公司金融3

112.PracticalProblemsinCapitalBudgeting(II)PrinciplesofCorporateFinanceSeventhEditionRichardA.BrealeyStewartC.MyersSlidesbyMatthewWillSlidesEditedbyMinggaoShen12-2McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedTopicsCoveredŠLookFirstToMarketValuesŠForecastingEconomicRentsŠMarvinEnterprisesŠThecapitalinvestmentprocessŠDecisionMakersandInformationŠIncentivesŠResidualIncomeandEVAŠAccountingPerformanceMeasuresŠEconomicProfit12-3McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarketValuesŠSmartinvestmentdecisionsmakeMOREmoneythansmartfinancingdecisions12-4McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarketValuesŠSmartinvestmentsareworthmorethantheycost:theyhavepositiveNPVsŠFirmscalculateprojectNPVsbydiscountingforecastcashflows,but...12-5McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarketValuesŠProjectsmayappeartohavepositiveNPVsbecauseofforecastingerrorse.g.someacquisitionsresultfromerrorsinaDCFanalysis12-6McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarketValuesŠPositiveNPVsstemfromacomparativeadvantageŠStrategicdecision-makingidentifiesthiscomparativeadvantage;itdoesnotidentifygrowthareas212-7McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarketValuesŠDon’tmakeinvestmentdecisionsonthebasisoferrorsinyourDCFanalysis.ŠStartwiththemarketpriceoftheassetandaskwhetheritisworthmoretoyouthantoothers.12-8McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarketValuesŠDon’tassumethatotherfirmswillwatchpassively.Ask--HowlongaleaddoIhaveovermyrivals?WhatwillhappentopriceswhenthatleaddisappearsInthemeantimehowwillrivalsreacttomymove?Willtheycutpricesorimitatemyproduct?12-9McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedDepartmentStoreRentsNPV=-100++...+=$1million[assumespriceofpropertyappreciatesby3%ayear]Rentalyield=10-3=7%NPV++...++=$1million88+1341.101.10108-78-7.218-8.878-9.131.101.1021.1091.101012-10McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedEXAMPLE:KINGSOLOMON’SMINEInvestment=$200millionLife=10yearsProduction=.1millionoz.ayearProductioncost=$200peroz.Currentgoldprice=$400peroz.Discountrate=10%UsingMarketValues12-11McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedEXAMPLE:KINGSOLOMON’SMINE-continuedIfthegoldpriceisforecastedtoriseby5%p.a.:NPV=-200+(.1(420-200))/1.10+(.1(441-200))/1.102+...=-$10m.Butifgoldisfairlypriced,youdonotneedtoforecastfuturegoldprices:NPV=-investment+PVrevenues-PVcosts=200+400-Σ((.1x200)/1.10t)=$77millionUsingMarketValues12-12McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedDoProjectsHavePositiveNPVs?ŠRents=profitsthatmorethancoverthecostofcapitalŠNPV=PV(rents)ŠRentscomeonlywhenyouhaveabetterproduct,lowercostsorsomeothercompetitiveedgeŠSoonerorlatercompetitionislikelytoeliminaterents312-13McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedCompetitiveAdvantageProposaltomanufacturespecialtychemicalsŠRawmaterialswerecommoditychemicalsimportedfromEuropeŠFinishedproductwasexportedtoEuropeŠHighearlyprofits,but...Š...whathappenswhencompetitorsenter?12-14McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarvinEnterprisesCapacityUnitcostTechnologyIndustryMarvinCapitalProdn.Salvagevalue1.2011120-17.552.52.20191202417.552.5*Proposed12-15McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarvinEnterprisesPricesTechnologyProductioncostInterestoncapitalInterestonsalvageInvestaboveScrapbelow1.20115.53.5.5962.20193.53.5.57412-16McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarvinEnterprises56710Price800400320240DemandDemand=80(10-Price)Price=10xquantity/80DemandforGarbageBlasters12-17McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarvinEnterprisesNPVnewplant=100x[-10+Σ((6-3)/1.2t)+10/1.25=$299millionChangePVexistingplant=24xΣ(1/1.2t)=$72millionNetbenefit=299-72=$227millionValueofGarbageBlasterInvestment12-18McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarvinEnterprises•VALUEOFCURRENTBUSINESS:VALUEAtpriceof$7PV=24x3.5/.20420•WINDFALLLOSS:Sincepricefallsto$5after5years,Loss=-24x(2/.20)x(1/1.20)5-96•VALUEOFNEWINVESTMENT:Rentgainedonnewinvestment=100x1for5years=299Rentlostonoldinvestment=-24x1for5years=-72227227TOTALVALUE:551CURRENTMARKETPRICE:460412-19McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedMarvinEnterprises100200280NPVnewplantChangeinPVexistingplantTotalNPVofinvestment400600200-200NPV$m.AdditiontocapacitymillionsAlternativeExpansionPlans12-20McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.AllrightsreservedThePrincipalAgentProblemShareholders=OwnersManagers=EmployeesQuestion:Whohasthepower?Answer:Managers12-21McGrawHill/IrwinCopyright©2003byTheMcGraw-HillCompanies,Inc.Allrig