版權(quán)說(shuō)明:本文檔由用戶提供并上傳,收益歸屬內(nèi)容提供方,若內(nèi)容存在侵權(quán),請(qǐng)進(jìn)行舉報(bào)或認(rèn)領(lǐng)
文檔簡(jiǎn)介
CostofCapital
11-2ChapterOutlineCostofcapitalanditsimportanceDiscountratesusedtoanalyzeinvestmentsValuationandapplicationtobonds,preferredstock,andcommonstockMinimumcostofcapitalIncreaseincostofcapitalwithincreaseinutilizationoffinances11-3CostofCapitalIncorporatefinance,aninvestmentmadeisforananticipatedreturninfutureKnowingtheappropriatediscountrateisvitalCostofacquiringthefundsEarningatleastareturnequalingthecostsincurredtoacquireit–theminimumacceptablereturn11-4TheOverallConceptAninvestment:ShouldnotbejudgedagainstthespecificmeansoffinancingusedtoimplementitThiswouldmakeinvestmentselectiondecisionsinconsistentWithalow-costdebtmustbechosencarefullyMayresultinincreaseoftheoverallriskMaymakealleventualformsoffinancingmoreexpensive11-5DeterminationofCostofCapitalBestunderstoodbycapitalstructureofafirmTheafter-taxcostsoftheindividualsourcesoffinancingaremultipliedbytheweightsassignedtothemSumofallthesegivestheweightedaveragecost11-6CostofDebtMeasuredbyinterestrate,oryield,paidtobondholdersExample:$1,000bondpaying$100annualinterest–10%yieldCalculationiscomplexifabondispricedatdiscountorpremiumfromparvalueTodeterminethecostofanewdebtinthemarketplace:Thefirmwillcomputetheyieldonitscurrentlyoutstandingdebt11-7ApproximateYieldtoMaturity(Y')Annualinterestpayment+Numberofyearstomaturity0.6(Priceofthebond)+0.4(Principalpayment)Assuming:Annualinterestpayment=$101.50;Principalpayment=$1,000;Priceofthebond=$940;Numberofyearstomaturity=20Y'
=$101.50+20.6($940)+.4($1,000)
=$101.50+20$564+$400
Y’=$101.50+3=$104.50=10.84%$964$964Principalpayment–Priceofthebond$1,000-$9406011-8AdjustingYield
forTaxConsiderationsYieldtomaturityindicateshowmuchthefirmhastopayonabefore-taxbasisInterestpaymentonadebtisatax-deductibleexpenseDuetothis,thetruecostislessthanthestatedcost11-9AdjustingYield
forTaxConsiderations(cont’d)Theafter-taxcostofdebtiscalculatedasshownbelow:
Kd(Costofdebt)=Y(1–T)Assuming:Yield=10.84%andTaxrate=35%
Kd(Costofdebt)=Y(1–T) Kd(Costofdebt)=10.84%(1–0.35) =10.84%×0.65 =7.05%11-10CostofPreferredStockAconstantannualpaymentwithnomaturitydatefortheprincipalpaymentComputedbydividingdividendpaymentbynetpriceorproceedsreceivedRepresentstherateofreturntopreferredstockholdersandannualcosttocorporationforissuePreferredstockdividendisnotatax-deductibleexpense,withnodownwardtaxadjustmentTheproceedstothefirmequalssellingpriceinthemarketminusflotationcost11-11CostofPreferredStock(cont’d)Thecostofpreferredstockisasfollows:Where,=Costofpreferredstock;=Annualdividendonpreferredstock;=Priceofpreferredstock;F=Floatation,orsellingcostAssumingannualdividendas$10.50,preferredstockis$100,andflotation,orsellingcostis$4.Effectivecostis:=$10.50=$10.50=10.94%$100-$4$9611-12CostofCommonEquity–
