Ch018国际资本预算.ppt

Chapter Outline Review of Domestic Capital Budgeting The Adjusted Present Value Model Capital Budgeting from the Parent Firm’s Perspective Risk Adjustment in the Capital Budgeting Process Sensitivity Analysis Real Options Review of Domestic Capital Budgeting 1. Identify the SIZE and TIMING of all relevant cash flows on a time line. 2. Identify the RISKINESS of the cash flows to determine the appropriate discount rate. 3. Find NPV by discounting the cash flows at the appropriate discount rate. 4. Compare the value of competing cash flow streams at the same point in time. Review of Domestic Capital Budgeting The basic net present value equation is Review of Domestic Capital Budgeting The NPV rule is to accept a project if NPV ? 0 Review of Domestic Capital Budgeting For our purposes it is necessary to expand the NPV equation. Alternative Formulations CFt Review of Domestic Capital Budgeting We can use CFt = (OCFt)(1 – t) + t Dt The Adjusted Present Value Model Can be converted to adjusted present value (APV) The Adjusted Present Value Model The APV model is a value additivity approach to capital budgeting. Each cash flow that is a source of value to the firm is considered individually. Note that with the APV model, each cash flow is discounted at a rate that is appropriate to the riskiness of the cash flow. Domestic APV Example Consider this project, the timing and size of the incremental after-tax cash flows for an all-equity firm are: Domestic APV Example (continued) Now, imagine that the firm finances the project with $600 of debt at r = 8%. The tax rate is 40%, so they have an interest tax shield worth t×I = .40×$600×.08 = $19.20 each year. Capital Budgeting from the Parent Firm’s Perspective The APV model is useful for a domestic firm analyzing a domestic capital expenditure or for a foreign subsidiary of a MNC analyzing a proposed capital expenditure from the subsidiary’s viewpoint. The APV model is NOT useful for a MNC in analyzing a foreign capital expe