习题答案Principles-of-Corporate-Finance第十版-Chapter18.doc

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1、Chapter18-HowMuchShouldaCorporationBorrow?CHAPTER18HowMuchShouldaCorporationBorrow?AnswerstoProblemSets1.Thecalculationassumesthatthetaxrateisfixed,thatdebtisfixedandperpetual,andthatinvestors’personaltaxratesoninterestandequityincomearethesame.2.a.PVtaxshield=TcD=$16.b.TcX20=$8.3.Relativeadvanta

2、geofdebt==Relativeadvantage =4.Afirmwithnotaxableincomesavesnotaxesbyborrowingandpayinginterest.Theinterestpaymentswouldsimplyaddtoitstax-losscarry-forwards.Suchafirmwouldhavelittletaxincentivetoborrow.5.a.Directcostsoffinancialdistressarethelegalandadministrativecostsofbankruptcy.Indirectcostsin

3、cludepossibledelaysinliquidation(EasternAirlines)orpoorinvestmentoroperatingdecisionswhilebankruptcyisbeingresolved.Alsothethreatofbankruptcycanleadtocosts.b.Iffinancialdistressincreasesoddsofdefault,managers’andshareholders’incentiveschange.Thiscanleadtopoorinvestmentorfinancingdecisions.c.Seeth

4、eanswerto5(b).Examplesarethe“games”describedinSection18-3.6.Notnecessarily.Announcementofbankruptcycansendamessageofpoor18-8Chapter18-HowMuchShouldaCorporationBorrow?profitsandprospects.Partofthesharepricedropcanbeattributedtoanticipatedbankruptcycosts,however.7.Moreprofitablefirmshavemoretaxable

5、incometoshieldandarelesslikelytoincurthecostsofdistress.Thereforethetrade-offtheorypredictshigh(book)debtratios.Inpracticethemoreprofitablecompaniesborrowleast.8.Debtratiostendtobehigherforlargerfirmswithmoretangibleassets.Debtratiostendtobelowerformoreprofitablefirmswithhighermarket-to-bookratio

6、s.9.Whenacompanyissuessecurities,outsideinvestorsworrythatmanagementmayhaveunfavorableinformation.Ifsothesecuritiescanbeoverpriced.Thisworryismuchlesswithdebtthanequity.Debtsecuritiesaresaferthanequity,andtheirpriceislessaffectedifunfavorablenewscomesoutlater.Acompanythatcanborrow(withoutincurrin

7、gsubstantialcostsoffinancialdistress)usuallydoesso.Anissueofequitywouldbereadas“badnews”byinvestors,andthenewstockcouldbesoldonlyatadiscounttothepreviousmarketprice.10.a.Thecumulativerequirementforexternalfinancing.b.M