公司理财培训资料英文版(ppt 27)
罗斯《公司理财Corporate-Finance》(第七版)英文-Ch01课件
2750% Deb50t % 3D0e%bEt quity
The Capital Structure decision can be viewed as how best to slice up a the pie.
5705% Equity
If how you slice the pie affects the size of the pie, then the capital structure decision matters.
investments? 3. How much short-term cash flow does a company need
to pay its bills?
罗斯《公司理财Corporate-Finance》(第七版)英文-Ch01
4
The Balance-Sheet Model of the Firm
罗斯《公司理财Corporate-Finance》(第七版)英文-Ch01
9
Hypothetical Organization Chart
Board of Directors Chairman of the Board and Chief Executive Officer (CEO)
President and Chief Operating Officer (COO)
Shareholders’ Equity
罗斯《公司理财Corporate-Finance》(第七版)英文-Ch01
8
Capital Structure
The value of the firm can be thought of as a pie.
The goal of the manager is to increase the size of the pie.
公司理财英文版课件Chap016.ppt
16-5
The Effect of Leverage
• How does leverage affect the EPS and ROE of a firm?
• If we have a really bad year, we still have to pay our fixed costs and we have less left over for our stockholders
• Leverage amplifies the variation in both EPS and ROE
16-8
Break-Even EBIT
• Find EBIT where EPS is the same under both the current and proposed capital structures
• If we expect EBIT to be greater than the break-even point, then leverage may be beneficial to our stockholders
Chapter 16
Financial Leverage and Capital Structure Policy
McGraw-Hill/Irwin
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Key Concepts and Skills
公司理财原版英文课件Chap.ppt
Interest Rates and Bond Valuation
McGraw-Hill/Irwin
Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Key Concepts and Skills
PV
$31.875 .11 2
1
1 (1.055)10
$1,000 (1.055)10
$825.69
8-9
YTM and Bond Value
When the YTM < coupon, the bond
1300
trades at a premium.
Bond Value
Know the important bond features and bond types Understand bond values and why they fluctuate Understand bond ratings and what they mean Understand the impact of inflation on interest
Bond Concepts
Bond prices and market interest rates move in opposite directions.
When coupon rate = YTM, price = par value
When coupon rate > YTM, price > par value (premium bond)
volatility with respect to changes in the discount rate.
公司理财英文资料31页PPT
21、静念园林好，人间良可辞。 22、步步寻往迹，有处特依依。 23、望云惭高鸟，临木愧游鱼。 24、结庐在人境，而无车马喧；问君 何能尔 ？心远 地自偏 。 25、人生归有财富 ❖ 丰富你的人生
71、既然我已经踏上这条道路，那么，任何东西都不应妨碍我沿着这条路走下去。——康德 72、家庭成为快乐的种子在外也不致成为障碍物但在旅行之际却是夜间的伴侣。——西塞罗 73、坚持意志伟大的事业需要始终不渝的精神。——伏尔泰 74、路漫漫其修道远，吾将上下而求索。——屈原 75、内外相应，言行相称。——韩非
罗斯《公司理财CorporateFinance》(第七版)英文课件Ch
If how you slice the pie affects the size of the pie, then the capital struቤተ መጻሕፍቲ ባይዱture decision matters.
1-9
Hypothetical Organization Chart
Board of Directors Chairman of the Board and Chief Executive Officer (CEO)
Shareholders’ Equity
1-5
The Balance-Sheet Model
of the Firm
The Capital Budgeting Decision
Current
Current Assets
Liabilities
Long-Term Debt
Fixed Assets 1 Tangible 2 Intangible
Cost Accounting Data Processing
1-10
The Financial Manager
To create value, the financial manager should: 1. Try to make smart investment decisions. 2. Try to make smart financing decisions.
How much shortterm cash flow does a company need to pay its bills?
Shareholders’ Equity
1-8
Capital Structure
The value of the firm can be thought of as a pie.
公司理财英文版课件 (27)
An increase in long-term debt and or equity leads to an increase in cash—as does a decrease in fixed assets or a decrease in the non-cash components of net working capital. The sources and uses of cash follow from this reasoning.
In practice, the inventory period, the accounts receivable period, and the accounts payable period are measured by days in inventory, days in receivables, and days in payables, respectively.
26-15
Appropriate Restrictive Policy
$ Minimum point Total costs of holding current assets.
