国际财务管理双语11

1. Capital structure
Capital structure is the mix of long-term debt and equity used to finance or capitalize a business enterprise. This may include long-term debt, common stock, preferred stock, warrants, pension, and lease liabilities.
Markets Does the Cost of Capital Differ Among
Countries? Cross-Border Listings of Stocks The Effect of Foreign Equity Ownership
Restrictions
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Motorola
11.3
Coca-Cola
11.2
Walt Disney
10.0
AT&T
9.8
Wal-Mart
9.8
Exxon
8.8
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INTERNATIONAL FINANCIAL
MANAGEMENT
Fourth Edition EUN / RESNICK
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International Capital
资本成本 World market portfolio 世界市场组合投资
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Chapter Outline
Cost of Capital Cost of Capital in Segmented vs. Integrated
In simple words, the capital structure is how a firm finances its overall operations and growth by using different sources of funds.
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(2) Applicable meaning
When we are deciding whether to invest on one project or not, we can use the cost of capital to evaluate the investment value of the project. If the return is not lower than the cost of capital, it is worth investing.
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2. Cost of Capital
What is cost of capital? What is the applicable meanings of cost of
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WACCs of major MNCs in U.S.
Company
WACC
Intel
12.9%
General Electric
11.9
(1) Definition
The cost of capital is the minimum rate of return an investment project must generate in order to pay its financing costs.
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(3) Calculation: Weighted Average Cost of Capital
K = (1 – )Kl + (1 – t)i
capital? How to calculate cost of capital? The Firm’s Investment Decision and the cost
of capital
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IRR vs. Cost of capital
Only if the IRR is equal to or greater than the cost of capital, the project is worth investing.
本市场 Cost of capital 资本成本 Country systematic risk 国家系统风险 Free ride 搭便车 Market portfolio 市场投资组合 Pricing spillover effect 定价溢出效应
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Байду номын сангаас
Structure and the
11
Cost of Capital
Chapter Eleven
INTERNATIONAL
Chapter Objective:
FINANCIAL
This chapter discusses the coMstAofNcAapGitEalMfoEr tNhTe
multinational firm.
What is the WACC of this company?
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(4)The Firm’s Investment Decision and the Cost of Capital
Calculation example: WACC
Supposing a Company with the given conditions as below:
The current market value of total debts:$3000000 The current market value of total equity:$4000000 Cost of debt capital:8% Cost of equity capital:18% Income tax rate:35%
Where
K = weighted average cost of capital Kl = cost of equity capital for a levered firm i = pretax cost of debt
= debt to total market value ratio t = marginal corporate income tax rate
IRR IRR vs. Cost of capital Firm’s investment decision
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IRR
The internal rate of return (IRR) is the discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero.
Key Terms
Pricing-to-market phenomenon 市场双重 定价现象
Pure foreign market risk 净外国市场风险 Risk-aversion measure 风险厌恶水平 Substitution portfolio 投资组合替代 Systematic risk 系统风险 Weighted average cost of capital 加权平均
Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project.
As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first.
Fourth Edition
EUN / RESNICK
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Key Terms
Capital Asset Pricing Model 资本资产定价模型 Capital structure 资本结构 Completely segmented capital market 完全分割化资
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Discussion:
Capital cost is determined by capital structure.
Is it true or wrong? Why?
The recent trend: internationalized capital structure
Why do MNCs source capital internationally? — Imperfections exist in international financial markets. — By internationalizing its corporate ownership structure, a firm can generally increase its share price and lower its cost of capital.