公司理财第五版高等院校双语教材·金融系列-chapter 12.ppt

* * * * * * * * * * * * * * * * * * COPYRIGHT?ZHULI * How changing capital structure affects expected returns Assume debtholders require a return of 8%, and the shareholders require a return of 14%, no corporate tax COPYRIGHT?ZHULI * Assume the firm borrows an additional $97 million and uses the cash to buy back and retire $97 million of its common stock The required return on the package of the debt and equity is unaffected (12.2%), but the change in capital structure does affect the required return on the individual securities COPYRIGHT?ZHULI * What happens when the corporate tax rate is not zero When there are no corporate taxes, the weighted-average cost of capital is unaffected by a change in capital structure. Unfortunately, taxes can complicate the picture. COPYRIGHT?ZHULI * Summary The weighted-average cost of capital is the right discount rate for average-risk capital investment projects. The weighted-average cost of capital is the return the company needs to earn after tax in order to satisfy all its security holders. If the firm increases its debt ratio, both the debt and the equity will become more risky. The debtholders and equityholders require a higher return to compensate for the increased risk. COPYRIGHT?ZHULI * Explicit cost of debt: 债务资金的显性成本 Implicit cost of debt: 债务资金的隐性成本 Corporate tax rate: 企业所得税率 Debtholder: 债权人 Equityholder: 权益所有者、股东 COPYRIGHT?ZHULI * Content Geothermal’s cost of capital The weighted-average cost of capital Measuring capital structure Calculating required rates of return Calculating the weighted-average cost of capital Interpreting the weighted-average cost of capital Valuing entire businesses COPYRIGHT?ZHULI * Just think of the business as a very large project Forecast the business’s operating cash flows (after-tax profits plus depreciation), and subtract the future investments in plant and equipment and in net working capital. The resulting free cash flows can then be discounted back to the present at the we