ValuationApproachIndeterminingthecostofcommonstock,thefirmmustbesensitivetopricingandperformancedemandsofcurrentandfuturestockholdersDividendvaluationmodel:Where,=Priceofthestocktoday;=Dividendattheendoftheyear(orperiod);=Requiredrateofreturn;g=ConstantgrowthrateindividendsAssuming=$2;=$40andg=7%,equals12percent=$2+7%=5%+7%=12%$4011-13AlternateCalculationoftheRequiredReturnonCommonStockCapitalassetpricingmodel(CAPM)Where:=Requiredreturnoncommonstock;=Risk-freerateofreturn,usuallythecurrentrateonTreasurybillsecurities;=Betacoefficient(measuresthehistoricalvolatilityofanindividualstock’sreturnrelativetoastockmarketindex;=returninthemarketasmeasuredbyanapproximateindexAssuming=5.5%,=12%,=1.0,wouldbe:=5.5%+1.0(12%-5.5%)=5.5%+1.0(6.5%)=5.5%+6.5%=12%11-14CostofRetainedEarningsSourcesofcapitalforcommonstockequity:Purchaserofthenewshares–externalsourceRetainedearnings–internalsourceRepresentthepresentandpastearningsofthefirmminuspreviouslydistributeddividendsBelongtothecurrentstockholders–maybepaidintheformofdividendsorreinvestedinthefirmReinvestmentsrepresentasourceofequitycapitalsuppliedbythecurrentstockholdersAnopportunitycostisinvolved11-15CostofRetainedEarnings(cont’d)Thecostofretainedearningsisequivalenttotherateofreturnonthefirm’scommoncostrepresentingtheopportunitycostrepresentsboththerequiredrateofreturnoncommonstock,andthecostofequityintheformofretainedearningsAssuming:=Costofcommonequityintheformofretainedearnings=Dividendattheendofthefirstyear,$2=Priceofstocktoday,$40
g=Constantgrowthrateindividends,7%=$2+7%=5%+7%=12%$4011-16CostofNewCommonStockAslightlyhigherreturnthan,representingtherequiredrateofreturnofpresentstockholders,isexpectedNeededtocoverthedistributioncostsofthenewsecurities
Costofcommonequityintheformofretainedearnings=
Costofnewcommonstock11-17CostofNewCommonStock(cont’d)Assuming=$2,=$40,F(Flotationorsellingcosts)=$4andg=7%;
=$2+7%$40-$4=$2+7%$36=5.6%+7%=12.6%11-18OptimalCapitalStructure–WeightingCostsThedesiretoachieveaminimumoverallcostofcapitalCalculateddecisionsarerequiredontheappropriateweightsfor:DebtPreferredstockCommonstockfinancingCapitalmixisdeterminedby:ConsideringthepresentcapitalstructureAscertainingifthecurrentpositionisoptimal11-19OptimalCapitalStructure–WeightingCosts(cont’d)Assessmentofdifferentplans:FirmisabletoinitiallyreduceweightedaveragecostofcapitalwithdebtfinancingBeyondPlanB,continueduseofdebtbecomesunattractiveandgreatlyincreasescostsofsourcesoffinancingCost(After-tax) Weights WeightedCostFinancialPlanA:Debt…………6.5%20%1.3%Equity……….12.080
9.610.9%FinancialPlanB:Debt…………7.0%40%2.8%Equity……….12.5607.5
10.3%FinancialPlanC:Debt…………9.0%60%5.4%Equity……….15.0406.011.4%11-20CostofCapitalCurve11-21DebtasaPercentageofTotalAssets(2010)11-22CapitalAcquisitionand
InvestmentDecisionMakingFinancialcapitalconsistsofbonds,preferredstock,andcommonequityMoneyraisedbysaleofthesesecuritiesandretainedearningsisinvestedin:Therealcapitalofthefirm,thelong-termproductiveassetsofplantandequipmentTominimizecostofequity,afirmmaysellcommonstockwhenpricesarerelativelyhighAbalancebetweendebtandequityisrequiredtoachieveminimumcostofcapital11-23CostofCapitalOverTime 11-24CostofCapitalinthe
CapitalBudgetingDecisionCurrentcostofcapitalforeachsourceoffundsisimportantforcapitalbudgetingdecisionTherequiredrateofreturnwillbetheweightedaveragecostofcapitalThecommonstockvalueofthefirmwillbemaintainedorwillincrease,aslongasthefirmearnsitscostofcapital11-25InvestmentProjectsAvailable
