第十二章风险、资本成本和资本预算.pptVIP

Chapter Outline12.1 The Cost of Equity Capital12.2 Estimation of Beta12.3 Determinants of Beta12.4 Extensions of the Basic Model12.5 Estimating International Paper’s Cost of Capital12.6 Reducing the Cost of Capital12.7 Summary and Conclusions第一页，共三十五页。 What’s the Big Idea?Earlier chapters on capital budgeting focused on the appropriate size and timing of cash flows.This chapter discusses the appropriate discount rate when cash flows are risky.第二页，共三十五页。 Invest in project12.1 The Cost of Equity CapitalFirm withexcess cashShareholder’s Terminal ValuePay cash dividendShareholder invests in financial assetBecause stockholders can reinvest the dividend in risky financial assets, the expected return on a capital-budgeting project should be at least as great as the expected return on a financial asset of comparable risk.A firm with excess cash can either pay a dividend or make a capital investment第三页，共三十五页。 The Cost of EquityFrom the firm’s perspective, the expected return is the Cost of Equity Capital:To estimate a firm’s cost of equity capital, we need to know three things:The risk-free rate, RFThe market risk premium,The company beta,第四页，共三十五页。 ExampleSuppose the stock of Stansfield Enterprises, a publisher of PowerPoint presentations, has a beta of 2.5. The firm is 100-percent equity financed. Assume a risk-free rate of 5-percent and a market risk premium of 10-percent.What is the appropriate discount rate for an expansion of this firm?第五页，共三十五页。 Example (continued) Suppose Stansfield Enterprises is evaluating the following non-mutually exclusive projects. Each costs $100 and lasts one year.ProjectProject bProject’s Estimated Cash Flows Next YearIRRNPV at 30%A2.5$15050%$15.38B2.5$13030%$0C2.5$11010%-$15.38第六页，共三十五页。 Using the SML to Estimate the Risk-Adjusted Discount Rate for Projects An all-equity firm should accept a project whose IRR exceeds the cost of equity capital and reject projects whose IRRs fall short of the cost of capital.Project IRRFirm’s risk (be