第十七章杠杆企业的估价与资本预算

• There are four side effects of financing:
– The Tax Subsidy to Debt – The Costs of Issuing New Securities – The Costs of Financial Distress – Subsidies to Debt Financing
flows at the weighted average cost of capital.
• Suppose Pearson Inc. target debt to equity ratio is 1.50
1.50 B S
1.5SB
B 1.5S 1.50.60 S 10.600.40
SB S1.5S 2.5
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17.3 WACC Method for Pearson
S
B
rWA CSC BrSSBrB(1T C)
• To find the value of the project, discount the unlevered cash
The project would be rejected by an all-equity firm: NPV < 0.
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17-4
APV Example (continued)
• Now, imagine that the firm finances the project with $600 of debt at rB = 8%.
• Pearson’s tax rate is 40%, so they have an interest tax shield worth TCBrB = .40×$600×.08 = $19.20 each year.
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17-3
APV Example
Consider a project of the Pearson Company, the timing and size of the incremental after-tax cash flows for an allequity firm are:
17.2 Flows to Equity Approach
17.3 Weighted Average Cost of Capital Method
17.4 A Comparison of the APV, FTE, and WACC Approaches
17.5 Capital Budgeting When the Discount Rate Must Be Estimated
17.6 APV Example
17.7 Beta and Leverage
17.8 Summary and Conclusions
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NP loV an$600 t 41$60 (1 .0 .0 8 )8 t(1.4)(1 $.6 0)0 8 4 0
NP loV an$6.3 59
APV NPV NPVF
A P $ 5 .5 V 6 6 0 .5 3 $ 9 7 .09
• Which is the same answer as before.
17-0
第十七章杠杆企业 的估价与资本预算
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17-1
Chapter Outline
17.1 Adjusted Present Value Approach
Step Three: Valuation for Pearson
• Discount the cash flows to equity holders at rS = 11.77%
-$400
$96.20
$221.20 $346.20 -$128.80
0
1
2
3
4
$9.2 60$22 .21 0$34 .26 0$12 .88 0 PV $40 (1 0.11) 7(1.7 11)27 (1 7.11)37 (1 7 .11)47 PV $2.5 86
• Thus, CF0 = -$400 • Each period, the equity holders must pay interest expense.
The after-tax cost of the interest is B×rB×(1-TC) = $600×.08×(1-.40) = $28.80
• The net present value of the project under leverage is:
APV NPV NPVF
4 $19.20
APV$56.50t1(1.08 )t
A P $ 5 .5 V 6 6 0 .5 3 $ 9 7 .09
• So, Pearson should accept the project with debt.
-$1,000 $125
$250
$375
$500
0
1
2
3
4
The unlevered cost of equity is r0 = 10%: NP 1% 0 V$1,00(0 $ 11 .12 )0 5 (1 $.2 1)5 0 20(1 $.3 1)7 0 35(1 $.5 1)0 0 4 0 NP 1% 0 V$5.5 60
rS .1 0 $ 4 $ 6.0 0 (1 7 9 0 .4)0 1 ( .0 .0) 8 1.7 1 % 7
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P V $ 12 $ 2 55 $ 0 37 $ 5 50 4 0 1.2 90 (1 .1)0 (1 .1)2 0(1 .1)3 0(1 .1)4 0t 1(1 .0)t8
P V $ 9.5 4 6 0 3 .5 3 9 $ 1 ,0.0 09 7
• B = $600 when V = $1,007.09 so S = $407.09.
CF3 = $375 -28.80 CF2 = $250 -28.80 CF1 = $125-28.80
CF4 = $500 -28.80 -600
-$400
$96.20 $221.20 $346.20 -$128.80
0
1

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3
4
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Step One: Levered Cash Flows for Pearson
• Since the firm is using $600 of debt, the equity holders only have to come up with $400 of the initial $1,000.
• There are three steps in the FTE Approach:
– Step One: Calculate the levered cash flows – Step Two: Calculate rS. – Step Three: Valuation of the levered cash flows at rS.
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17.2 Flows to Equity Approach
• Discount the cash flow from the project to the equity holders of the levered firm at the cost of levered equity capital, rS.
NP6.8V% 8 $6.68
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17-12 17.4 A Comparison of the APV, FTE, and WACC Approaches
17-11
Valuation for Pearson using WACC