Carrying costs
Shortage costs CA* Investment in Current Assets ($)
26-8
Example
Inventory:
Beginning = 200,000 Ending = 300,000
Accounts Receivable:
公司理财(罗斯)第1章(英文
03 Valuation Basis
The concept and significance of valuation
要点一
Definition
Valuation is the process of estimating the worth of an asset or a company, typically through the use of financial metrics and analysis.
The Time Value of Money
公司理财相关知识英文版)
Chapter 8: Strategy and Analysis in Using Net Present Value Concept Questions - Chapter 88.1 ∙What are the ways a firm can create positive NPV.1.Be first to introduce a new product.2.Further develop a core competency to product goods or services at lower coststhan competitors.3.Create a barrier that makes it difficult for the other firms to competeeffectively.4.Introduce variation on existing products to take advantage of unsatisfieddemand5.Create product differentiation by aggressive advertising and marketingnetworks.e innovation in organizational processes to do all of the above.∙How can managers use the market to help them screen out negative NPV projects?8.2 ∙What is a decision tree?It is a method to help capital budgeting decision-makers evaluating projectsinvolving sequential decisions. At every point in the tree, there are differentalternatives that should be analyzed.∙What are potential problems in using a decision tree?Potential problems 1) that a different discount rate should be used for differentbranches in the tree and 2) it is difficult for decision trees to capture managerialoptions.8.3 ∙What is a sensitivity analysis?It is a technique used to determine how the result of a decision changes whensome of the parameters or assumptions change.∙Why is it important to perform a sensitivity analysis?Because it provides an analysis of the consequences of possible prediction orassumption errors.∙What is a break-even analysis?It is a technique used to determine the volume of production necessary to breakeven, that is, to cover not only variable costs but fixed costs as well.∙Describe how sensitivity analysis interacts with break-even analysis.Sensitivity analysis can determine how the financial break-even point changeswhen some factors (such as fixed costs, variable costs, or revenue) change. Answers to End-of-Chapter ProblemsQUESTIONS AND PROBLEMSDecision Trees8.1 Sony Electronics, Inc., has developed a new type of VCR. If the firm directly goes to the market with the product, there is only a 50 percent chance of success. On the other hand, if the firm conducts test marketing of the VCR, it will take a year and will cost $2 million.Through the test marketing, however, the firm is able to improve the product and increase the probability of success to 75 percent. If the new product proves successful, the present value (at the time when the firm starts selling it) of the payoff is $20 million, while if it turns out to be a failure, the present value of the payoff is $5 million. Should the firm conduct test marketing or go directly to the market? The appropriate discount rate is 15 percent.8.1 Go directly:NPV = 0.5 ⨯ $20 million + 0.5 ⨯ $5 million= $12.5 millionTest marketing:NPV = -$2 million + (0.75 ⨯ $20 million + 0.25 ⨯ $5 million) / 1.15= $12.13 millionGo directly to the market.8.2 The marketing manager for a growing consumer products firm is considering launching a new product. To determine consumers’ interest in such a product, the manager can conduct a focus group that will cost $120,000 and has a 70 percent chance of correctly predicting the success of the product, or hire a consulting firm that will research the market at a cost of $400,000. The consulting firm boasts a correct assessment record of 90 percent. Of course going directly to the market with no prior testing will be the correct move 50 percent of the time. If the firm launches the product, and it is a success, the payoff will be $1.2 million.Which action will result in the highest expected payoff for the firm?8.2 Focus group: -$120,000 + 0.70 ⨯ $1,200,000 = $720,000Consulting firm: -$400,000 + 0.90 ⨯ $1,200,000 = $680,000Direct marketing: 0.50 ⨯ $1,200,000 = $600,000The manager should conduct a focus group.8.3 Tandem Bicycles is noticing a decline in sales due to the increase of lower-priced import products from the Far East. The CFO is considering a number of strategies to maintain its market share. The options she sees are the following:• Price the products more aggressively, resulting in a $1.3 million decline in cash flows.The likelihood that Tandem will lose no cash flows to the imports is 55 percent; there is a45 percent probability that they will lose only $550,000 in cash flows to the imports.