公司财务4650606.pptVIP

Adjusted Present Value APV = Base Case NPV + PV Impact Base Case = All equity finance firm NPV PV Impact = all costs/benefits directly resulting from project Adjusted Present Value example: Project A has an NPV of $150,000. In order to finance the project we must issue stock, with a brokerage cost of $200,000. Adjusted Present Value example: Project A has an NPV of $150,000. In order to finance the project we must issue stock, with a brokerage cost of $200,000. Project NPV = 150,000 Stock issue cost = -200,000 Adjusted NPV - 50,000 don’t do the project Adjusted Present Value example: Project B has a NPV of -$20,000. We can issue debt at 8% to finance the project. The new debt has a PV Tax Shield of $60,000. Assume that Project B is your only option. Adjusted Present Value example: Project B has a NPV of -$20,000. We can issue debt at 8% to finance the project. The new debt has a PV Tax Shield of $60,000. Assume that Project B is your only option. Project NPV = - 20,000 Stock issue cost = 60,000 Adjusted NPV 40,000 do the project Adjusted Present Value Example – Rio Corporation APV Adjusted Present Value Example – Rio Corporation APV - continued * * * * Copyright ? 2008 by The McGraw-Hill Companies, Inc. All rights reserved 20- * McGraw Hill/Irwin Chapter 20 Principles of Corporate Finance Ninth Edition Financing and Valuation Slides by Matthew Will Copyright ? 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw Hill/Irwin Topics Covered After Tax WACC Valuing Businesses Using WACC in Practice Adjusted Present Value Your Questions Answered Capital Project Adjustments Adjust the Discount Rate Modify the discount rate to reflect capital structure, bankruptcy risk, and other factors. Adjust the Present Value Assume an all equity financed firm and then make adjustments to value based on financing. After Tax WACC Tax Adjusted Formula After Tax WACC Example - Sangria Corporation The firm has a margina