CapitalBudgeting(高级公司财务-资金时间价值-英文版课件)
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公司理财英文版课件Chap016
公司理财英文版课件 Chap016
PPT文档演模板
2020/11/6
公司理财英文版课件Chap016
Key Concepts and Skills
• Understand the effect of financial leverage on cash flows and the cost of equity
– (RA – RD)(D/E) is the “cost” of the firm’s financial risk, i.e., the additional return required by stockholders to compensate for the risk of leverage
• Understand the impact of taxes and bankruptcy on capital structure choice
• Understand the basic components of the bankruptcy process
PPT文档演模板
公司理财英文版课件Chap016
– The cash flows of the firm do not change; therefore, value doesn’t change
• Proposition II
– The WACC of the firm is NOT affected by capital structure
• If we have a really bad year, we still have to pay our fixed costs and we have less left over for our stockholders
PPT文档演模板
2020/11/6
公司理财英文版课件Chap016
Key Concepts and Skills
• Understand the effect of financial leverage on cash flows and the cost of equity
– (RA – RD)(D/E) is the “cost” of the firm’s financial risk, i.e., the additional return required by stockholders to compensate for the risk of leverage
• Understand the impact of taxes and bankruptcy on capital structure choice
• Understand the basic components of the bankruptcy process
PPT文档演模板
公司理财英文版课件Chap016
– The cash flows of the firm do not change; therefore, value doesn’t change
• Proposition II
– The WACC of the firm is NOT affected by capital structure
• If we have a really bad year, we still have to pay our fixed costs and we have less left over for our stockholders
CHAPTER10 The Basics of Capital Budgeting (《财务管理基础》PPT课件)
0
n t0
CFt ( 1 IRR
)t
Solving for IRR with a financial calculator:
Enter CFs in CFLO register. Press IRR; IRRL = 18.13% and IRRS = 23.56%.
10-14
exclusive (NPVs > NPVL), and would accept
both if independent.
10-13
INTERNAL RATE OF RETURN (IRR)
IRR is the discount rate that forces PV of inflows equal to cost, and the NPV = 0:
1 1.6 2
3
70 100 50
20
-30 0 20
40
+ 30 / 50 = 1.6 years
10-7
STRENGTHS AND WEAKNESSES OF PAYBACK
Strengths
Provides an indication of a project’s risk and liquidity. Easy to calculate and understand.
60
49.59
3
80
60.11
NPVL = $18.79
NPVS = $19.98
10-11
SOLVING FOR NPV: FINANCIAL CALCULATOR SOLUTION
Enter CFs into the calculator’s CFLO register.
英文版公司理财chapter-1课件
Making good investment and financing decisions is the chief task of the financial manager.
英文版公司理财chapter-1
7
The Investment Decision
• Investment decision /capital budgeting decision: decision to invest in
2750% Deb50t % 3D0e%bEt quity 5705% Equity
If how you slice the pie affects the size of the pie, then the capital structure decision matters.
英文版公司理财chapter-1
4. Understand why conflicts of interest arise, especially in large, public corporations
5. Explain how corporations mitigate conflicts and encourage ethical behavior
英文版公司理财chapter-1
Current Liabilities Long-Termபைடு நூலகம்Debt
Shareholders’ Equity
13
• The choice between debt and equity financing is often called the
capital structure decision
2
Chapter 1
The Corporation and the Financial Manager
国际财务管理(英文课件)Chap17 International Capital Budgeting
4. Compare the value of competing cash flow streams at the same point in time.
17-2
Review of Domestic Capital Budgeting
The basic net present value equation is
Note that with the APV model, each cash flow is discounted at a rate that is appropriate to the riskiness of the cash flow.
17-9
Capital Budgeting from the Parent Firm’s Perspective
We can appeal to PPP:
St
S0
(1πd )t (1πf )t
17-14
International Capital Budgeting
A recipe for international decision makers:
1. Estimate future cash flows in foreign currency.
Donald Lessard developed an APV model for a MNC analyzing a foreign capital expenditure. The model recognizes many of the particulars peculiar to foreign direct investment.
