资本成本,公司财务和投资理论外文翻译.docVIP

外文翻译 原文 The Cost of Capital, Corporation Finance and Theory of Investment Material Source: http://ww.jstor.or Author: Franco Modigliani; Merton H. Miller A. Capital Structure and Investment Policy On the basis of our propositions with respect to cost of capital and financial structure (and for the moment neglecting tans), we can coercive the following simple rule for optimal investment policy by the firm: Proposition III. If a firm in class is acting in the best interest of the stockholders at the time of the decision, it will exploit an investment opportunity if and only if the rate of return on the investment, say , is as large as or larger than . That is, the cut-off point for investment in the firm will in all cases be and will be completely unaffected by the type of security used to finance the investment. Equivalently, we may say that regardless of the financing used, the marginal cost of capital to a firm is equal to the average cost of capital, which is in turn equal to the capitalization rate for an unlevered stream in the class to which the firm belongs. To establish this result we will consider the three major financing alternatives open to the firm-bonds, retained earnings, and common stock issues-and show that in each case an investment is worth undertaking if, and only if,. Consider first the case of an investment financed by the sale of bonds. We know from Proposition I that the market value of the firm before the investment was undertaken was: (20) And that the value of the common stock was: （21） If now the firm borrows I dollars to finance an investment yielding its market value will become: （22） And the value of its common stock will be: （23） Or using equation 21, （24） Hence To illustrate, suppose the capitalization rate for uncertain streams in the class is 10 per cent and the rate of interest is 4 per cent. Then if a given company had an expected income of 1,000 and if it were financed entirely by common stock we know from Pr