公司理财英文版课件Chap016.ppt
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公司理财原版英文课件Chap.ppt
Chapter 8
Interest Rates and Bond Valuation
McGraw-Hill/Irwin
Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Key Concepts and Skills
PV
$31.875 .11 2
1
1 (1.055)10
$1,000 (1.055)10
$825.69
8-9
YTM and Bond Value
When the YTM < coupon, the bond
1300
trades at a premium.
Bond Value
Know the important bond features and bond types Understand bond values and why they fluctuate Understand bond ratings and what they mean Understand the impact of inflation on interest
Bond Concepts
Bond prices and market interest rates move in opposite directions.
When coupon rate = YTM, price = par value
When coupon rate > YTM, price > par value (premium bond)
volatility with respect to changes in the discount rate.
Interest Rates and Bond Valuation
McGraw-Hill/Irwin
Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Key Concepts and Skills
PV
$31.875 .11 2
1
1 (1.055)10
$1,000 (1.055)10
$825.69
8-9
YTM and Bond Value
When the YTM < coupon, the bond
1300
trades at a premium.
Bond Value
Know the important bond features and bond types Understand bond values and why they fluctuate Understand bond ratings and what they mean Understand the impact of inflation on interest
Bond Concepts
Bond prices and market interest rates move in opposite directions.
When coupon rate = YTM, price = par value
When coupon rate > YTM, price > par value (premium bond)
volatility with respect to changes in the discount rate.
公司理财英文版PPT34页
40、人类法律，事物有规律，这是不 容忽视 的。— —爱献 生
46、我们若已接受最坏的，就再没有什么损失。——卡耐基 47、书到用时方恨少、事非经过不知难。——陆游 48、书籍把我们引入最美好的社会，使我们认识各个时代的伟大智者。——史美尔斯 49、熟读唐诗三百首，不会作诗也会吟。——孙洙 50、谁和我一样用功，谁就会和我一样成功。——莫扎特
公司理财英文版
36、如果我们国家的法律中只有某种 神灵， 而不是 殚精竭 虑将神 灵揉进 宪法， 总体上 来说， 法律就 会更好 。—— 马克·吐 温 37、纲纪废弃之日，便是暴政兴起之 时。— —威·皮 物特
38、若是没有公众舆论的支持，法律 是丝毫 没有力 量的。 ——菲 力普斯 39、一个判例造出另一个判例，它们 迅速累 聚，进 而变成 法律。 ——朱 尼厄斯
46、我们若已接受最坏的，就再没有什么损失。——卡耐基 47、书到用时方恨少、事非经过不知难。——陆游 48、书籍把我们引入最美好的社会，使我们认识各个时代的伟大智者。——史美尔斯 49、熟读唐诗三百首，不会作诗也会吟。——孙洙 50、谁和我一样用功，谁就会和我一样成功。——莫扎特
公司理财英文版
36、如果我们国家的法律中只有某种 神灵， 而不是 殚精竭 虑将神 灵揉进 宪法， 总体上 来说， 法律就 会更好 。—— 马克·吐 温 37、纲纪废弃之日，便是暴政兴起之 时。— —威·皮 物特
38、若是没有公众舆论的支持，法律 是丝毫 没有力 量的。 ——菲 力普斯 39、一个判例造出另一个判例，它们 迅速累 聚，进 而变成 法律。 ——朱 尼厄斯
公司理财PPTchap001
McGraw-Hill/Irwin
Government
The cash flows from the firm must exceed the cash flows from the financial markets.
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved
Slide 4
1.1 What is Corporate Finance?
Corporate Finance addresses the following three questions:
Slide 13
1.2 The Corporate Firm
• The corporate form of business is the standard method for solving the problems encountered in raising large amounts of cash. • However, businesses can take other forms.
