某公司財(cái)務(wù)管理及財(cái)務(wù)知識(shí)分析（英文版）課件

PreferredstockLeasingWarrantsConvertiblesRecentinnovationsCHAPTER20

HybridFinancing:PreferredStock,Leasing,Warrants,andConvertiblesPreferredstockCHAPTER20

HybrLeasingLeasingissometimesreferredtoas“offbalancesheet”financingifaleaseisnot“capitalized.”Inotherwords,itisnotshownonthebalancesheet.Leasingisasubstitutefordebtfinancingand,thus,usesupafirm’sdebtcapacity.(More...)LeasingLeasingissometimesreCapitalleasesaredifferentfromoperatingleases:Capitalleasesdonotprovideformaintenanceservice.Capitalleasesarenotcancelable.Capitalleasesarefullyamortized.CapitalleasesaredifferentfAnalysis:Leasevs.Borrow-and-BuyData:Newmachinecosts$1,200,000.3-yearMACRSclasslife;4-yeareconomiclife.Taxrateof40%.kd=10%.(More...)Analysis:Leasevs.Borrow-anMaintenanceof$25,000/year,payableatbeginningofeachyear.ResidualvalueinYear4of$125,000.4-yearleaseincludesmaintenance.Leasepaymentis$340,000/year,payableatbeginningofeachyear.Maintenanceof$25,000/year,pDepreciationScheduleDepreciablebasis=$1,200,000 MACRS Depreciation End-of-YearYear Rate Expense BookValue1 0.33 $396,000 $804,0002 0.45 540,000 264,0003 0.15 180,000 84,0004 0.07

84,000 0

1.00

$1,200,000DepreciationScheduleDepreciabInaleaseanalysis,whatdiscountrateshouldcashflowsbediscountedat?Sincecashflowsinaleaseanalysisareevaluatedonanafter-taxbasis,weshouldusetheafter-taxcostofborrowing.Previously,weweretoldthecostofdebt,kd,was10%.Therefore,weshoulddiscountcashflowsat6%.A-T

kd=10%(1–T)=10%(1–0.4)=

6%.Inaleaseanalysis,whatdiscCostofOwningAnalysis

(InThousands)Costofasset (1,200.0)Dep.taxsavings1 158.4 216.0 72.0 33.6Maint.(AT)2 (15.0) (15.0)(15.0) (15.0)Res.value(AT)3 ______ _____ _____ _____ 75.0Netcashflow (1,215.0) 143.4 201.0 57.0 108.6PVcostofowning(@6%)=-$766,948.01234(More...)CostofOwningAnalysis

(InThNotes:1 Depreciationisataxdeductibleexpense,soitproducesataxsavingsofT(Depreciation).Year1=0.4($396)=$158.4.2 Eachmaintenancepaymentof$25isdeductiblesotheafter-taxcostoftheleaseis(1–T)($25)=$15.3 Theendingbookvalueis$0sothefull$125salvage(residual)valueistaxed.Notes:CostofLeasingAnalysis

(InThousands)Leasepmt(AT)1 -204 -204 -204 -204PVcostofleasing(@6%)=-$749,294.Note:1Eachleasepaymentof$340isdeductible,sotheafter-taxcostoftheleaseis(1–T)($340)=-$204.01234CostofLeasingAnalysis