17-6
Review of Domestic Capital Budgeting
17-2
Review of Domestic Capital Budgeting
The basic net present value equation is
Note that with the APV model, each cash flow is discounted at a rate that is appropriate to the riskiness of the cash flow.
17-9
Capital Budgeting from the Parent Firm’s Perspective
We can appeal to PPP:
St
S0
(1πd )t (1πf )t
17-14
International Capital Budgeting
A recipe for international decision makers:
1. Estimate future cash flows in foreign currency.
Donald Lessard developed an APV model for a MNC analyzing a foreign capital expenditure. The model recognizes many of the particulars peculiar to foreign direct investment.
17-6
Review of Domestic Capital Budgeting
英文版资本结构课件1
13
Net Present Value (NPV)
NPV
I0
C1 (1 r)
C2 (1 r)2
C3 (1 r)3
...
Ct (1 r)T
NPV
I0
T t 1
Ct (1 r)t
14
Net Present Value (NPV) Cntd.
where: Ct = the net cash receipt at the end of year t Io = the initial investment outlay r = the discount rate/the required minimum rate of return on investment t= the project/investment's duration in years.
• Net Present Value vs Internal Rate of Return • The Payback Method and ARR • Equivalent Annual Cash Flows (EACF) • Multiple Rates of Return • Capital Rationing • Sensitivity Analysis • Monte Carlo Simulation • Real Options and Decision Trees
table) ACF = Annuity cash flow
17
Annuity Cntd.
Self Assessment Question
A project requires an initial investment of £125,000. It is expected to generate a net receipt of £17,500 at the end of each year during the 12 years life of the project. Calculate the NPV of the project with a discount rate of 12%.
Net Present Value (NPV)
NPV
I0
C1 (1 r)
C2 (1 r)2
C3 (1 r)3
...
Ct (1 r)T
NPV
I0
T t 1
Ct (1 r)t
14
Net Present Value (NPV) Cntd.
where: Ct = the net cash receipt at the end of year t Io = the initial investment outlay r = the discount rate/the required minimum rate of return on investment t= the project/investment's duration in years.
• Net Present Value vs Internal Rate of Return • The Payback Method and ARR • Equivalent Annual Cash Flows (EACF) • Multiple Rates of Return • Capital Rationing • Sensitivity Analysis • Monte Carlo Simulation • Real Options and Decision Trees
table) ACF = Annuity cash flow
17
Annuity Cntd.
Self Assessment Question
A project requires an initial investment of £125,000. It is expected to generate a net receipt of £17,500 at the end of each year during the 12 years life of the project. Calculate the NPV of the project with a discount rate of 12%.
国际财务管理(英文课件)Chap17 International Capital Budgeting精品文档
We can appeal to PPP:
St
S0
(1πd )t (1πf )t
17-14
International Capital Budgeting
A recipe for international decision makers:
1. Estimate future cash flows in foreign currency.
17-13
Denotes the present value
(in the parent’s currency) of
any concessionary loans,
CL0, and loan payments, LPt , discounted at id .
Estimating the Future Expected Exchange Rates
Second Edition
EUN / RESNICK
Chapter Outline
Review of Domestic Capital Budgeting The Adjusted Present Value Model Capital Budgeting from the Parent Firm’s
C0 = initial investment at inception, K = weighted average cost of capital.
T = economic life of the project in years.
17-3
Review of Domestic Capital Budgeting
Where:
NPV tT 1(1C K tF )t (1T K T V )TC0
Chapter 13 Capital Budgeting Techniques 资本预算方法 财务管理(双语版) 教学课件
k是预期报酬率,要求的最低报酬率 接受标准:NPV≥0,接受;否则,拒绝.
4.Profitability Index 盈利指数法
PI
1CFk1
CF2
1k2
...1CFknn
ICO
PI1 NPV ICO
PI≥1,接受;否则,拒绝.