Shareholders’ Equity
McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved
Slide 9
Capital Structure
The value of the firm can be thought of as a pie. The goal of the manager is to increase the size of the pie. The Capital Structure decision can be viewed as how best to slice the pie. 70% 30% 25%50% DebtDebt Equity 75% 50% Equity
Government
The cash flows from the firm must exceed the cash flows from the financial markets.
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved
Slide 4
1.1 What is Corporate Finance?
Corporate Finance addresses the following three questions:
Slide 13
1.2 The Corporate Firm
• The corporate form of business is the standard method for solving the problems encountered in raising large amounts of cash. • However, businesses can take other forms.
Shareholders’ Equity
McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved
Slide 9
Capital Structure
The value of the firm can be thought of as a pie. The goal of the manager is to increase the size of the pie. The Capital Structure decision can be viewed as how best to slice the pie. 70% 30% 25%50% DebtDebt Equity 75% 50% Equity
公司理财原版配套ppt_chap01ppt
2004/8
Zengping, School of Business Administration
Sole Proprietorship
Advantages
① Easiest to start ② Least regulated ③ Single owner keeps all the profits ④ Taxed once as personal income
Job opportunities
Stockbroker or financial advisor Portfolio manager Security analyst
2004/8 Zengping, School of Business Administration
Financial Institutions
The Function of Finance
DISPLAY MONITOR TACHE BRAIN OF DECISION VALUE CREATION
2004/8
Zengping, School of Business Administration
1.2 BUSINESS FINANCE AND THE FINANCIAL MANAGER
① Treasurer – oversees cash management, credit management, capital expenditures and financial planning ② Controller – oversees taxes, cost accounting, financial accounting and data processing
2004/8
Zengping, School of Business Administration
英文版公司理财chapter-1课件
英文版公司理财chapter-1
6
What is finance?
• Finance can be defined as the art and science of managing money.
• Corporations face two broad financial questions: What investments should the firm make? And how should it pay for those investments? The first question involves spending money; the second involves raising it.
英文版公司理财chapter-1
Shareholders’ Equity
10
• If a project’s value is greater than its required investment, then the project is attractive financially
• The financial manager helps the firm to invest in projects that are worth more than they cost.
2. Cite some of the advantages and disadvantages of organizing a business as a corporation
3. Explain why maximizing market value is the logical financial goal for the corporation
tangible or intangible assets
{财务管理公司理财}公司理财经典讲义英文版
of the Firm
The Capital Structure Decision
Current
Current Assets
Liabilities
How can the firm
raise the money Fixed Assets for the required
Long-Term Debt
1 Tangible investments?
investments?
McGraw-Hill/Irwin
© 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.
1-4
The Balance-Sheet Model
of the Firm
Total Value of Assets:
Total Firm Value to Investors:
Current
Current Assets
Liabilities Long-Term
Debt
Fixed Assets
1 Tangible
2 Intangible
McGraw-Hill/Irwin
Shareholders’ Equity
© 2005 The McGraw-Hill Companies, Inc. All Rights Reserved.
2750%50%30% DebtDeEbtquity
5705%
Equity
McGraw-Hill/Irwin
If how you slice the pie affects the size of the pie, then the capital structure decision matters.
公司理财原版英文课件Chap006
6-9
The Baldwin Company
Price during first year is $20; price increases 2% per year thereafter. Production costs during first year are $10 per unit and increase 10% per year thereafter. Annual inflation rate: 5% Working Capital: initial $10,000 changes with sales
48.00
28.80
17.30
5.80
150.00
16.32
–6.32 –6.32
24.97
–8.65 –8.65
21.22
3.75 3.75
0
21.22 193.00
At the end of the project, the warehouse is unencumbered, so we can sell it if we want to.
