《财务管理基础第13版》相关章节答案.pptVIP

O V B S O I E O V B S O I E Chapter 17: Capital Structure Determination SOLUTIONS TO SELF-CORRECTION PROBLEMS 1. a. Qwert Typewriter Company: Net operating income $ 360,000 ko Overall capitalization rate ÷ 0.18 Total value of the firm (B + S) Market value of debt (50%) Market value of stock (50%) Net operating income Interest on debt (13%) Earnings available to common shareholders (O – I) $2,000,000 1,000,000 $1,000,000 $ 360,000 130,000 $ 230,000 2% of $230,000 = $4,600 Implied equity capitalization rate, ke = E/S = $230,000/$1,000,000 = 23 percent b. Yuiop Typewriters, Inc.: Net operating income $ 360,000 ko Overall capitalization rate ÷ 0.18 Total value of the firm (B + S) Market value of debt (20%) Market value of stock (80%) Net operating income Interest on debt (13%) Earnings available to common shareholders (O – I) $2,000,000 400,000 $1,600,000 $ 360,000 52,000 $ 308,000 Implied equity capitalization rate, ke = E/S = $308,000/$1,600,000 = 19.25 percent Yuiop has a lower equity capitalization rate than Qwert, because Yuiop uses less debt in its capital structure. As the equity capitalization rate is a linear function of the debt-to- equity ratio when we use the net operating income approach, the decline in equity capitalization rate exactly offsets the disadvantage of not employing so much in the way of “cheaper” debt funds. 182 = + = + = + of Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition, Instructor’s Manual 2. Value of firm if unlevered: Earnings before interest and taxes Interest Earnings before taxes Taxes (40 percent) Earnings after taxes $ 3,000,000 0 $ 3,000,000 1,200,000 $ 1,800,000 Equity capitalization rate, ke ÷ 0.18 Value of the firm (unlevered) Value with $4 million in debt: $10,000,000 Value of levered firm = Value of firm if unlevered $10,000,000 $11,600,000 Present value of tax-shield benefits of debt ($4,000,000) (0.40) Value with $7 million in debt: $10,000,0