords,thecompanywillhavetopaystockholdersmoresincetheymusttakeagreaterrisk,andtheequitycostofcapitalwillrise.Explainwhatismeantbythe"weightedcostofcapital"andhowitisusedincapitalbudgeting.Answer:Theproportionofeachtypeoffinancing(debt,equityandretainedearnings)inthefirm'scapitalstructure,andapplyingthesepercentagestotheopportunitycostsofcapitalassociatedwithfinancingaprospectivecapitaloutlay.Thisweightedaverageoftheopportunitycostofcapitalthenisusedtodiscountprojectedcashflowsbacktoanetpresentvalue.DescribetheCapitalAssetPricingModel(CAPM)andhowitisusedincapitalbudgetingdecisions.Answer:CAPMisaprocedureforadjustingameasureoftherequiredrateofreturnonafirm'sstockforrisk.Thisrisk-adjustedmeasureoftherequiredrateofreturnonafirm'sstockisusedastheopportunitycostofcapitalinequityfinancingofacapitalproject.Theprojectedcashflowsfromtheprojectarcdiscountedbacktoanetpresentvalueusingthisrisk-adjustedrateofreturn.TheriskadjustmentisbasedontheBetavalueofafirm'sstock:theratioofthevolatilityintherateofreturnonafirm'sstocktothevolatilityintherateofreturnonamarketportfolioofstocks.Whatadditionalcomplexitiesarisewhenmultinationalcorporationsconsidercapitalprojectsonaglobalbasis?Answer:Considerationsmustbegiventotheimpactonprojectedcashflowsfromdifferencesintaxlawsandtaxrates,exchangeratecontrolsandchanges,limitationsonrepatriationofprofits,tariffsandquotasonimportedproducts,andspeciallicensingfees.Inaddition,ratesusedtodiscountcashflowsbacktopresentvaluesmustbeadjustedlordifferencesinratesofinflationandtaxes,andrisksassociatedwithexpropriationofassetsandpolitical-socialinstability.Afirm'smostrecentannualdividendwas$2pershare;itssharessellfor$40inthestockmarket,andthecompanyexpectsitsdividendtogrowataconstantrateof5%intheforeseeablefuture.Usingthedividendgrowth(Gordon)model,whatwouldyouestimateitsequitycostofcapitaltobe?Answer:10.25%=|(2)(1.05)/(40+.05)]Whatarethemajorsourcesofriskforthefirm?Answer:Economicuncertainty,competition(actionsofcompetitors),changesindemand,changesintechnology,changesininputcostsYoubuyalotteryticketfor$I.Ifyouwin,youreceive$3million.Theoddsofyournumberscomingupare1:10,000,000.Whatistheexpectedvalueofthisgamble?Answer:Expectedvalue=(3million)(0.0000001)+(-1)(0.9999999)=-$0.69,oryouexpecttolose69cents.ProjectAandProjectBbothhaveexpectedvaluesof$5,000.ProjectAhasastandarddeviationof$1,000,whileProjectBhasastandarddeviationof$3,000.Commentonthedesirabilityoftheseprojects.Answer:Bothhavethesameexpectedvalue,butAhasalowerstandarddeviation.Itis99%certainthatthereturnfromAwillbebetween$2,000and$8,000.However,forB,itis99%certainthatthereturnwillbebetween$-4,000and$14,000.ProjectBismoreriskyandthuslessdesirable.ProjectChasanexpectedvalueof$500andastandarddeviationof50.ProjectDhasanexpectedvalueof$300andastandarddeviationof10.Commentonthedesirabilityoftheseprojects.Answer:CVC=50/500=0.10CVD=10/300=0.03ProjectDhasalowercoefficientofvariationandthusismoredesirable.Eventhoughitsexpectedvalueislower,itslowerstandarddeviation(andthuslowerrisk)makesupforthis.TheWidgetCompanyhasestimatedthefollowingrevenuepossibilitiesfortheyear:SalesProbability100150220290300.200.15Findexpectedrevenue.Findthestandarddeviation.Findthecoefficientofvariation.Answer:Expectedrevenueis$215.50.Standarddeviation=72.90Coefficientofvariation=0.34Savingsaccountspayverylowratesofinterest.Theaveragereturnonthestockmarketisabout10-12%,inthelongrun.Whywouldanyoneputmoneyintoasavingsaccount?Answe亡Thestockmarketgivesahigherreturnforhigherrisk.Particularlyifyouareveryaversetorisk,youmightfindthesavingsaccounttobeanattractivealternative.Atwo-periodprojecthasthefollowingprobabilitiesandcashflows:ProbabilityCashflowPeriod1:.25500.50600.25700Period2:.30300.50500.20700Thediscountrateis7%,andtheinitialinvestmentisS1,000.HowmuchistheexpectedNPVofthisproject?Answer:$-20.TwoprojectshavethefollowingNPVsandstandarddeviations:ProjectB

300

100ProjectB

300

100NPV 200Standarddeviation 75Whichofthetwoprojectsismorerisky?Answer:SincethetwoprojectshavedifferentNPVsanddifferentstandarddeviations,relativeriskcanbemeasuredbythecoefficientofvariation.ProjectAhasaCVof.375,projectB.333.Thus,therelativeriskofprojectBisless.Intermsofcapitalbudgeting,explainthedifferencebetweenriskanduncertainty.Answer:Uncertaintyinvolvespossiblefutureeventstowhichnoprobabilityvaluescanbeassigned,whileriskinvolvessucheventstowhichprobabilitiescanbeattachedtotheiroutcome.Thus,riskadjustmentscanbemadetoexpectedcashflowvaluesand/oropportunitycostratesofdiscount.Withuncertainty,nosuchadjustmentscanbemade.Describetherealoptionapproachtorisk-adjustedcapitalbudgeting.Answer:Realoptionsinvolvethecontraclionalabilitytomakechangesincapitalprojects,particularlyoncetheyareunderway.Suchoptionsinvolvetheabilitytoalteroutputs(expand,contract,shutdown),alterinputs(bothinputtypesandprocessesusingthem),andpostponeorabandonprojects.Theseoptionsgivetheholdertheright,butnottheobligation,toexercisethemandusuallyrequiretheholdertopayanextraamountforthisprivilege.Todeterminewhethersuchoptionsareworthwhile,onewouldcalculatethedifferenceintheexpectednetpresentvaluesofthecapitalprojectswithandwithouttheoptionandcompareittothecostofpayingfortheoption.Explainwhyriskcanbeinsuredagainstbutuncertaintycannot.Answer:Theproviderofinsurancepoliciescanassignprobabilitiestotheoccurrencesofinsurableeventsandcalculatepremiumratestocharge.Withuncertainty,noprobabilitiescanbeattachedtosucheventsanditisn'tpossibletoconstructtheappropriatepremiumrates.Youaregivenriskycashflowdataforathree-yearproject:YearCashflow1$2,00023,00034,000Theinitialcashoutflowis$6,000;therisk-freeinterestrateis6%,andtherisk-adjusteddiscountrateis10%.CalculatetheNPVbyboththerisk-adjusteddiscountratemethodandthecertaintyequivalentmethodinsuchawaythattheNPVwillbethesameusingeithermethod.Answer:RisklessRiskyCashFlowCashFlowCERisklessDiscountedDiscountedYearCashFlowFactor*CashFlowat6%at10%120000.963636192718181818230000.928595278624792479340000.894828357930053005Total73037303Lessinitialinvestment60006000NPV13031303*CEfactors:1.06/1.1=0.9636361.062/1.12=0.9285951.063/1.13=0.894828Whatadditionalsourcesofriskcomefrominternationalinvestments?Answer:Exchangeraterisk,andpoliticalriskssuchasregulation,discrimination,andexpropriationTheXYZCompanyhasestimatedexpectedcashflowsfor1996tobeasfollows:ProbabilityCashflow.10$120,000.15140,000.50150,000.15180,000.10210,000Calculate:expectedvaluestandarddeviationcoefficientofvariationtheprobabilitythatthecashflowwillbelessthan$100,000Answer:$156,000$23,7490.1520.91%(z-statisticis2.36)29)Youaregiventhefollowingriskycashflowsandcertaintyequivalentfactorsforafour-yearproject:CertaintyPeriodCashFlowEquivalentFactor1$2,500.9523,000.9234,000.8843,000.84Theinitialinvestmentforthisprojectis$8,000,andtherisk-freeinterestrateis6%.Calculatethenetpresentvalueoftheproject.Answe亡$1,648Answer:CDiff:2Aproposedprojectshouldbeacceptedifthenetpresentvalueispositive.negative.largerthantheinternalrateofreturn.smallerthantheinternalrateofreturn.Answer:ADiff:2Whenfutureeventscannotbeassignedprobabilities,wearetalkingaboutrisk.uncertainty.acloudedfuture.financialrisk.Answer:BDiff:1Probabilities,whichcanbeobtainedbyrepetitionorarebasedongeneralmathematicalprinciples,arecalledstatistical.empirical.apriori.subjective.Answer:CDiff:2Otherthingsbeingequal,thehigherthecostofcapitalthehighertheNPVofaproject.thehighertheIRRoftheproject.thelowertheNPVoftheproject.ThecostofcapitalhasnoeffectontheNPVoftheproject.Answer:CDiff:3Theinternalrateofreturnofaprojectcanbefoundbydiscountingallcashflowsatthecostofcapital.averagingallcashinflows,andcalculatingtheinterestrate,whichwillmakethemequaltotheaverageinvestment.calculatingtheinterestrate,whichwillequatethepresentvalueofallcashinflowstothepresentvalueofallcashoutflows.NoneoftheaboveAnswer:CDiff:3Infinance,riskismostcommonlymeasuredbytheprobabilitydistribution.thestandarddeviation.theaveragedeviation.thesquarerootofthestandarddeviation.Answer:BDiff:2Aprojectwhoseacceptanceeliminatesanotherprojectfromconsiderationiscalledindependent.mutuallyplementary.Answer:BDiff:1TheinternalrateofreturnequalsthecostofcapitalwhenNPV=0.NPV>0.NPV<0.NoneoftheaboveAnswer:ADiff:2Whentwomutuallyexclusiveprojectsareconsidered,theNPVcalculationsandtheIRRcalculationsmay,undercertaincircumstances,giveconflictingrecommendationsastowhichprojecttoaccept.ThereasonforthisresultisthatintheNPVcalculation,cashinflowsareassumedtobereinvestedatthecostofcapital,whileintheIRRsolution,reinvestmenttakesplaceatthehurdlerate.theaccountingrateofreturn.theprimerate.theproject'sinternalrateofreturn.Answer:DDiff:3Whenanalyzingacapitalbudgetingproject,theanalystmustincludeinhiscalculationallofthefollowingexceptallrevenuesandcostsintermsofcashflows.onlythosecashflowsthatwillchangeiftheproposalisaccepted(i.e.,incrementalcashflows).interestpaymentsondebtfinancingconnectedwiththeproject.anyeffect(impact)theacceptanceoftheprojectunderconsiderationwillhaveonotherprojectsnowinoperation.Answer:CDiff:3Theuseofthesamecostofcapital(riskadjusteddiscountrate)forallcapitalprojectsinacorporationisusuallythecorrectprocedure.isincorrectsincedifferentdivisionsofthecorporationmaybefacedwithdifferentlevelsofrisk.isincorrectsincedifferentcapitalprojects,eveninthesamedivision,maybefacedwithdifferentlevelsofrisk.BothBandCAnswer:DDiff:3IfariskycashflowofS10,000isequivalenttoarisklesscashflowof$9,300,thecertaintyequivalentfactoris7.1.07.1.93.Answer:ADiff:2If,attheendoftheprojectlife,apieceofequipmenthavingabookvalueof$4,000isexpectedtobring$3,000uponresale,andtheincometaxrateis40%,howmuchwillbethecashflow?A)$2,800B)$3,000C)$3,400D)$4,000Answer:CDiff:3Iftheriskadjusteddiscountratemethodandthecertaintyequivalentmethodsaretogivethesameresults,thenthecertaintyequivalentfactor(at)mustequal(whererfistherisk-freeinterestrate,and"k"istheriskadjustedcostofcapital)A)(1+rf)ttimes(1+k)t.B)(l+k)tdividedby(1+rf)t.C)(l+rf)tdividedby(1+k)LD)(l+k)tminus(1+r伊.Answer:CDiff:3TwoprojectshavethefollowingNPVsandstandarddeviations:ProjectAProjectBNPV200200Standarddeviation75100ApersonwhoselectsprojectAoverprojectBisriskseeking.riskindifferent.riskaverse.NoneoftheaboveAnswer:CDiff:2Anincreaseinnetworkingcapitalrequiredatthebeginningofanexpansionprojectmustbeconsideredtobeacashinflow.areallocationofassets.acashoutllow.NoneoftheaboveAnswer:CDiff:2Usually,thecostofcapitalfbrnewlyissuedstockisthecostofretainedearnings.lowerthanhigherthansameaseitherhigherorlowerthanAnswer:BDiff:2Astockwhoserateofreturnfluctuateslessthantherateofreturnofamarketportfoliowillhaveabetathatequals1.lessthan1.morethan1.EitherAorCaboveAnswer:BDiff:2Acompany'scapitalstructureismadeupof40%debtand60%commonequity(bothatmarketvalues).Theinterestrateonbondssimilartothoseissuedbythecompanyis8%.Thecostofequityisestimatedtobe15%.Theincometaxrateis40%.Thecompany'sweightedcostofcapitalis11.5%.12.2%.10.9%.8.9%.Answer:CDiff:3Capitalrationingexistswhenacompanysetsanarbitrarylimitontheamountofinvestmentitiswillingtoundertake,sothatnotallprojectswithanNPVhigherthanthecostofcapitalwillbeaccepted.B)generallydoesnotpermitacompanytoachievemaximumvalue.seemstooccurquitefrequentlyamongcorporations.AlloftheaboveAnswer:DDiff:3Thetimevalueofmoneycanbebestdescribedasadollartodayisworthmorethanadollartomorrow.thebasisonwhichnetpresentvaluesarecalculated.thebasisonwhichinternalratesofreturnarecalculated.AlloftheaboveAnswer:DDiff:2NetpresentvalueandinternalrateofreturncapitalbudgetingdecisionscandifferbecauseA)theinitialcostsofthecapitaloutlaysdiffer.thecashflowstreamsdiffer.thediscountratesdifferfordifferenttimeperiods.AlloftheaboveAnswer:DDiff:2Simulationanalysispermitsthecalculationofexpectedvalueandstandarddeviation.doesnotpermitthecalculationofexpectedvalueandstandarddeviation.istoocomplextoeverbeusedinactualbusinesssituations.docsnotconsiderprobabilities.Answer:ADiff:2Theexpectedvalueisthetotalofallpossibleoutcomes.thearithmeticaverageofallpossibleoutcomes.theaverageofallpossibleoutcomesweightedbytheirrespectiveprobabilities.thetotalofallpossibleoutcomesdividedbythenumberofdifferentpossibleoutcomes.Answer:CDiff:2Anadvantageofthedecisiontreeisthatiteliminatestheneedforcalculatingthecostofcapital.iteliminatestheneedforcalculatingprobabilities.itcausestheanalysttoconsiderimportanteventsthatmayoccurinthecourseoftheproject,anddecisionsandactionsthatmayhavetobeundertaken.AlloftheaboveAnswer:CDiff:3Arealoptioncanpresentmanagementwiththeopportunitytovaryoutput.abandonaproject.postponeaproject.AlloftheaboveAnswer:DDiff:2Asourceofbusinessriskisachangeintechnology.consumerpreferences.inputprices.AlloftheaboveAnswer:DDiff:1Thecertaintyequivalentapproachtoaccountingforriskincapitalbudgetinginvolvesadjustingthediscountrateusedtocalculatenetpresentvalues.adjustingtheexpectedcashflows.estimatingthecoefficientofvariation.estimatingthestandarddeviationofthenetpresentvalues.Answer:BDiff:2Whichofthefollowingisanexampleofriskincapitalbudgetingonaglobalbasis?exchangeratechangestariffchangesexpropriationAlloftheaboveAnswer:DDiff:2Theriskadjusteddiscountrateisthesumoftherisk-freerateandtheriskpremium.includesri