• Hire a lobbyist to convince the regulators that there should be important tariffs placed upon overseas manufacturers of bicycles. This will cost Tandem $800,000 and will have a 75 percent success rate, that is, no loss in cash flows to the importers. If the lobbyists do not succeed, Tandem Bicycles will lose $2 million in cash flows. As the assistant to the CFO, which strategy would you recommend to your boss? Accounting Break-Even Analysis8.3 Price more aggressively:-$1,300,000 + (0.55 ⨯ 0) + 0.45 ⨯ (-$550,000)= -$1,547,500Hire lobbyist:-$800,000 + (0.75 ⨯ 0) + 0.25 ⨯ (-$2,000,000)= -$1,300,000Tandem should hire the lobbyist.8.4 Samuelson Inc. has invested in a facility to produce calculators. The price of the machine is $600,000 and its economic life is five years. The machine is fully depreciated by the straight-line method and will produce 20,000 units of calculators in the first year. The variable production cost per unit of the calculator is $15, while fixed costs are $900,000. The corporate tax rate for the company is 30 percent. What should the sales price per unit of the calculator be for the firm to have a zero profit?8.4 Let sales price be x.Depreciation = $600,000 / 5 = $120,000BEP: ($900,000 + $120,000) / (x - $15) = 20,000x = $668.5 What is the minimum number of units that a distributor of big-screen TVs must sell in a given period to break even?Sales price _ $1,500Variable costs _ $1,100Fixed costs _ $120,000Depreciation _ $20,000Tax rate _ 35%8.5 The accounting break-even= (120,000 + 20,000) / (1,500 - 1,100)= 350 units8.6 You are considering investing in a fledgling company that cultivates abalone for sale to local restaurants. The proprietor says he’ll return all profits to you after covering operating costs and his salary. How many abalone must be harvested and sold in the first year of operations for you to get any payback? (Assume no depreciation.)Price per adult abalone _ $2.00Variable costs _ $0.72Fixed costs _ $300,000Salaries _ $40,000Tax rate _ 35%How much profit will be returned to you if he sells 300,000 abalone?8.6 a. The accounting break-even= 340,000 / (2.00 - 0.72)= 265,625 abalonesb. [($2.00 ⨯ 300,000) - (340,000 + 0.72 ⨯ 300,000)] (0.65)= $28,600This is the after tax profit.Present Value Break-Even Analysis8.7 Using the information in the problem above, what is the present value break-even point if the discount rate is 15 percent, initial investment is $140,000, and the life of the project is seven years? Assume a straight-line depreciation method with a zero salvage value.A = $33,6508.7 EAC = $140,000 / 715.0Depreciation = $140,000 / 7 = $20,000BEP = {$33,650 + $340,000 ⨯ 0.65 - $20,000 ⨯ 0.35} / {($2 - $0.72) ⨯ 0.65}= 297,656.25≈ 297,657 units8.8 Kids & Toys Inc. has purchased a $200,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method for its economic life of five years and will be worthless after its life. The firm expects that the sales price of the toy is $25 while its variable cost is $5. The firm should also pay $350,000 as fixed costs each year. The corporate tax rate for the company is 25 percent, and the appropriate discount rate is 12 percent. What is the present value break-even point?8.8 Depreciation = $200,000 / 5 = $40,000A = $200,000 / 3.60478EAC = $200,000 / 512.0= $55,482BEP = {$55,482 + $350,000 ⨯ 0.75 - $40,000 ⨯ 0.25} / {($25 - $5) ⨯ 0.75}= 20,532.13≈ 20533 units8.9 The Cornchopper Company is considering the purchase of a new harvester. The company is currently involved in deliberations with the manufacturer and the parties have not come to settlement regarding the final purchase price. The management of Cornchopper has hired you to determine the break-even purchase price of the harvester.This price is that which will make the NPV of the project zero. Base your analysis on the following facts: • The new harvester is not expected to affect revenues, but operating expenses will be reduced by $10,000 per year for 10 years.• The old harvester is now 5 years old, with 10 years of its scheduled life remaining. It was purchased for $45,000. It has been depreciated on a straight-line basis.• The old harvester has a current market value of $20,000.• The new harvester will be depreciated on a straight-line basis over its 10-year life.• The corporate tax rate is 34 percent.• The firm’s required rate of return is 15 percent.• All cash flows occur at year-end. However, the initial investment, the proceeds from selling the old harvester, and any tax effects will occur immediately. Capital gains and losses are taxed at the corporate rate of 34 percent when they are realized.• The expected market value of both harvesters at the end of their economic lives is zero.8.9 Let I be the break-even purchase price.Incremental C0$20,000Tax effect 3,400Total $23,400Depreciation per period= $45,000 / 15= $3,000Book value of the machine= $45,000 - 5 ⨯ $3,000= $30,000Loss on sale of machine= $30,000 - $20,000= $10,000Tax credit due to loss= $10,000 ⨯ 0.34= $3,400Incremental cost savings:$10,000 (1 - 0.34) = $6,600Incremental depreciation tax shield:[I / 10 - $3,000] (0.34)The break-even purchase price is the Investment (I), which makes the NPV be zero.NPV = 0= -I + $23,400 + $6,600 1015.0A+ [I / 10 - $3,000] (0.34) 1015.0A= -I + $23,400 + $6,600 (5.0188)+ I (0.034) (5.0188) - $3,000 (0.34) (5.0188)I = $61,981Scenario Analysis8.10 Ms. Thompson, as the CFO of a clock maker, is considering an