问题:
采用不同评价方法可能互相矛盾.一些潜在的困难,评价中存在的问题
Chapter 13 Capital Budgeting Techniques 资本预算方法
2.Internal Rate of Return(IRR)内部收益率法 内部收益率是一种利息率,用这个利率折现未来净现金流入 CF1-CFn所得的现值刚好等于初始现金流出量(ICO)
IC1 O C I1R F (R 1 C I2 R F )2 R ...(1 C In R F )nR
项目排序不同,可能是:投资规模不同多个IRR问题.
为求解IRR,需先试误(trial-error),再用插值法(interpolation)
Acceptance Criterion:IRR≥Hurdle Rate(障碍利率) 可行, 否则,不可行.
Present Value 净现值法
NP 1 V C k 1F 1 C k 2F 2.. .1 C k nF nICO
4.Profitability Index 盈利指数法
PI
1CFk1
CF2
1k2
...1CFknn
ICO
PI1 NPV ICO
PI≥1,接受;否则,拒绝.
问题:
采用不同评价方法可能互相矛盾.一些潜在的困难,评价中存在的问题
Chapter 13 Capital Budgeting Techniques 资本预算方法
2.Internal Rate of Return(IRR)内部收益率法 内部收益率是一种利息率,用这个利率折现未来净现金流入 CF1-CFn所得的现值刚好等于初始现金流出量(ICO)
IC1 O C I1R F (R 1 C I2 R F )2 R ...(1 C In R F )nR
项目排序不同,可能是:投资规模不同多个IRR问题.
为求解IRR,需先试误(trial-error),再用插值法(interpolation)
Acceptance Criterion:IRR≥Hurdle Rate(障碍利率) 可行, 否则,不可行.
Present Value 净现值法
NP 1 V C k 1F 1 C k 2F 2.. .1 C k nF nICO
Capital Structure and Cost of Equity(高级公司财务-资本结构与资金成本-英文版课件)
= discount rate
12
Firm Value with Taxes
NOI = Rev – VC – FC - Dep After tax cash flow: NOI – Tc(NOI) = (Rev – VC – FC - Dep)(1- Tc) Note: Depreciation cost. Hence, Cash Flow = (Rev – Free cash flow = (Rev – VC – FC = (Rev – VC – FC – is a noncash-fixed
Initial Cost of Investment Expected Return
Debt: (0.1)D (0.1)rdD Equity: (0.1)E (0.1)(NOI - rdD) Total: (0.1)(D + E) = (0.1)VL (Initial cost)
(0.1)rdD + (0.1)(NOI - rdD) = (0.1)NOI (Expected Return)
Corporate Finance (Econ 906)
Lecture Capital Structure Read: Hillier, Grinblatt & Titman Chapters 14-17 Copeland/Weston – Chapter 15 Brealey and Myers Chapter 16-19
8
MM’s Arbitrage Pricing Argument:
Since both investments same expected return: (0.1)NOI, they must have the same initial cost, i.e. same value V, so that no arbitrage opportunities remain to be exploited MM Proposition 1:Vu = VL = D + E.9 have the
国际财务管理(英文课件)Chap17 International Capital Budgeting
17-7
The Adjusted Present Value Model
N P tT 1O V (1 t( K 1 C )tτ) F (1 τK tD )t (1 T K T )V T C 0
Can be converted to adjusted present value (APV)
A P tT 1O V ( 1 tK ( 1 C u )tτ) F ( 1 τ it) D t ( 1 τ t i) I t ( 1 T K T u )T V C 0
The APV model is a value additivity approach to capital budgeting. Each cash flow that is a source of value to the firm is considered individually.
2. Identify the RISKINESS of the cash flows to determine the appropriate discount rate.
3. Find NPV by discounting the cash flows at the appropriate discount rate.
17-5
Review of Domestic Capital Budgeting
For our purposes it is necessary to expand the NPV equation.