21.77 94.20 Investments: (1) Bowling ball machine –100.00 (2) Accumulated 20.00 depreciation (3) Adjusted basis of 80.00 machine after depreciation (end of year) (4) Opportunity cost –150.00 (warehouse) (5) Net working capital 10.00 10.00 (end of year) (6) Change in net –10.00 working capital (7) Total cash flow of –260.00 investment [(1) + (4) + (6)] 52.00 71.20 82.70
公司理财英文版课件 (6)
Calculate the net future value of all cash inflows using the investing rate.
Find the rate of return that equates these values.
Benefits: single answer and specific rates for borrowing and reinvestment
Must exceed a MINIMUM acceptance criteria
5-15
Multiple IRRs
There are two IRRs for this project:
$200 $800
Which one should
0
1
-$200
2
3
- $800
we use?
NPV
$100.00
criteria may not have a positive NPV
Advantages:
Easy to understand Biased toward liquidity
5-7
5.3 The Discounted Payback Period
How long does it take the project to “pay back” its initial investment, taking the time value of money into account?
Advantages:
Easy to understand and communicate
5-10
IRR: Example
Consider the following project:
Find the rate of return that equates these values.
Benefits: single answer and specific rates for borrowing and reinvestment
Must exceed a MINIMUM acceptance criteria
5-15
Multiple IRRs
There are two IRRs for this project:
$200 $800
Which one should
0
1
-$200
2
3
- $800
we use?
NPV
$100.00
criteria may not have a positive NPV
Advantages:
Easy to understand Biased toward liquidity
5-7
5.3 The Discounted Payback Period
How long does it take the project to “pay back” its initial investment, taking the time value of money into account?
Advantages:
Easy to understand and communicate
5-10
IRR: Example
Consider the following project:
公司理财中英文课件 (6)
• Individuals and institutions have different income streams and different intertemporal consumption preferences. • They can adjust their consumption decisions through the financial market. • A market has arisen for money.
• An investment must be at least as desirable as the opportunities available in the financial markets.
4 The Basic Principle: A Lending Example
• John has an income of $100,000 this year and expects to make the same amount next year. The interest rate is 10 percent. • This individual is thinking about investing in a piece of land that costs $70,000. She is certain that next year the land will be worth $75,000. • Should she undertake the investment?
1 The Financial Market Economy: Example
• Consider郭 who earns 200,000 RMB per year and chooses to consume 80,000 RMB per year. He has 120,000 RMB in surplus money to invest. • He could loan 30,000 RMB to each of 4 college seniors. They each promise to pay him back with interest after they graduate in one year. 货币时间价值是指货币随着时间的推移而发生的增值。
• An investment must be at least as desirable as the opportunities available in the financial markets.
4 The Basic Principle: A Lending Example
• John has an income of $100,000 this year and expects to make the same amount next year. The interest rate is 10 percent. • This individual is thinking about investing in a piece of land that costs $70,000. She is certain that next year the land will be worth $75,000. • Should she undertake the investment?
1 The Financial Market Economy: Example
• Consider郭 who earns 200,000 RMB per year and chooses to consume 80,000 RMB per year. He has 120,000 RMB in surplus money to invest. • He could loan 30,000 RMB to each of 4 college seniors. They each promise to pay him back with interest after they graduate in one year. 货币时间价值是指货币随着时间的推移而发生的增值。
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• We can maximize stockholder wealth by maximizing the value of the firm or minimizing the WACC
16-5
The Effect of Leverage
• How does leverage affect the EPS and ROE of a firm?
• If we have a really bad year, we still have to pay our fixed costs and we have less left over for our stockholders
• Leverage amplifies the variation in both EPS and ROE
16-8
Break-Even EBIT
• Find EBIT where EPS is the same under both the current and proposed capital structures
• If we expect EBIT to be greater than the break-even point, then leverage may be beneficial to our stockholders
Chapter 16
Financial Leverage and Capital Structure Policy
McGraw-Hill/Irwin
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Key Concepts and Skills
16-3
Capital Restructuring
• We are going to look at how changes in capital structure affect the value of the firm, all else equal
• Capital restructuring involves changing the amount of leverage a firm has without changing the firm’s assets
16-6
Example: Financial Leverage, EPS and ROE – Part I
• We will ignore the effect of taxes at this stage
• What happens to EPS and ROE when we issue debt and buy back shares of stock?