investment of a $420,000 machine that has a seven-year life and no salvage value. The machine is depreciated by a straight-line method with a zero salvage over the seven years. The appropriate discount rate for cash flows of the project is 13 percent, and the corporate tax rate of the company is 35 percent. Calculate the NPV of the project in the following scenario. What is your conclusion about the project?Pessimistic Expected OptimisticUnit sales 23,000 25,000 27,000Price $ 38 $ 40 $ 42Variable costs $ 21 $ 20 $ 19Fixed costs $320,000 $300,000 $280,0008.10 Pessimistic:NPV = -$420,000 +(){}23,000$38$21$320,0000.65$60,0000.351.13tt17--⨯+⨯=∑= -$123,021.71 Expected:NPV = -$420,000 +(){}25,000$40$20$300,0000.65$60,0000.351.13t7--⨯+⨯=∑t1= $247,814.17 Optimistic:NPV = -$420,000 +(){}27,000$42$19$280,0000.65$60,0000.351.13tt17--⨯+⨯=∑= $653,146.42Even though the NPV of pessimistic case is negative, if we change one input while all others are assumed to meet their expectation, we have all positive NPVs like the one before. Thus, this project is quite profitable.Pessimistic NPVUnit sales 23,000 $132,826.30Price $38 $104,079.33Variable costs $21 $175,946.75Fixed costs $320,000 $190,320.248.11 You are the financial analyst for a manufacturer of tennis rackets that has identified a graphite-like material that it is considering using in its rackets. Given the following information about the results of launching a new racket, will you undertake the project?(Assumptions: Tax rate _ 40%, Effective discount rate _ 13%, Depreciation _ $300,000per year, and production will occur over the next five years only.)Pessimistic Expected OptimisticMarket size 110,000 120,000 130,000Market share 22% 25% 27%Price $ 115 $ 120 $ 125Variable costs $ 72 $ 70 $ 68Fixed costs $ 850,000 $ 800,000 $ 750,000Investment $1,500,000 $1,500,000 $1,500,0008.11 Pessimistic:NPV = -$1,500,000+(){}1100000220000600000401131,.$850,.$300,..⨯--⨯+⨯=∑$115$725tt= -$675,701.68Expected:NPV = -$1,500,000+(){}1200000250000600000401131,.$800,.$300,..⨯--⨯+⨯=∑$120$705tt= $399,304.88Optimistic:NPV = -$1,500,000+(){}130,0000.27$125$68$750,0000.60$300,0000.401.13tt15⨯--⨯+⨯=∑= $1,561,468.43The expected present value of the new tennis racket is $428,357.21. (Assuming there are equal chances of the 3 scenarios occurring.)8.12 What would happen to the analysis done above if your competitor introduces a graphite composite that is even lighter than your product? What factors would this likely affect? Do an NPV analysis assuming market size increases (due to more awareness of graphite-based rackets) to the level predicted by the optimistic scenario but your market share decreases to the pessimistic level (due to competitive forces). What does this tell you about the relative importance of market size versus market share?8.12 NPV =(){}-+⨯--⨯+⨯=∑1,500,000130,0000.22$120$70$800,0000.60$300,0000.401.13tt15= $251,581.17The 3% drop in market share hurt significantly more than the 10,000 increase in marketsize helped. However, if the drop were only 2%, the effects would be about even. Market size is going up by over 8%, thus it seems market share is more important than market size. The Option to Abandon8.13 You have been hired as a financial analyst to do a feasibility study of a new video game for Passivision. Marketing research suggests Passivision can sell 12,000 units per year at $62.50 net cash flowper unit for the next 10 years. Total annual operating cash flow is forecasted to be $62.50 _ 12,000 _ $750,000. The relevant discount rate is 10 percent.The required initial investment is $10 million.a. What is the base case NPV?b. After one year, the video game project can be abandoned for $200,000. After one year,expected cash flows will be revised upward to $1.5 million or to $0 with equalprobability. What is the option value of abandonment? What is the revised NPV?A) = -$5,391,574.678.13 a. NPV = -$10,000,000 + ( $750, 000 ⨯1010.A)b.Revised NPV = -$10,000,000 + $750,000 / 1.10 + [(.5 ⨯ $1,500,000 ⨯9.10+ (.5 ⨯ $200,000 )] / 1.10= -$5,300,665.58Option value of abandonment = -$5,300,665.58 – ( -$5,391,574.67 )= $90,909.098.14 Allied Products is thinking about a new product launch. The vice president of marketing suggests that Allied Products can sell 2 million units per year at $100 net cash flow per unit for the next 10 years. Allied Products uses a 20-percent discount rate for new product launches and the required initial investment is $100 million.a. What is the base case NPV?b. After the first year, the project can be dismantled and sold for scrap for $50 million. If expected cash flows can be revised based on the first year’s experience, when would it make sense to abandon the project? (Hint: At what level of expected cash flows does it make sense to abandon the project?)A) = $738.49Million8.14 a. NPV = -$100M + ( $100 ⨯ 2M ⨯10.20Ab.$50M = C9.20C = $12.40 Million (or 1.24 Million units )。
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period bond to that of a (n – 1) period bond rolled over into a one-
year bond in year n.
