财务管理学及财务知识分析(英文版).pptVIP

10 - * Copyright ? 2001 by Harcourt, Inc. All rights reserved. CHAPTER 10The Cost of Capital Cost of capital components Accounting for flotation costs WACC Adjusting cost of capital for risk Estimating project risk 第一页，共四十一页。 What types of capital do firms use? Debt Preferred stock Common equity: Retained earnings New common stock 第二页，共四十一页。 Stockholders focus on A-T CFs. Therefore, we should focus on A-T capital costs, i.e., use A-T costs in WACC. Only kd needs adjustment. Should we focus on before-tax or after-tax capital costs? 第三页，共四十一页。 The cost of capital is used primarily to make decisions that involve raising new capital. So, focus on today’s marginal costs (for WACC). Should we focus on historical (embedded) costs or new (marginal) costs? 第四页，共四十一页。 A 15-year, 12% semiannual bond sells for $1,153.72. What’s kd? 60 60 + 1,000 60 0 1 2 30 i = ? 30 -1153.72 60 1000 5.0% x 2 = kd = 10% N I/YR PV FV PMT -1,153.72 ... INPUTS OUTPUT 第五页，共四十一页。 Component Cost of Debt Interest is tax deductible, so kd AT = kd BT(1 – T) = 10%(1 – 0.40) = 6%. Use nominal rate. Flotation costs small. Ignore. 第六页，共四十一页。 What’s the cost of preferred stock? Pp = $111.10; 10%Q; Par = $100. Use this formula: 第七页，共四十一页。 Picture of Preferred Stock 2.50 2.50 0 1 2 kp = ? -111.1 ￥ ... 2.50 $111.10 = = . kPer = = 2.25%; kp(Nom) = 2.25%(4) = 9%. DQ kPer $2.50 kPer $2.50 $111.10 第八页，共四十一页。 Note: Preferred dividends are not tax deductible, so no tax adjustment. Just kp. Nominal kp is used. Our calculation ignores flotation costs. 第九页，共四十一页。 Is preferred stock more or less risky to investors than debt? More risky; company not required to pay preferred dividend. However, firms try to pay preferred dividend. Otherwise, (1) cannot pay common dividend, (2) difficult to raise additional funds, (3) preferred stockholders may gain control of firm. 第十页，共四十一页。 Why is yield on preferred lower than kd? Corporations own