totheBakerCorporation11-26CostofCapitalandInvestmentProjectsfortheBakerCorporation11-27TheMarginalCostofCapitalThemarketmaydemandahighercostofcapitalforeachamountoffundrequiredifalargeamountoffinancingisrequiredEquity(ownership)capitalisrepresentedbyretainedearningsRetainedearningscannotgrowindefinitelyasthefirm’scapitalneedstoexpandRetainedearningsislimitedtotheamountofpastandpresentearningsthatcanberedeployedintoinvestments11-28TheMarginalCostofCapital(cont’d)Assumptions:60%istheamountofequitycapitalafirmmustmaintaintokeepabalancebetweenfixedincomesecuritiesandownershipinterestThefirmhas$23.40millionofretainedearningavailableforinvestmentThereisadequateretainedearningtosupportthecapitalstructureasshownbelow:Assuming:X=Retainedearnings;PercentofretainedearningsinthecapitalstructureWhereXrepresentsthesizeofthecapitalstructurethatretainedearningswillsupportX=$23.40million=$39million.6011-29CostsofCapitalfor
DifferentAmountsofFinancingKmc,inthebottomright-handportionofthetable,representsthemarginalcostofcapital11-30IncreasingMarginalCostofCapitalBothandrepresentthecostofcapitalThemcsubscriptafterKindicatestheincreaseinmarginalcostofcapitalTheincreaseisbecausecommonequityisnowintheformofnewcommonstockratherthanretainedearningsTheafter-taxcostofthenewcommonstockismoreexpensivethanretainedearningsbecauseofflotationcosts11-31IncreasingMarginalCostofCapital(cont’d)Equationforthecostofnewcommonstock:
=$2+7%=$2+7%=5.6%+7%=12.6%$40-$4$36The$50millionfigurecanbederivedthus:Z=Amountoflower-costdebt;PercentofdebtinthecapitalstructureZ=$15million=$50million.30WhereZrepresentsthesizeofthecapitalstructureinwhichlower-costdebtcanbeused11-32CostofCapitalfor
IncreasingAmountsofFinancing11-33Changesinthe
MarginalCostsofCapital11-34MarginalCostofCapital
andBakerCorporationProjects11-35CostofComponents
intheCapitalStructure11-36PerformanceofPAIandtheMarket11-37LinearRegressionofReturns
BetweenPAIandtheMarketTheCAPMisanexpectational(exante)model,andthereisnoguaranteehistoricaldatawillreoc
溫馨提示
- 1. 本站所有資源如無(wú)特殊說(shuō)明,都需要本地電腦安裝OFFICE2007和PDF閱讀器。圖紙軟件為CAD,CAXA,PROE,UG,SolidWorks等.壓縮文件請(qǐng)下載最新的WinRAR軟件解壓。
- 2. 本站的文檔不包含任何第三方提供的附件圖紙等,如果需要附件,請(qǐng)聯(lián)系上傳者。文件的所有權(quán)益歸上傳用戶所有。
- 3. 本站RAR壓縮包中若帶圖紙,網(wǎng)頁(yè)內(nèi)容里面會(huì)有圖紙預(yù)覽,若沒(méi)有圖紙預(yù)覽就沒(méi)有圖紙。
- 4. 未經(jīng)權(quán)益所有人同意不得將文件中的內(nèi)容挪作商業(yè)或盈利用途。
- 5. 人人文庫(kù)網(wǎng)僅提供信息存儲(chǔ)空間,僅對(duì)用戶上傳內(nèi)容的表現(xiàn)方式做保護(hù)處理,對(duì)用戶上傳分享的文檔內(nèi)容本身不做任何修改或編輯,并不能對(duì)任何下載內(nèi)容負(fù)責(zé)。
- 6. 下載文件中如有侵權(quán)或不適當(dāng)內(nèi)容,請(qǐng)與我們聯(lián)系,我們立即糾正。
- 7. 本站不保證下載資源的準(zhǔn)確性、安全性和完整性, 同時(shí)也不承擔(dān)用戶因使用這些下載資源對(duì)自己和他人造成任何形式的傷害或損失。
最新文檔
- 宿舍安全從我做起
- 房屋買賣合同的合同解除與后果
- 城市房屋拆遷權(quán)益保障書(shū)指南
- 水果代銷協(xié)議格式范本模板
- 食堂菌類蔬菜采購(gòu)合同
- 夏季安全無(wú)小事
- 婚姻誓言不再出軌
- 安全評(píng)估招標(biāo)通知分析
- 智慧城市食品監(jiān)控采購(gòu)合同
- 年度采購(gòu)與銷售協(xié)議
- 員工獎(jiǎng)勵(lì)申請(qǐng)單模版
- 如何高效進(jìn)行初中信息技術(shù)學(xué)業(yè)水平考試復(fù)習(xí)
- [精品]大力培育新時(shí)期消防戰(zhàn)斗精神
- 部編版三年級(jí)上語(yǔ)文《讀不完的大書(shū)》教案+反思
- 國(guó)際經(jīng)濟(jì)學(xué)李坤望版ppt01
- 中美會(huì)計(jì)準(zhǔn)則具體差異列表對(duì)比
- 田字格硬筆書(shū)法練字專用A4打印版紅藍(lán)兩色
- 中國(guó)計(jì)量學(xué)院特種設(shè)備安全管理辦法
- 四年級(jí)寫同學(xué)閃光點(diǎn)的作文5篇
- 地質(zhì)勘查技術(shù)服務(wù)合同
- 電氣圖形符號(hào)(經(jīng)典實(shí)用)
評(píng)論
0/150
提交評(píng)論