财务管理基础 financial management 清华大学出版社pp15

After Studying Chapter 15, you should be able to:
1. 2. 3. 4.
Explain how a firm creates value and identify the key sources of value creation. Define the overall “cost of capital” of the firm. Calculate the costs of the individual components of a firm’s cost of capital - cost of debt, cost of preferred stock, and cost of equity. Explain and use alternative models to determine the cost of equity, including the dividend discount approach, the capital-asset pricing model (CAPM) approach, and the before-tax cost of debt plus risk premium approach. Calculate the firm’s weighted average cost of capital (WACC) and understand its rationale, use, and limitations. Explain how the concept of economic Value added (EVA) is related to value creation and the firm’s cost of capital.
$0 + $1,000 (1 + kd)10
15.8
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Cost of Equity Approaches
• • •
Dividend Discount Model Capital-Asset Pricing Model
Before-Tax Cost of Debt plus Risk Premium
15.12
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Constant Growth Model
The constant dividend growth assumption reduces the model to:
D1 D2 D + +...+ P0 = 1 (1 + k )2 (1 + ke) (1 + ke) e
15.13 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Cost of Debt
Cost of Debt is the required rate of return on investment of the lenders of a company.
P0 = S
n
Ij + Pj
(1 + kd)j j=1
ki = kd ( 1 – T )
15.7 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Determination of the Cost of Debt
(1 + kd)10 = $1,000 / $385.54 = 2.5938 (1 + kd) = (2.5938) (1/10) = 1.1 kd = 0.1 or 10%
ki = 10% ( 1 – .40 )
ki
15.9
= 6%
Type of Financing
Long-Term Debt
Mkt Val
$ 35M
Weight
35%
Preferred Stock
$ 15M $ 100M
15%
50%
Common Stock Equity $ 50M
100%
15.6
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Cost of Preferred Stock is the required rate of return on investment of the preferred shareholders of the company.
kP = DP / P0
15.10 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
15.5
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Market Value of Long-Term Financing
kP = $6.30 / $70
kP = 9%
15.11 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Determination of the Cost of Preferred Stock
Assume that Basket Wonders (BW) has preferred stock outstanding with par value of $100, dividend per share of $6.30, and a current market value of $70 per share.
Determination of the Cost of Debt
Assume that Basket Wonders (BW) has $1,000 par value zero-coupon bonds outstanding. BW bonds are currently trading at $385.54 with 10 years to maturity. BW tax bracket is 40%. $385.54 =
15.2
Required Returns and the Cost of Capital
• • • • •
Creation of Value Overall Cost of Capital of the Firm Project-Specific Required Rates
Group-Specific Required Rates
Cost
Marketing and price
Perceived quality
Superior organizational capability
Competitive Advantage
15.4 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
wenku.baidu.com
Dividend Discount Model
The cost of equity capital, ke, is the discount rate that equates the present value of all expected future dividends with the current market price of the stock.
5. 6.
7.
Understand the capital-asset pricing model's role in computing project-specific and group-specific required rates of return.
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Total Risk Evaluation
15.3
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Key Sources of Value Creation
Industry Attractiveness
Other -e.g., patents, temporary monopoly power, oligopoly pricing
Growth phase of product cycle
Barriers to competitive entry
Chapter 15
Required Returns and the Cost of Capital
15.1 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
Cost of Preferred Stock
Overall Cost of Capital of the Firm
Cost of Capital is the required rate of return on the various types of financing. The overall cost of capital is a weighted average of the individual required rates of return (costs).