(InTNetAdvantageofLeasingNAL =– =$766,948–$749,294 =$17,654.PVcostofowningPVcostofleasingSincethecostofowningoutweighsthecostofleasing,thefirmshouldlease.NetAdvantageofLeasingPVcosSupposecomputer’sresidualvaluecouldbeaslowas$0orashighas$250,000,butexpectedvalueis$125,000.HowcouldtheriskinessoftheSVbeincorporatedintheanalysis?Whateffectwouldthishaveonleasedecision?Toaccountforrisk,therateusedtodiscounttheSVwouldbeincreased;therefore,thecostofowningwouldbeevenhigher.Leasingbecomesevenmoreattractive.Supposecomputer’sresidualvaWhateffectwouldacancellationclausehaveontheriskinessofthelease?Acancellationclauselowerstheriskoftheleasetothelessee,butincreasestherisktothelessor.WhateffectwouldacancellatiPreferreddividendsarefixed,buttheymaybeomittedwithoutplacingthefirmindefault.Mostpreferredstocksprohibitthefirmfrompayingcommondividendswhenthepreferredisinarrears.Usuallycumulativeuptoalimit.Howdoespreferredstockdifferfromcommonequityanddebt?Preferreddividendsarefixed,Dividendsareindexedtotherateontreasurysecuritiesinsteadofbeingfixed.ExcellentS-Tcorporateinvestment:Only30%ofdividendsaretaxabletocorporations.Thefloatingrategenerallykeepsissuetradingnearpar.Whatisfloatingratepreferred?DividendsareindexedtotherHowever,iftheissuerisrisky,thefloatingratepreferredstockmayhavetoomuchpriceinstabilityfortheliquidassetportfoliosofmanycorporateinvestors.However,iftheissuerisriskAwarrantisalong-termcalloption.Aconvertibleconsistsofafixedratebondplusacalloption.Howcanaknowledgeofcalloptionshelponeunderstandwarrantsandconvertibles?Awarrantisalong-termcallP0=$10.kdof20-yearannualpaymentbondwithoutwarrants=12%.50warrantswithanexercisepriceof$12.50eachareattachedtobond.Eachwarrant’svaluewillbe$1.50.Giventhefollowingfacts,whatcouponratemustbesetonabondwithwarrantsifthetotalpackageistosellfor$1,000?P0=$10.GiventhefollowingfStep1:CalculateVBondVPackage=VBond+VWarrants=$1,000.VWarrants=50($1.50)=$75.VBond+$75 =$1,000VBond =$925.Step1:CalculateVBondVPackaStep2:FindCouponPaymentandRateNI/YRPVPMTFV2012-9251000Solution:110Therefore,therequiredcouponrateis$110/$1,000=11%.Step2:FindCouponPaymentaThepackagewouldactuallyhavebeenworth Vpackage=$925+50($2.50)=$1,050, whichis$50morethantheactualsellingprice.Ifafterissuethewarrantsimmediatelysellfor$2.50each,whatwouldthisimplyaboutthevalueofthepackage?ThepackagewouldactuallyhavThefirmcouldhavesetlowerinterestpaymentswhosePVwouldbesmallerby$50perbond,oritcouldhaveofferedfewerwarrantswithahigherexerciseprice.Currentstockholdersaregivingupvaluetothewarrantholders.ThefirmcouldhavesetlowerGenerally,awarrantwillsellintheopenmarketatapremiumaboveitstheoreticalvalue(itcan’tsellforless).Therefore,warrantstendnottobeexerciseduntiljustbeforetheyexpire.Assumethatthewarrantsexpire10yearsafterissue.Whenwouldyouexpectthemtobeexercised?Generally,awarrantwillsellInastepped-upexerciseprice,theexercisepriceincreasesinstepsoverthewarrant’slife.Becausethevalueofthewarrantfallswhentheexercisepriceisincreased,step-upprovisionsencouragein-the-moneywarrantholderstoexercisejustpriortothestep-up.Sincenodividendsareearnedonthewarrant,holderswilltendtoexercisevoluntarilyifastock’sdividendrisesenough.Inastepped-upexercisepriceWhenexercised,eachwarrantwillbringintheexerciseprice,$12.50.Thisisequitycapitalandholderswillreceiveoneshareofcommonstockperwarrant.Theexercisepriceistypicallysetat10%to30%abovethecurrentstockpriceontheissuedate.Willthewarrantsbringinadditionalcapitalwhenexercised?Whenexercised,eachwarrantwNo.Asweshallsee,thewarrantshaveacostthatmustbeaddedtothecouponinterestcost.Becausewarrantslowerthecostoftheaccompanyingdebtissue,shouldalldebtbeissuedwithwarrants?No.Asweshallsee,thewarrThecompanywillexchangestockworth$17.50foronewarrantplus$12.50.Theopportunitycosttothecompanyis$17.50–$12.50=$5.00.Bondhas50warrants,soonaparbondbasis,opportunitycost=50($5.00)=$250.Whatistheexpectedreturntotheholdersofthebondwithwarrants(ortheexpectedcosttothecompany)ifthewarrantsareexpectedtobeexercisedin5yearswhenP=$17.50?ThecompanywillexchangestocHereisthecashflowtimeline:0 1 4 5 6 19 20+1,000-110 -110 -110 -110 -110 -110

