财务管理ch07 资本成本

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1、Chapter07RequiredReturnsandtheCostofCapital要求报酬与资本成本OverallCostofCapitaloftheFirmCostofCapitalistherequiredrateofreturnonthevarioustypesoffinancing.Theoverallcostofcapitalisaweightedaverageoftheindividualrequiredratesofreturn(costs).TypeofFinancingMktValWeightLong-TermDebt$35M35%Prefer

2、redStock$15M15%CommonStockEquity$50M50%$100M100%MarketValueofLong-TermFinancingCostofDebtThecostofdebtistherequiredreturnonourcompany’sdebtWeusuallyfocusonthecostoflong-termdebtorbondsTherequiredreturnisbestestimatedbycomputingtheyield-to-maturityontheexistingdebtWemayalsouseestimateso

3、fcurrentratesbasedonthebondratingweexpectwhenweissuenewdebtThecostofdebtisNOTthecouponrateCostofDebtistherequiredrateofreturnoninvestmentofthelendersofacompany.ki=kd(1-T)CostofDebtP0=Ij+Pj(1+kd)jSnj=1AssumethatBasketWonders(BW)has$1,000parvaluezero-couponbondsoutstanding.BWbondsarecurre

4、ntlytradingat$385.54with10yearstomaturity.BWtaxbracketis40%.DeterminationoftheCostofDebtDeterminationoftheCostofDebtCostofPreferredStockistherequiredrateofreturnoninvestmentofthepreferredshareholdersofthecompany.kP=DP/P0CostofPreferredStockAssumethatBasketWonders(BW)haspreferredstocko

5、utstandingwithparvalueof$100,dividendpershareof$6.30,andacurrentmarketvalueof$70pershare.DeterminationoftheCostofPreferredStockDividendDiscountModelCapital-AssetPricingModelBefore-TaxCostofDebtplusRiskPremiumCostofEquityApproachesDividendDiscountModelThecostofequitycapital,ke,isthedisc

6、ountratethatequatesthepresentvalueofallexpectedfuturedividendswiththecurrentmarketpriceofthestock.D1D2D(1+ke)1(1+ke)2(1+ke)+...++P0=¥¥ConstantGrowthModelTheconstantdividendgrowthassumptionreducesthemodelto:ke=(D1/P0)+gAssumesthatdividendswillgrowattheconstantrate“g”forever.AssumethatBas

7、ketWonders(BW)hascommonstockoutstandingwithacurrentmarketvalueof$64.80pershare,currentdividendof$3pershare,andadividendgrowthrateof8%forever.DeterminationoftheCostofEquityCapitalCapitalAssetPricingModelThecostofequitycapital,ke,isequatedtotherequiredrateofreturninmarketequilib