C t ( R tF O t D t C I t ) 1 τ ( ) D t I t ( 1 τ ) (Nt ID tIt(1τ) (R t O t C D τ)1 ( τ) D t NO t(1Iτ)D t (R tOt)C 1 (τ)τD t OC t(1 Fτ)τD t
The Adjusted Present Value Model
N P tT 1O V (1 t( K 1 C )tτ) F (1 τK tD )t (1 T K T )V T C 0
Can be converted to adjusted present value (APV)
A P tT 1O V ( 1 tK ( 1 C u )tτ) F ( 1 τ it) D t ( 1 τ t i) I t ( 1 T K T u )T V C 0
The APV model is a value additivity approach to capital budgeting. Each cash flow that is a source of value to the firm is considered individually.
2. Identify the RISKINESS of the cash flows to determine the appropriate discount rate.
3. Find NPV by discounting the cash flows at the appropriate discount rate.
17-5
Review of Domestic Capital Budgeting
For our purposes it is necessary to expand the NPV equation.
C t ( R tF O t D t C I t ) 1 τ ( ) D t I t ( 1 τ ) (Nt ID tIt(1τ) (R t O t C D τ)1 ( τ) D t NO t(1Iτ)D t (R tOt)C 1 (τ)τD t OC t(1 Fτ)τD t
成本预算英文版课件powerpoint87页
17
第十八页，编辑于星期二：三点 三十五分。
Quick Check ✓
How much would you have to put in the bank today to have $100 at the end of five years if the interest rate is 10%?
▪ Reduce an organization’s flexibility
3
第四页，编辑于星期二：三点 三十五分。
Meaning of Capital Budgeting
• Capital budgeting can be defined as the process of analyzing, evaluating, and deciding whether resources should be allocated to a project or not.
8
第九页，编辑于星期二：三点 三十五分。
Time Value of Money
A dollar today is worth more than a dollar a year from now since a dollar
received today can be invested, yielding more than a dollar a year from
Some Standard Notation
• For simplicity, the following notation is used:
Abbr.
Meaning
n
Number of periods considered in the investment analysis;
第十八页，编辑于星期二：三点 三十五分。
Quick Check ✓
How much would you have to put in the bank today to have $100 at the end of five years if the interest rate is 10%?
▪ Reduce an organization’s flexibility
3
第四页，编辑于星期二：三点 三十五分。
Meaning of Capital Budgeting
• Capital budgeting can be defined as the process of analyzing, evaluating, and deciding whether resources should be allocated to a project or not.
8
第九页，编辑于星期二：三点 三十五分。
Time Value of Money
A dollar today is worth more than a dollar a year from now since a dollar
received today can be invested, yielding more than a dollar a year from
Some Standard Notation
• For simplicity, the following notation is used:
Abbr.
Meaning
n
Number of periods considered in the investment analysis;
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=100(2.7232) =£272.32
10
Future Value cntd.
Self Assessment Question (SAQ)
• Cash is what ultimately matters
• profits are simply a guide to the availability of cash
• Profit measurement is subjective
• Cash is used to pay dividends
• The ultimate method of transferring wealth to equity holders
3
Time Value of Money – Introduction
• The interaction of lenders with borrowers sets an equilibrium rate of interest.
r = the interest rate n = the number of periods for which the investment is to receive interest.
6
Future Value of Annuity (FVA)
n
FVAn PMT (1 i)nt t 1
4
Time Value of Money – Introduction cntd.
• The interest rate received by the lender is made up of:
• The time value of money: the receipt of money is preferred sooner rather than later. Money can be used to earn more money.
• Net Present Value • Internal Rate of Return • The Payback Method • The Accounting Rate of Return
1
Criterion for Shareholders’ Wealth Maximisation
• All cash flows should be considered.