-250

-1,000 -360 -1,110InputthecashflowsinthecalculatortofindIRR=12.93%.Thisisthepre-taxcostofthebondandwarrantpackage.......HereisthecashflowtimelinThecostofthebondwithwarrantspackageishigherthanthe12%costofstraightdebtbecausepartoftheexpectedreturnisfromcapitalgains,whichareriskierthaninterestincome.Thecostislowerthanthecostofequitybecausepartofthereturnisfixedbycontract.Thecostofthebondwithwarr20-year,10%annualcoupon,callableconvertiblebondwillsellatits$1,000parvalue;straightdebtissuewouldrequirea12%coupon.Callthebondswhenconversionvalue>$1,200.P0=$10;D0=$0.74;g=8%.Conversionratio=CR=80shares.Assumethefollowingconvertiblebonddata:20-year,10%annualcoupon,caWhatconversionprice(Pc)isbuiltintothebond?Theconversionpriceistypicallyset10%to30%abovethestockpriceontheissuedate.$1,00080

Pc = ==$12.50.Parvalue#SharesreceivedWhatconversionprice(Pc)isExamplesofrealconvertiblebondsissuedbyInternetcompaniesIssuerABCNETDoubleClickMindspringNetBankPSINetSportsLSizeofissue$1,250mil55mil173mil250mil180mil100mil400mil150milCvtPrice$156.0518.3474.8116562.535.6762.3665.12Priceatissue$122168413460325552ExamplesofrealconvertiblebWhatis(1)theconvertible’sstraightdebtvalueand(2)theimpliedvalueoftheconvertibilityfeature?PVFV20 12 1001000Solution:-850.61I/YRPMTNStraightdebtvalue:Whatis(1)theconvertible’sBecausetheconvertibleswillsellfor$1,000,theimpliedvalueoftheconvertibilityfeatureis $1,000–$850.61=$149.39. =$1.87pershare.Theconvertibilityvaluecorrespondstothewarrantvalueinthepreviousexample.ImpliedConvertibilityValue$149.3980sharesBecausetheconvertibleswillConversionvalue=Ct=CR(P0)(1+g)t.t=0 C0 =80($10)(1.08)0=$800.t=10 C10 =80($10)(1.08)10 =$1,727.14.

Whatistheformulaforthebond’sexpectedconversionvalueinanyyear?Conversionvalue=Ct=CR(P0Thefloorvalueisthehigherofthestraightdebtvalueandtheconversionvalue.Straightdebtvalue0=$850.61.C0=$800.FloorvalueatYear0=$850.61.Whatismeantbythefloorvalueofaconvertible?ThefloorvalueisthehigherStraightdebtvalue10=$887.00.C10=$1,727.14.Floorvalue10=$1,727.14.Convertiblewillgenerallysellaboveitsfloorvaluepriortomaturitybecauseconvertibilityoptionhasanadditionalvalue.Straightdebtvalue10=$887.0ThefirmintendstoforceconversionwhenC=1.2($1,000)=$1,200.Whenistheissueexpectedtobecalled?PVFV

8-80001200Solution:N=5.27I/YRPMTNThefirmintendstoforceconvWhatistheconvertible’sexpectedcostofcapitaltothefirm?AssumeconversioninYear5at$1,200.0 1 2 3 4 51,000 -100-100 -100 -100-100

