财务管理基础 第13版 教学课件Chap011_PPT.ppt

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1、CostofCapital11ChapterOutlineCostofcapitalanditsimportanceDiscountratesusedtoanalyzeinvestmentsValuationandapplicationtobonds,preferredstock,andcommonstockMinimumcostofcapitalIncreaseincostofcapitalwithincreaseinutilizationoffinances2CostofCapitalIncorporatefinance,aninv

2、estmentmadeisforananticipatedreturninfutureKnowingtheappropriatediscountrateisvitalReturnoninvestmentsmust,intheleast,garnerareturnequalingthecostsincurredtoacquireit–theminimumacceptablereturn3TheOverallConceptAninvestment:Shouldnotbejudgedagainstthespecificmeansoffinan

3、cingusedtoimplementitThiswouldmakeinvestmentselectiondecisionsinconsistentWithalow-costdebt,mustbechosencarefullyMayresultinincreaseoftheoverallriskMaymakealleventualformsoffinancingmoreexpensive4CostofCapital–BakerCorporation5CostofDebtMeasuredbyinterestrate,oryield,pai

4、dtobondholdersExample:$1,000bondpaying$100annualinterest–10%yieldCalculationiscomplexdiscountrateorpremiumfromparvaluebondsTodeterminethecostofanewdebtinthemarketplace:Thefirmwillcomputetheyieldonitscurrentlyoutstandingdebt6ApproximateYieldtoMaturity(Y')Annualinterestpay

5、ment+Numberofyearstomaturity0.6(Priceofthebond)+0.4(Principalpayment)Assuming:Y'=$101.50+20.6($940)+.4($1,000)=$101.50+20$564+$400Y’=$101.50+3=$104.50=10.84%$964$964Principalpayment–Priceofthebond$1,000-$940607AdjustingYieldforTaxConsiderationsYieldtomaturityindicatesho

6、wmuchthefirmhastopayonabefore-taxbasisInterestpaymentonadebtisatax-deductibleexpenseDuetothis,thetruecostislessthanthestatedcost8AdjustingYieldforTaxConsiderations(cont’d)Theafter-taxcostofdebtiscalculatedasshownbelow:Assuming:9CostofPreferredStockAconstantannualpayment

7、withnomaturitydatefortheprincipalpaymentComputedbydividingdividendpaymentbynetpriceorproceedsreceivedRepresentstherateofreturntopreferredstockholdersandannualcosttocorporationforissuePreferredstockdividendisnotatax-deductibleexpense,withnodownwardtaxadjustmentTheproceeds

8、tothefirmequalssellingpriceinthemarketminusflotationcost10CostofPreferredStock(cont’d)Thecostofpreferre