PMT
(1
Байду номын сангаас
i)n i
1
PMT(FVIFAi,n )
7
Future Value of Annuity (FVA) Example
Calculate future value at the end of three years if at the end of each of the following three years £100 is paid into a bank account that earns 5% interest rate. FVA3 = PMT*FVIFA0.05,3 FVA3 = 100*3.1525 = £315.25
• Borrowing is only worthwhile if the return on the loan exceeds the cost of the borrowed funds
• Lending is only worthwhile if the return is at least equal to that which can be obtained from alternative opportunities in the same risk class.
Lecture1 Capital Budgeting
Contents: • Time value of money – introduction
• Compounding • Discounting • Annuities • Perpetuities
• Capital Budgeting Techniques:
• The cash flows should be discounted at the opportunity cost of funds.
• The technique should select from a set of mutually exclusive projects the one that maximizes shareholders’ wealth.
8
Present Value of Annuity (PVA)
PVAn
n
PMT
t 1
(1
1
i)
t
1 PMT
1
1 in
i
PMT(PVIFAi,n )
9
Present Value of Annuity (PVA) Example
Calculate the present value if at the end of each of the following three years £100 is paid into a bank account that earns 5% interest rate. PVA = PMT(PVIFAi,n)
• Management should be able to consider one project independently from all others (this is known as the value-additivity principle).
2
Why Use Cash Flows Rather Than Profits?
• The risk of the capital sum not being repaid.
• Inflation: money may lose its purchasing power over time.
5
Future Value (FV)
The general formula for computing Future Value is as follows: FVn = Vo (l + r)n where Vo = the initial sum invested
10
Future Value cntd.
Self Assessment Question (SAQ)
• Cash is what ultimately matters
• profits are simply a guide to the availability of cash
• Profit measurement is subjective
• Cash is used to pay dividends
• The ultimate method of transferring wealth to equity holders
3
Time Value of Money – Introduction
• The interaction of lenders with borrowers sets an equilibrium rate of interest.
r = the interest rate n = the number of periods for which the investment is to receive interest.
6
Future Value of Annuity (FVA)
n
FVAn PMT (1 i)nt t 1
4
Time Value of Money – Introduction cntd.
• The interest rate received by the lender is made up of:
• The time value of money: the receipt of money is preferred sooner rather than later. Money can be used to earn more money.
• Net Present Value • Internal Rate of Return • The Payback Method • The Accounting Rate of Return
1
Criterion for Shareholders’ Wealth Maximisation
• All cash flows should be considered.
PMT
(1
Байду номын сангаас
i)n i
1
PMT(FVIFAi,n )
7
Future Value of Annuity (FVA) Example
Calculate future value at the end of three years if at the end of each of the following three years £100 is paid into a bank account that earns 5% interest rate. FVA3 = PMT*FVIFA0.05,3 FVA3 = 100*3.1525 = £315.25
• Borrowing is only worthwhile if the return on the loan exceeds the cost of the borrowed funds
• Lending is only worthwhile if the return is at least equal to that which can be obtained from alternative opportunities in the same risk class.
Lecture1 Capital Budgeting
Contents: • Time value of money – introduction
• Compounding • Discounting • Annuities • Perpetuities
• Capital Budgeting Techniques:
• The cash flows should be discounted at the opportunity cost of funds.
• The technique should select from a set of mutually exclusive projects the one that maximizes shareholders’ wealth.
8
Present Value of Annuity (PVA)
PVAn
n
PMT
t 1
(1
1
i)
t
1 PMT
1
1 in
i
PMT(PVIFAi,n )
9
Present Value of Annuity (PVA) Example
Calculate the present value if at the end of each of the following three years £100 is paid into a bank account that earns 5% interest rate. PVA = PMT(PVIFAi,n)
• Management should be able to consider one project independently from all others (this is known as the value-additivity principle).
2
Why Use Cash Flows Rather Than Profits?
• The risk of the capital sum not being repaid.
• Inflation: money may lose its purchasing power over time.
5
Future Value (FV)
The general formula for computing Future Value is as follows: FVn = Vo (l + r)n where Vo = the initial sum invested