预算编制-第十七章 杠杆企业的估价与资本预算 精品
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• 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
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.
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
17.1 Adjusted Present Value Approach
• 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.
APV NPV NPVF
• The value of a project to the firm can be thought of as the value of the project to an unlevered firm (NPV) plus the present value of the financing side effects (NPVF):
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.
Prospectus
• Recall that there are three questions in corporate finance.
• The first regards what long-term investments the firm should make (the capital budgeting question).
• The net present value of the project under leverage is:
APV NPV NPVF
APV $56.50 4 $19.20
t1 (1.08)t
APV $56.50 63.59 $7.09
• So, Pearson should accept the project with debt.
APV Example (continued)
百度文库
• Note that there are two ways to calculate the NPV
of the loan. Previously, we calculated the PV of the
interest tax shields. Now, let’s calculate the actual
• The second regards the use of debt (the capital structure question).
• This chapter is the nexus of these questions.
Chapter Outline
17.1 Adjusted Present Value Approach 17.2 Flows to Equity Approach 17.3 Weighted Average Cost of Capital Method 17.4 A Comparison of the APV, FTE, and WACC
$250
$375
$500
0
1
2
3
4
The unlevered cost of equity is r0 = 10%:
NPV10%
$1,000
$125 (1.10)
$250 (1.10)2
$375 (1.10)3
$500 (1.10)4
NPV10% $56.50
The project would be rejected by an all-equity firm: NPV < 0.
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.
NPV of the loan:
NPVloan
$600
4 t 1
$600
.08 (1 .4) (1.08)t
$600 (1.08)4
NPVloan $63.59
APV NPV NPVF
APV $56.50 63.59 $7.09
• Which is the same answer as before.
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:
-$1,000 $125
– The Tax Subsidy to Debt – The Costs of Issuing New Securities – The Costs of Financial Distress – Subsidies to Debt Financing
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.
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
17.1 Adjusted Present Value Approach
• 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.
APV NPV NPVF
• The value of a project to the firm can be thought of as the value of the project to an unlevered firm (NPV) plus the present value of the financing side effects (NPVF):
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.
Prospectus
• Recall that there are three questions in corporate finance.
• The first regards what long-term investments the firm should make (the capital budgeting question).
• The net present value of the project under leverage is:
APV NPV NPVF
APV $56.50 4 $19.20
t1 (1.08)t
APV $56.50 63.59 $7.09
• So, Pearson should accept the project with debt.
APV Example (continued)
百度文库
• Note that there are two ways to calculate the NPV
of the loan. Previously, we calculated the PV of the
interest tax shields. Now, let’s calculate the actual
• The second regards the use of debt (the capital structure question).
• This chapter is the nexus of these questions.
Chapter Outline
17.1 Adjusted Present Value Approach 17.2 Flows to Equity Approach 17.3 Weighted Average Cost of Capital Method 17.4 A Comparison of the APV, FTE, and WACC
$250
$375
$500
0
1
2
3
4
The unlevered cost of equity is r0 = 10%:
NPV10%
$1,000
$125 (1.10)
$250 (1.10)2
$375 (1.10)3
$500 (1.10)4
NPV10% $56.50
The project would be rejected by an all-equity firm: NPV < 0.
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.
NPV of the loan:
NPVloan
$600
4 t 1
$600
.08 (1 .4) (1.08)t
$600 (1.08)4
NPVloan $63.59
APV NPV NPVF
APV $56.50 63.59 $7.09
• Which is the same answer as before.
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:
-$1,000 $125