-1,200

-1,300InputthecashflowsinthecalculatorandsolveforIRR=13.08%.Whatistheconvertible’sexpeForconsistency,needkd<kc<ke.Why?Theconvertiblebond’sriskisablendoftheriskofdebtandequity,sokcshouldbeinbetweenthecostofdebtandequity.Doesthecostoftheconvertibleappeartobeconsistentwiththeriskinessoftheissue?Forconsistency,needkd<kckd=12%andkc=13.08%.ks=+g =+0.08

=16.0%.Sincekcisbetweenkdandks,theconsistencyrequirementismet.Checkthevalues:D0(1+g)P0$0.74(1.08)$10kd=12%andkc=13.08%.CheckThefirm’sfutureneedsforcapital:Exerciseofwarrantsbringsinnewequitycapitalwithouttheneedtoretirelow-coupondebt.Conversionbringsinnonewfunds,andlow-coupondebtisgonewhenbondsareconverted.However,debtratioislowered,sonewdebtcanbeissued.Besidescost,whatotherfactorsshouldbeconsidered?Thefirm’sfutureneedsforcaDoesthefirmwanttocommitto20yearsofdebt?Conversionremovesdebt,whiletheexerciseofwarrantsdoesnot.Ifstockpricedoesnotriseovertime,thenneitherwarrantsnorconvertibleswouldbeexercised.Debtwouldremainoutstanding.DoesthefirmwanttocommittPreferredstockLeasingWarrantsConvertiblesRecentinnovationsCHAPTER20

HybridFinancing:PreferredStock,Leasing,Warrants,andConvertiblesPreferredstockCHAPTER20

HybrLeasingLeasingissometimesreferredtoas“offbalancesheet”financingifaleaseisnot“capitalized.”Inotherwords,itisnotshownonthebalancesheet.Leasingisasubstitutefordebtfinancingand,thus,usesupafirm’sdebtcapacity.(More...)LeasingLeasingissometimesreCapitalleasesaredifferentfromoperatingleases:Capitalleasesdonotprovideformaintenanceservice.Capitalleasesarenotcancelable.Capitalleasesarefullyamortized.CapitalleasesaredifferentfAnalysis:Leasevs.Borrow-and-BuyData:Newmachinecosts$1,200,000.3-yearMACRSclasslife;4-yeareconomiclife.Taxrateof40%.kd=10%.(More...)Analysis:Leasevs.Borrow-anMaintenanceof$25,000/year,payableatbeginningofeachyear.ResidualvalueinYear4of$125,000.4-yearleaseincludesmaintenance.Leasepaymentis$340,000/year,payableatbeginningofeachyear.Maintenanceof$25,000/year,pDepreciationScheduleDepreciablebasis=$1,200,000 MACRS Depreciation End-of-YearYear Rate Expense BookValue1 0.33 $396,000 $804,0002 0.45 540,000 264,0003 0.15 180,000 84,0004 0.07

84,000 0

1.00

$1,200,000DepreciationScheduleDepreciabInaleaseanalysis,whatdiscountrateshouldcashflowsbediscountedat?Sincecashflowsinaleaseanalysisareevaluatedonanafter-taxbasis,weshouldusetheafter-taxcostofborrowing.Previously,weweretoldthecostofdebt,kd,was10%.Therefore,weshoulddiscountcashflowsat6%.A-T

kd=10%(1–T)=10%(1–0.4)=

6%.Inaleaseanalysis,whatdiscCostofOwningAnalysis

(InThousands)Costofasset (1,200.0)Dep.taxsavings1 158.4 216.0 72.0 33.6Maint.(AT)2 (15.0) (15.0)(15.0) (15.0)Res.value(AT)3 ______ _____ _____ _____ 75.0Netcashflow (1,215.0) 143.4 201.0 57.0 108.6PVcostofowning(@6%)=-$766,948.01234(More...)CostofOwningAnalysis

