财务管理ch07 资本成本.pptVIP

Chapter 07 Required Returns and the Cost of Capital 要求报酬与资本成本 Overall Cost of Capital of the Firm Cost of Capital is the required rate of return on the various types of financing. The overall cost of capital is a weighted average of the individual required rates of return (costs). Market Value of Long-Term Financing Type of Financing Mkt Val Weight Long-Term Debt $ 35M 35% Preferred Stock $ 15M 15% Common Stock Equity $ 50M 50% $ 100M 100% Cost of Debt The cost of debt is the required return on our company’s debt We usually focus on the cost of long-term debt or bonds The required return is best estimated by computing the yield-to-maturity on the existing debt We may also use estimates of current rates based on the bond rating we expect when we issue new debt The cost of debt is NOT the coupon rate Cost of Debt Cost of Debt is the required rate of return on investment of the lenders of a company. ki = kd ( 1 - T ) Determination of the Cost of Debt Assume that Basket Wonders (BW) has $1,000 par value zero-coupon bonds outstanding. BW bonds are currently trading at $385.54 with 10 years to maturity. BW tax bracket is 40%. Determination of the Cost of Debt Cost of Preferred Stock Cost of Preferred Stock is the required rate of return on investment of the preferred shareholders of the company. kP = DP / P0 Determination of the Cost of Preferred Stock Assume that Basket Wonders (BW) has preferred stock outstanding with par value of $100, dividend per share of $6.30, and a current market value of $70 per share. Cost of Equity Approaches Dividend Discount Model Capital-Asset Pricing Model Before-Tax Cost of Debt plus Risk Premium Dividend Discount Model The cost of equity capital, ke, is the discount rate that equates the present value of all expected future dividends with the current market price of the stock. Constant Growth Model The constant dividend growth assumption reduces the model to: ke = ( D1 / P0 ) + g