美国注册管理会计师CMAP2_S5

Copyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)1MODULE34TAXES:TRANSACTIONSINPROPERTYS5:FinancialInstruments&CostofCapital(Cont’d)Instructor:HelenCopyright高才国际教育集团P2–FinancialDecisionMakingCopyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)2E.CostofCapital–CurrentCopyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)3ECostofCapital–Current1.Overviewa)Investor’srequiredrateofreturnInvestorsprovidefundstocorporationswiththeunderstandingthatmgmtwilldeploythesefundsinsuchawaythattheinvestorwillultimatelyreceiveareturn.Ifmgmtdoesnotgeneratetheinvestor’srequiredreturn,theinvestorswilltaketheirfundsoutofthecorporationandredirectthemtomoreprofitableventures.Forthisreason,theinvestors’requiredrateofreturninturnbecomesthefirm’scostofcapital.①Afirm’scostofcapitalistypicallyusedtodiscountthefuturecashflowsofLTprojects,sinceinvestmentswithareturnhigherthanthecostofcapitalwillincreasethevalueofthefirm,i.e.shareholder’swealth.Copyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)4ECostofCapital–Current2.ComponentCostofCapitala)CostofdebtItistheafter-taxinterestrateonthedebtsinceinterestpaymentsaretax-deductible.Costofdebt=CouponrateX(1–taxrate)Copyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)5ECostofCapital–Current2.ComponentCostofCapitalb)CostofequityItiscomputedusingthedividendyieldratioCostofequity=Cashdividend÷Marketpriceofstock①ThecomponentofR/EisconsideredtobethesameasthatforC/SsinceifthefirmcannotfindaprofitableuseforR/E,itshouldbedistributedtotheC/Sholdersintheformofdividendssothattheycanfindtheirownalternativeinvestments.②Providersofequitycapitalareexposedtomoreriskthanarelenders.Tocompensateforthishigherlevelofrisk,equityinvestorsdemandahigherreturn,makingequityfinancingmoreexpensivethandebt.Copyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)6ECostofCapital–Current3.Weighted-AverageCostofCapitala)TargetcapitalstructureCorpmgmtusuallydesignatesatargetcapitalstructureforthefirm,i.e.,theproportionsthateachcomponentofcapitalshouldcompriseintheoverallcombination.Thisisbasedonthecomponents’respectivebookvalues.ComponentExample:11.4%BondsPay11.5%P/SC/SR/EBookvalues$2,000,0004,000,00012,000,0001,200,000$19,200,000Proportions10.42%20.83%62.50%6.25%100.00%Thefollowingisexcerptedfromafirm’smostrecentB/SCopyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)7ECostofCapital–Current3.Weighted-AverageCostofCapitalb)Weighted-averagecostofcapital(WACC)Itisbasedonthecomponents’respectivemarketvalues,becausemarketvalueprovidesthebestinformationaboutinvestors’expectations.Example(cont’d)Ifthecompanyhashistoricallyprovided16%returnonC/S,anda35%taxratecurrentlytheP/Sisvalued@$4,600,000onthemarket.Costofdebt=11.4%X(1–35%)=7.4%CostofP/S=($40,000,000X11.5%)÷$4,600,000=10.0%Component11.4%BondsPay11.5%P/SC/SR/EMarketvalues$2,200,0004,600,00014,000,0001,200,000$22,000,000Weight10.00%20.91%63.64%5.45%100.00%Componentcost7.4%10.0%16.0%16.0%XWeightedcost0.7400%2.0909%10.1818%0.8727%13.8855%=Copyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)8ECostofCapital–Current3.Weighted-AverageCostofCapitalc)OptimalcapitalstructureShareholderwealth-maximizationresultsfromminimizingtheWACC.①Thus,thefocusofmgmtshouldnotbemaximizingEPSsinceEPScanbeincreasedbytakingonmoredebt,butdebtincreasesrisk.②However,firmscannotidentifythisoptimalpointprecisely.Therefore,theyshouldattempttofindanoptimalrangeforthecapitalstructure.D/ECostofequityCostofdebtWACCMinWACCOptimalcapitalstructureCopyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)9ECostofCapital–Current4.ImpactofIncomeTaxesonCapitalStructureandCapitalDecisionsa)Taxesareanimportantconsiderationbecausetheycanbeanywherefrom25%to50%ofallcosts.Effectofcapitalgains①Corporatecapitalgainsaretaxed@regularrate.②Individualcapitalgainsaretaxed@16%orless.Effectofdividends①Dividendsreceivedbycorporationsmaybesubjectedto70%to100%dividendsreceiveddeductions.②Dividendsreceivedbyindividualsmayusuallybesubjectedto15%Topreventdoubletaxation.Toencouragecorporationstoinvestinthestockofanothercompany.Effectofinterest①Interestistax-deductibleexpenseofthedebtorcompany,butistaxabletothecreditors,bothindividualsandcorporations.Copyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)10ECostofCapital–Current4.ImpactofIncomeTaxesonCapitalStructureandCapitalDecisionsb)MultinationalCorporationsMultinationalcorporationsfrequentlyderiveincomefromseveralcountries.Thegovernmentofeachcountryinwhichacorporationdoesbusinessmayenactstatutesimposingoneormoretypesoftaxonthecorporation,soanycapitaldecisionaffectingmultiplecountriesmustconsiderthetaxprovisionsofeachnation.Copyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)11QuestionTime…1.ThetheoryunderlyingthecostofcapitalisprimarilyconcernedwiththecostofAnswer:CA.Long-termfundsandoldfundsB.Short-termfundsandnewfundsC.Long-termfundsandnewfundsD.Short-termfundsandoldfundsCopyright高才国际教育集团S5:FinancialInstrument&CostofCapital(byHelen)12QuestionTime…2.Whencalculatingthecostofcapital,t