财务成本管理英语08

cosT OF CAPITAL AND COST STRUCTURE [对应中文教材2008年财务成本管理第九章:资本成本和资本结构] Part I　Capital Structure（资本结构） A.Choosing between equity（权益）and debt（债务） B.Comparing debt and equity finance C.Gearings（杠杆,leverage） （1）Operating gearing（经营杠杆）. Operating gearing= （2）Financial gearing（财务杠杆）. Total gearing= 总杠杆系数 Equity gearing= Income gearing= 收入杠杆系数 Here debt interest includes preference dividend. （利息金额包含优先股股利在内） D. Weighted Average Cost of Capital（WACC）（加权平均资本成本） Part II　Cost of Capital（资本成本） 1.The cost of equity, the cost of debt and the weighted average cost of capital 1.1 The concept of a weighted average cost of capital Cost of equity Cost of debt Irredeemable Redeemable K is the IRR of the related flows: initial market value, annual interest final redemption. 1.2 Market or book weights（市值或账面价值） Example The accounts of Apollo plc reveal（揭示）the following capital structure: Ordinary shares  　2,000,000 Reserves      3,000,000 10% debentures  　 1,000,000 6,000,000 Market values of the above are as follows: Ordinary shares  　3.75 each ex div（除权） Debenture stock  　80 The cost of equity is estimated to be 20%, the cost of debt is 7.5%（after tax）. What is the weighted average cost of capital using book weights? Solution Equity（ordinary shares+reserves）2000000+3000000  5000000 Debt                  　1000000 Total                  6000000 Proportions    　5/6 Equity    　1/6 Debt Combined cost of capital（5/6 x 20%）+（1/6 x 7.5%）= 17.92% 3.Operating gearing（经营杠杆） Operating gearing（also called operational gearing）measures the cost structure（fixed and variable）of the firm. Firms with high levels of fixed costs are usually described as having high operating gearing. 经营杠杆度量的是公司的成本结构,即固定成本和变动成本之间的关系.固定成本占比较大的公司称之为经营杠杆系数较高. Firms with high operating gearing are risky as fixed cost payments must be made no matter the level of contribution. 具有较高经营杠杆系数的公司风险较大,原因在于无论边际贡献如何,均须承担相关固定成本. Example Consider two firms: Firm A        Firm B m          　m Sales                　 5          　5 Variable costs            　3          　1 Fixed costs              1          　3 EBIT（Earnings before interest and tax）1         　 　1 What would be the impact（影响）of a 10% increase in sales volume on the EBIT of each firm? Firm A New EBIT=（5m-3m）×1.1-1=1.2m  i.e. a 20% increase. Firm B New EBIT=（5m-1m）×1.1-3=1.4m  i.e. a 40% increase. Operating gearing FirmA      FirmB Alternatively: FirmA      FirmB B carries a higher operating gearing because it has higher fixed costs. Its operating earnings are more volume sensitive. 公司B具有较高的经营杠杆系数,因为其固定成本占比较高.它的经营收入具有数量敏感性. Part III　Further Aspects of WACC（加权平均成本的进一步探究） 3 CAPM and the cost of capital 3.1 Modigliani and Miller 1963 In a world with corporation tax the benefit to the general company of the tax shield on debt interest must be included in our analysis. Thus: Assuming debt is risk free and that β debt is therefore zero: 假定债务无风险,故βdebt=0 Discount rates for capital investment appraisal should be related to the systematic risk of the project in question. In a similar way it could also be argued that they ought also to be related to the gearing level of the project. 资本投资评价使用的折现率应反映该项目的系统风险.同样地其也应反映该项目的杠杆水平. Example Hubbard, an all equity（融资方式为权益资金））food manufacturing firm, is about to embark（转型）upon a major diversification in the consumer electronics industry（电子行业）. Its current equity beta is 1.2, whilst the average equity β of electronics firms is 1.6. Gearing in the electronics industry averages 30% debt, 70% equity. Corporate debt is considered to be risk free. Rm=25%, Rf=10%, corporation tax rate=30%（notation as before）. Required: What would be a suitable discount rate for the new investment if Hubbard were to finance the new project in each of the following ways? 问: 若该公司采用下述融资结构以支持此新项目,则合适的折现率是多少? （a）Entirely by equity （b）By 30% debt and 70% equity （c）By 40% debt and 60% equity? Solution In all three situations the best approach is to treat the project as a 'mini-firm' and tailor（调整,修改）the discount rate to reflect its level of systematic business risk and financial risk（财务风险）. （a）Project financed entirely by equity To reflect the business risk of the new venture we should start with the equity ,βof the electronics industry, i.e. 1.6. As our project is to be ungeared we should then remove the financial risk element. The pure cost of equity（and hence WACC in the all equity ease）would then be: The project should be evaluated at a rate of 28.45%. （b）Project financed by 30% debt, 70% equity In this case the observed equity beta of the electronics industry would reflect the level of business risk and financial risk of the project. No adjustments are therefore required. 在此情况下电子行业的β系数反应了该项目的商业风险和财务风险.无需进一步调整. To obtain a suitable discount rate we must simply weight the cost of equity and the cost of debt, hence: Suitable discount rate for project =（34%×0.7）+（7%×0.3） =25.9% （c）Project financed by 40% debt and 60% equity In this case the equity beta of the electronics industry reflects a lower level of gearing than that for the proposed project. The simplest procedure is to take a two step approach to the gearing adjustment. Step 1 Calculate the equity beta for an ungeared electronics company（as in（a））. βequity ungeared=1.23 This is a measure of the pure systematic risk of electronics companies. We now adjust this pure beta in the light of the given financial gearing ratio. Step 2 Work out the equation 'backwards' to calculate the cost of equity for an electronics company with 60% equity and 40% debt The cost of equity for such a firm would then be: The cost of dcbt would be as before. And suitable discount rate for the project would be: 风险调整后净现值（risk adjusted NPV）