公司理财第17章

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1、Chapter17:ValuationandCapitalBudgetingfortheLeveredFirmCONCEPTQUESTIONS-CHAPTER1717.1·HowistheAPVmethodapplied?APVisequaltotheNPVoftheproject(i.e.thevalueoftheprojectforanunleveredfirm)plustheNPVoffinancingsideeffects.·WhatadditionalinformationbeyondNPVdoesoneneedtocalculateA

2、PV?NPVoffinancin

3、gsideeffects(NPVF)>17.2·HowistheFTEMethodapplied?FTEcallsforthediscountingofthecashflowsofaprojecttotheequityholderatthecostofequitycapital.·WhatinformationisneededtocalculateFTE?Leveredcashflowandthecostofequitycapital.17.3·HowistheWACCmethodapplied?WACCcallsforthediscountingofunleveredcashf

4、lowsofaproject(UCF)attheweightedaveragecostofcapital,WACC.17.4·WhatisthemaindifferencebetweenAAPVandWACC?WACCisbaseduponatargetdebtrateandAPVisbaseduponthelevelofdebt.·WhatisthemaindifferencebetweentheFTEapproachandthetwootherapproaches?FTEusesleveredcashflowandothermethodsuseunleveredcashflo

5、w.·WhenshouldtheAPVmethodbeused?Whenthelevelofdebtisknownineachfutureperiod.·WhenshouldtheFTEandWACCapproachesbeused?Whenthetargetdebtratioisknown.AnswerstoEnd-of-ChapterProblems17.1a.ThemaximumpricethatHertzshouldbewillingtopayforafleetofcarswithallequityfundingisthepricethatmakestheNPVofthe

6、fleetzero.LetIbethecostofthefleet.ThentheNPVissimplytheoutflows(-I)plusthePVoftheafter-taxearningsplusthePVofthedepreciationtaxshield.B-173AnswerstoEnd-of-ChapterProblemsI=$350,625.29b.APV=Base-case(B/C)NPV+NPVoftheLoanBase-caseNPV:TherearetwowaystodeterminetheB/CNPV.Onewayistocomputeitdirect

7、lyusingtheformulainpartaandsubstituting$325,000forI.Alternatively,NPV=Since,I=$325,000,NPV=$18,285.17NPVoftheLoan:TherearetwowaystocomputetheNPVoftheloan.YoucancomputetheactualNPVoftheloan,oryoucancomputethePVoftheinteresttaxshield.MethodOne:NPV(Loan)=Amountborrowed-PVoftheafter-taxinterestpa

8、yment-PVoftheprincipal=$21,720.34MethodTwo:PV(TaxShield)=Therefore,theAPVis:APV=$18,285.17+$21,720.34=$40,005.51c.UseofthesubsidizedloanwillincreasetheNPVoftheloan.Thus,itwillallowHondatochargemoreforthefleetofcars.TocomputethemaximumpriceHer