1
y1
1
f
2
1
y2
2
,
1
y2
2
1
f
3
1
y3
3
,
1
y3 3
1
f
4
1
y4 4
.
For example, 1 f2 (1.09)2 (1.08) 1.1, f2 10% (geometric mean) or
y1 y2 y3 y4
(maturity date)
How are the bond prices related with interest rates?
© Professor Ho-Mou Wu
Corporate Finance
3-1
The Present Value Formulas for Bonds
PB
PV
C y
‥ ‥ ‥ ‥ ‥ ‥ ‥ ‥ ‥ ‥ ‥ ‥(3.3)
Such a rate y is known as the yield to maturity (YTM). The yield to
maturity is a complicated average of different rates of interest. It can be a
i1
i2? i3? i4?
1 year zero: Price = 926 2 year zero: Price = 842 3 year zero: Price = 758 4 year zero: Price = 683
1 year bond 2 year bond 3 year bond 4 year bond
© Professor Ho-Mou Wu
Corporate Finance
3-3
3.2 The Term Structure of Interest Rates
From bond prices, we can compute yields yn , plot the “yield
curve”, and compute the implied forward rates,
y2 12 y1 f2 , so f2 10% as an approximation (arithmetic mean).
Similarly,
y3
1 3 ( y1
f2
f 3 ),
so f3 11% .
y4
1 3
(
y1
f2
f3
f4 ),
so f4 11% .
© Professor Ho-Mou Wu
Bond Market and Alternative Investment Rules
3.1 Valuation of Bonds 3.2 The Term Structure of Interest Rates 3.3 Alternative Investment Rules
(1) The Payback Period Rule (2) The Average Accounting Return (3) The Internal Rate of Return (4) The Profitability Index 3.4 Why Use Net Present Value? (RWJ Ch.5,6)
Pure Discount Bonds
PB
PV
F
1 yT
T
,
‥ ‥ ‥ ‥ ‥ ‥ ‥ ‥ ‥ ‥(3.1)
for T-maturity bonds with face value F.
Level Coupon Bonds
Consols
PB
PV
C 1
y
C
1 y2
C 1 yT
F 1 yT
‥ ‥(3.2)
useful summary measure.
© Professor Ho-Mou Wu
Corporate Finance
3-2
Yield to Maturity
Example 1.(continued): we can convert bond prices into “yield to maturity” ( yn)
© Professor Ho-Mou Wu
Corporate Finance
3-0
3.1 Valuation of Bonds
Example 1：
Suppose we observe the following bond prices for default-free zero coupon bonds (pure discount bond, with face value $1,000)：
Corporate Finance
3-5
Forecast of Future Interest
Can we use forward rates fn to forecast future short-term interest rates in, also called “short rates”？ Assume that the investment horizon is one year, and investors are risk neutral.
926 1000 (1 y1 )
hencye1, 8% (i1 y1)
842 1000 (1 y2 )2
y2 9%
758 1000 (1 y3 )3
y3 9.66%
683 1000 (1 y4 )4
y4 10%
yn= yield of bonds with n periods as time to maturity, also called “spot rates.” Plot yn against time to maturity (n) ” yield curve” to summarize information about bond prices (diagram 1).
%
fn
.
implied
10
“forward rates”
8
yield curve or
“spot rates”
6
4
2
© Professor Ho-Mou Wu
1
2
3
4
Yield Curve
Corporate Finance
Maturity 3-4
Forward Rates
fn is the “break-even” interest rate that equates the returns on a n-