公司理财chap4分析.ppt

* * * * * Growing Annuity A growing stream of cash flows with a fixed maturity 0 1 C 2 C×(1+g) 3 C ×(1+g)2 T C×(1+g)T-1 Growing Annuity: Example A defined-benefit retirement plan offers to pay $20,000 per year for 40 years and increase the annual payment by 3% each year. What is the present value at retirement if the discount rate is 10%? 0 1 $20,000 2 $20,000×(1.03) 40 $20,000×(1.03)39 You are evaluating an income generating property. Net rent is received at the end of each year. The first years rent is expected to be $8,500, and rent is expected to increase 7% each year. What is the present value of the estimated income stream over the first 5 years if the discount rate is 12%? 0 1 2 3 4 5 $34,706.28 Perpetuity A constant stream of cash flows that lasts forever 0 … 1 C 2 C 3 C Perpetuity: Example What is the value of a British consol that promises to pay ￡15 every year for ever? The interest rate is 10-percent. 0 … 1 ￡15 2 ￡15 3 ￡15 Growing Perpetuity A growing stream of cash flows that lasts forever 0 … 1 C 2 C×(1+g) 3 C ×(1+g)2 Growing Perpetuity: Example The expected dividend next year is $1.30, and dividends are expected to grow at 5% forever. If the discount rate is 10%, what is the value of this promised dividend stream? 0 … 1 $1.30 2 $1.30×(1.05) 3 $1.30 ×(1.05)2 4.5 What Is a Firm Worth? Conceptually, a firm should be worth the present value of the firm’s cash flows. The tricky part is determining the size, timing, and risk of those cash flows. Quick Quiz What is PVIF, FVIF, PVIFA and FVIFA? What is the Net Present Value of an investment? What is an EAR, and how is it computed from APR? What is a perpetuity? An annuity? * * * * * * * * * It may be good at this point to discuss the difficulty of calculating time periods and interest rates, particularly without the help of a financial calculator. * * * * * * * * * * * It is important to note to students that in this example the year 1 cash flow