(InThNotes:1 Depreciationisataxdeductibleexpense,soitproducesataxsavingsofT(Depreciation).Year1=0.4($396)=$158.4.2 Eachmaintenancepaymentof$25isdeductiblesotheafter-taxcostoftheleaseis(1–T)($25)=$15.3 Theendingbookvalueis$0sothefull$125salvage(residual)valueistaxed.Notes:CostofLeasingAnalysis

(InThousands)Leasepmt(AT)1 -204 -204 -204 -204PVcostofleasing(@6%)=-$749,294.Note:1Eachleasepaymentof$340isdeductible,sotheafter-taxcostoftheleaseis(1–T)($340)=-$204.01234CostofLeasingAnalysis

(InTNetAdvantageofLeasingNAL =– =$766,948–$749,294 =$17,654.PVcostofowningPVcostofleasingSincethecostofowningoutweighsthecostofleasing,thefirmshouldlease.NetAdvantageofLeasingPVcosSupposecomputer’sresidualvaluecouldbeaslowas$0orashighas$250,000,butexpectedvalueis$125,000.HowcouldtheriskinessoftheSVbeincorporatedintheanalysis?Whateffectwouldthishaveonleasedecision?Toaccountforrisk,therateusedtodiscounttheSVwouldbeincreased;therefore,thecostofowningwouldbeevenhigher.Leasingbecomesevenmoreattractive.Supposecomputer’sresidualvaWhateffectwouldacancellationclausehaveontheriskinessofthelease?Acancellationclauselowerstheriskoftheleasetothelessee,butincreasestherisktothelessor.WhateffectwouldacancellatiPreferreddividendsarefixed,buttheymaybeomittedwithoutplacingthefirmindefault.Mostpreferredstocksprohibitthefirmfrompayingcommondividendswhenthepreferredisinarrears.Usuallycumulativeuptoalimit.Howdoespreferredstockdifferfromcommonequityanddebt?Preferreddividendsarefixed,Dividendsareindexedtotherateontreasurysecuritiesinsteadofbeingfixed.ExcellentS-Tcorporateinvestment:Only30%ofdividendsaretaxabletocorporations.Thefloatingrategenerallykeepsissuetradingnearpar.Whatisfloatingratepreferred?DividendsareindexedtotherHowever,iftheissuerisrisky,thefloatingratepreferredstockmayhavetoomuchpriceinstabilityfortheliquidassetportfoliosofmanycorporateinvestors.However,iftheissuerisriskAwarrantisalong-termcalloption.Aconvertibleconsistsofafixedratebondplusacalloption.Howcanaknowledgeofcalloptionshelponeunderstandwarrantsandconvertibles?Awarrantisalong-termcallP0=$10.kdof20-yearannualpaymentbondwithoutwarrants=12%.50warrantswithanexercisepriceof$12.50eachareattachedtobond.Eachwarrant’svaluewillbe$1.50.Giventhefollowingfacts,whatcouponratemustbesetonabondwithwarrantsifthetotalpackageistosellfor$1,000?P0=$10.GiventhefollowingfStep1:CalculateVBondVPackage=VBond+VWarrants=$1,000.VWarrants=50($1.50)=$75.VBond+$75 =$1,000VBond =$925.Step1:CalculateVBondVPackaStep2:FindCouponPaymentandRateNI/YRPVPMTFV2012-9251000Solution:110Therefore,therequiredcouponrateis$110/$1,000=11%.Step2:FindCouponPaymentaThepackagewouldactuallyhavebeenworth Vpackage=$925+50($2.50)=$1,050, whichis$50morethantheactualsellingprice.Ifafterissuethewarrantsimmediatelysellfor$2.50each,whatwouldthisimplyaboutthevalueofthepackage?ThepackagewouldactuallyhavThefirmcouldhavesetlowerinterestpaymentswhosePVwouldbesmallerby$50perbond,oritcouldhaveofferedfewerwarrantswithahigherexerciseprice.Currentstockholdersaregivingupvaluetothewarrantholders.ThefirmcouldhavesetlowerGenerally,awarrantwillsellintheopenmarketatapremiumaboveitstheoreticalvalue(itcan’tsellforless).Therefore,warrantstendnottobeexerciseduntiljustbeforetheyexpire.Assumethatthewarrantsexpire10yearsafterissue.Whenwouldyouexpectthemtobeexercised?Generally,awarrantwillsellInastepped-upexerciseprice,theexercisepriceincreasesinstepsoverthewarrant’slife.Becausethevalueofthewarrantfallswhentheexercisepriceisincreased,step-upprovisionsencouragein-the-moneywarrantholderstoexercisejustpriortothestep-up.Sincenodividendsareearnedonthewarrant,holderswilltendtoexercisevoluntarilyifastock’sdividendrisesenough.Inastepped-upexercisepriceWhenexercised,eachwarrantwillbringintheexerciseprice,$12.50.Thisisequitycapitalandholderswillreceiveoneshareofcommonstockperwarrant.Theexercisepriceistypicallysetat10%to30%abovethecurrentstockpriceontheissuedate.Willthewarrantsbringinadditionalcapitalwhenexercised?Whenexercised,eachwarrantwNo.Asweshallsee,thewarrantshaveacostthatmustbeaddedtothecouponinterestcost.Becausewarrantslowerthecostoftheaccompanyingdebtissue,shouldalldebtbeissuedwithwarrants?No.Asweshallsee,thewarrThecompanywillexchangestockworth$17.50foronewarrantplus$12.50.Theopportunitycosttothecompanyis$17.50–$12.50=$5.00.Bondhas50warrants,soonaparbondbasis,opportunitycost=50($5.00)=$250.Whatistheexpectedreturntotheholdersofthebondwithwarrants(ortheexpectedcosttothecompany)ifthewarrantsareexpectedtobeexercisedin5yearswhenP=$17.50?ThecompanywillexchangestocHereisthecashflowtimeline:0 1 4 5 6 19 20+1,000-110 -110 -110 -110 -110 -110

