(chapter 8-11)(公司理财-对外经济贸易大学)new

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1、CORPORATEFINANCIALCORPORATEFINANCIALMANAGEMENTMANAGEMENTPARTIIICAPITALINVESTMENTDECISION(chapter8-11)Chapter11Chapter11TheCostofCapitalIntroductionIntroduction1.WeightedAverageCostofCapital2.ComponentCosts3.MarginalCostofCapital1.1.WeightedAverageCostofCapitalòCostofcapital–Whatthefirmmustpayfo

2、rcapital–Thereturnrequiredbyinvestors–Minimumrateofreturnrequiredonnewinvestments–Determinedinthecapitalmarkets–Dependsontheriskassociatedwiththefirm’sactivitiesEqualtotheequilibriumrateofreturndemandedbyinvestorsinthecapitalmarketsforsecuritiesofthatdegreeofrisk4ContinuedContinued……òWeightedAv

3、erageCostofCapital:ka–DiscountrateusedwhencomputingtheNPVofaprojectofaveragerisk–HurdlerateusedinconjunctionwiththeIRR–Basedontheafter-taxcostofcapital–Obtainedfromtheweightedcostsoftheindividualcomponents–Weightsequaltotheproportionofeachofthecomponentsinthetargetcapitalstructure5ContinuedCont

4、inued……EBP()()f()k=k+k+kaeipB+E+PB+E+PB+E+PfffExamplewith$3inbonds,$6inequity,and$1inpreferredstock631k=()k+()k+()kaeip3+6+13+6+13+6+1k=W(k)+W(k)+W(k)eipk=60%(k)+30%(k)+10%(k)eipContinuedContinued……òRiskvs.requiredreturntrade-off:Requiredreturn=rf+Riskpremium–rf=risk-freerateoRealrateofreturnde

5、terminedbysupplyanddemandoPlusapremiumfortheeffectsofinflation–ComponentsoftheriskpremiumoBusinessrisk-associatedwiththeamountofoperatingleverageoFinancialrisk-associatedwiththeuseoffinancialleverageoMarketabilityrisk-referstotheabilitytoquicklybuyandselloInterestraterisk-arisingfromchangesinin

6、terestratesoSeniorityrisk-duetothepriorityofasecurity’sclaimonassetsContinuedContinued……RequiredReturn%xCommonStockxLowQualityCorpDebtxHighQualityP/SxHighQualityCorpDebtxL-TGovernmentDebtxS-TGovernmentDebtrfRisk2.ComponentCostsòCostofDebtk=k(1–T)InterestistaxdeductibleidòCostofPreferredStockk=D

7、/PppnetDividendsarenottaxdeductiblePnet:NetofissuancecostsContinuedContinued……òCostofinternalequitycapital–k=D/P+ge10CostofR/Eusingconstantdividendg–k=r+β(r–r)CAPMefjmf–RiskpremiumondebtapproachAdd%òCostofexternalequityk′=D/P+gP=P