Chapter_09CapitalBudgetingandRisk公司理财原理.pptVIP

Principles of Corporate Finance Seventh Edition Richard A. Brealey Stewart C. Myers Slides by Matthew Will Chapter 9 McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Capital Budgeting and Risk 9- 2 McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Topics Covered ? Company and Project Costs of Capital ? Measuring the Cost of Equity ? Capital Structure and COC ? Discount Rates for Intl. Projects ? Estimating Discount Rates ? Risk and DCF 9- 3 McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Company Cost of Capital ? A firms value can be stated as the sum of the value of its various assets PV(B) PV(A) PV(AB) value Firm ? ? ? 9- 4 McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Company Cost of Capital 10% nology known tech t, improvemen Cost COC) (Company 15% business existing of Expansion 20% products New 30% ventures e Speculativ Rate Discount Category 9- 5 McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Company Cost of Capital ? A companys cost of capital can be compared to the CAPM required return Required return Project Beta 1.26 Company Cost of Capital 13 5.5 0 SML 9- 6 McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Measuring Betas ? The SML shows the relationship between return and risk ? CAPM uses Beta as a proxy for risk ? Other methods can be employed to determine the slope of the SML and thus Beta ? Regression analysis can be used to find Beta 9- 7 McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Measuring Betas Dell Computer Slope determined from plotting the line of best fit. Price data – Aug 88- Jan 95 Market return (%) Dell return (%) R 2 = .11 B = 1.62 9- 8 McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reser