• Understand the effect of financial leverage on cash flows and the cost of equity
• Understand the impact of taxes and bankruptcy on capital structure choice
16-7
Example: Financial Leverage, EPS and ROE – Part II
• Variability in ROE
– Current: ROE ranges from 6% to 20% – Proposed: ROE ranges from 2% to 30%
• Variability in EPS
– Current: EPS ranges from $0.60 to $2.00 – Proposed: EPS ranges from $0.20 to $3.00
• The variability in both ROE and EPS increases when financial leverage is increased
• When we increase the amount of debt financing, we increase the fixed interest expense
• If we have a really good year, then we pay our fixed cost and we have more left over for our stockholders
• Understand the basic components of the bankruptcy process
16-2
Chapter Outline
• The Capital Structure Question • The Effect of Financial Leverage • Capital Structure and the Cost of Equity Capital • M&M Propositions I and II with Corporate Taxes • Bankruptcy Costs • Optimal Capital Structure • The Pie Again • The Pecking-Order Theory • Observed Capital Structures • A Quick Look at the Bankruptcy Process
• The firm can increase leverage by issuing debt and repurchasing outstanding shares
• The firm can decrease leverage by issuing new shares and retiring outstanding debt
16-4
Choosing a Capital Structure
• What is the primary goal of financial managers?
–nt to choose the capital structure that will maximize stockholder wealth
16-5
The Effect of Leverage
• How does leverage affect the EPS and ROE of a firm?
• If we have a really bad year, we still have to pay our fixed costs and we have less left over for our stockholders
• Leverage amplifies the variation in both EPS and ROE
16-8
Break-Even EBIT
• Find EBIT where EPS is the same under both the current and proposed capital structures
• If we expect EBIT to be greater than the break-even point, then leverage may be beneficial to our stockholders
Chapter 16
Financial Leverage and Capital Structure Policy
McGraw-Hill/Irwin
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Key Concepts and Skills
16-3
Capital Restructuring
• We are going to look at how changes in capital structure affect the value of the firm, all else equal
• Capital restructuring involves changing the amount of leverage a firm has without changing the firm’s assets
16-6
Example: Financial Leverage, EPS and ROE – Part I
• We will ignore the effect of taxes at this stage
• What happens to EPS and ROE when we issue debt and buy back shares of stock?
• Understand the effect of financial leverage on cash flows and the cost of equity
• Understand the impact of taxes and bankruptcy on capital structure choice
16-7
Example: Financial Leverage, EPS and ROE – Part II
• Variability in ROE
– Current: ROE ranges from 6% to 20% – Proposed: ROE ranges from 2% to 30%
• Variability in EPS
– Current: EPS ranges from $0.60 to $2.00 – Proposed: EPS ranges from $0.20 to $3.00
• The variability in both ROE and EPS increases when financial leverage is increased
• When we increase the amount of debt financing, we increase the fixed interest expense
• If we have a really good year, then we pay our fixed cost and we have more left over for our stockholders
• Understand the basic components of the bankruptcy process
16-2
Chapter Outline
• The Capital Structure Question • The Effect of Financial Leverage • Capital Structure and the Cost of Equity Capital • M&M Propositions I and II with Corporate Taxes • Bankruptcy Costs • Optimal Capital Structure • The Pie Again • The Pecking-Order Theory • Observed Capital Structures • A Quick Look at the Bankruptcy Process
• The firm can increase leverage by issuing debt and repurchasing outstanding shares
• The firm can decrease leverage by issuing new shares and retiring outstanding debt
16-4
Choosing a Capital Structure
• What is the primary goal of financial managers?
–nt to choose the capital structure that will maximize stockholder wealth