-250

-1,000 -360 -1,110InputthecashflowsinthecalculatortofindIRR=12.93%.Thisisthepre-taxcostofthebondandwarrantpackage.......HereisthecashflowtimelinThecostofthebondwithwarrantspackageishigherthanthe12%costofstraightdebtbecausepartoftheexpectedreturnisfromcapitalgains,whichareriskierthaninterestincome.Thecostislowerthanthecostofequitybecausepartofthereturnisfixedbycontract.Thecostofthebondwithwarr20-year,10%annualcoupon,callableconvertiblebondwillsellatits$1,000parvalue;straightdebtissuewouldrequirea12%coupon.Callthebondswhenconversionvalue>$1,200.P0=$10;D0=$0.74;g=8%.Conversionratio=CR=80shares.Assumethefollowingconvertiblebonddata:20-year,10%annualcoupon,caWhatconversionprice(Pc)isbuiltintothebond?Theconversionpriceistypicallyset10%to30%abovethestockpriceontheissuedate.$1,00080

Pc = ==$12.50.Parvalue#SharesreceivedWhatconversionprice(Pc)isExamplesofrealconvertiblebondsissuedbyInternetcompaniesIssuerABCNETDoubleClickMindspringNetBankPSINetSportsLSizeofissue$1,250mil55mil173mil250mil180mil100mil400mil150milCvtPrice$156.0518.3474.8116562.535.6762.3665.12Priceatissue$122168413460325552ExamplesofrealconvertiblebWhatis(1)theconvertible’sstraightdebtvalueand(2)theimpliedvalueoftheconvertibilityfeature?PVFV20 12 1001000Solution:-850.61I/YRPMTNStraightdebtvalue:Whatis(1)theconvertible’sBecausetheconvertibleswillsellfor$1,000,theimpliedvalueoftheconvertibilityfeatureis $1,000–$850.61=$149.39. =$1.87pershare.Theconvertibilityvaluecorrespondstothewarrantvalueinthepreviousexample.ImpliedConvertibilityValue$149.3980sharesBecausetheconvertibleswillConversion