《金融学(第二版)》讲义大纲及课后习题答案详解-十六章

CHAPTER16CAPITALSTRUCTUREObjectivesTounderstandhowafirmcancreatevaluethroughitsfinancingdecisions.Toshowhowtotakeaccountofafirm’sfinancingmixinevaluatinginvestmentdecisions.Outline16.1InternalversusExternalFinancing16.2EquityFinancing16.3DebtFinancing16.4TheIrrelevanceofCapitalStructureinaFrictionlessEnvironment16.5CreatingValuethroughFinancingDecisions16.6ReducingCosts16.7DealingwithConflictsofInterest16.8CreatingNewOpportunitiesforStakeholders16.9FinancingDecisionsinPractice16.10HowtoEvaluateLeveredInvestmentsSummaryExternalfinancingsubjectsacorporation’sinvestmentplansmoredirectlytothedisciplineofthecapitalmarketthaninternalfinancingdoes.Debtfinancinginitsbroadestsenseincludesloansanddebtsecurities,suchasbondsandmortgages,aswellasotherpromisesoffuturepaymentbythecorporation,suchasaccountspayable,leases,andpensions.Inafrictionlessfinancialenvironment,wheretherearenotaxesortransactioncosts,andcontractsarecostlesstomakeandenforce,thewealthofshareholdersisthesamenomatterwhatcapitalstructurethefirmadopts.Intherealworldthereareanumberoffrictionsthatcancausecapitalstructurepolicytohaveaneffectonthewealthofshareholders.Theseincludetaxes,regulations,andconflictsofinterestbetweenthestakeholdersofthefirm.Afirm’smanagementmightthereforebeabletocreateshareholdervaluethroughitscapitalstructuredecisionsinoneofthreeways:Byreducingtaxcostsorthecostsofburdensomeregulations.Byreducingpotentialconflictsofinterestamongvariousstakeholdersinthefirm.ByprovidingstakeholderswithfinancialassetsnototherwiseavailabletoInstructor’sManualChapter16Page174them.Therearethreealternativemethodsusedinestimatingthenetpresentvalueofaninvestmentprojecttotakeaccountoffinancialleverage:theadjustedpresentvaluemethod,theflowstoequitymethod,andtheweightedaveragecostofcapitalmethodInstructor’sManualChapter16Page175SolutionstoProblemsatEndofChapterDebt-EquityMix1.DividoCorporationisanall-equityfinancedfirmwithatotalmarketvalueof$100million.Thecompanyholds$10millionincash-equivalentsandhas$90millioninotherassets.Thereare1,000,000sharesofDividocommonstockoutstanding,eachwithamarketpriceof$100.DividoCorporationhasdecidedtoissue$20millionofbondsandtorepurchase$20millionworthofitsstock.a.Whatwillbetheimpactonthepriceofitssharesandonthewealthofitsshareholders?Why?b.AssumethatDivido’sEBIThasanequalprobabilityofbeing$20million,or$12million,or$4million.Showtheimpactofthefinancialrestructuringontheprobabilitydistributionofearningspershareintheabsenceoftaxes.Whydoesthefactthattheequitybecomesriskiernotnecessarilyaffectshareholderwealth?SOLUTION:a.InanM&Mfrictionlessenvironment,wheretherearenotaxesandcontractsarecostlesstomakeandenforce,thewealthofshareholdersisthesamenomatterwhatcapitalstructurethefirmadopts.Insuchanenvironment,neitherthestockpricenorshareholders’wealthwouldbeaffected.IntherealworldDivido’smanagementmightbeabletocreateshareholdervaluebyissuingdebtandrepurchasingsharesintwoways:ByreducingtaxcostsByreducingthefreecashflowavailabletomanagementandexposingitselftogreatermarketdiscipline.b.TheformulaforEPSwithoutdebtis:EPSallequity=EBIT1,000,000sharesTheinterestpaymentswillbe$1.2millionperyear(.06x$20million)regardlessoftherealizedvalueofEBIT.Thenumberofsharesoutstandingafterexchangingdebtforequitywillbe800,000.EPSwithdebtistherefore:EPSwithdebt=NetEarnings=EBIT–$1.2million800,000shares800,000sharesProbabilityDistributionofDivido’sEBITandEPSStateoftheEconomyEBITAllequityWith$20millionofdebtInstructor’sManualChapter16Page176financingEPS(1millionshares)NetEarningsEPS(800,000shares)Badbusiness$4million$4pershare$2.8million$3.50pershareNormalbusiness121210.813.50Goodbusiness202018.823.50Mean121210.813.50Standarddeviation$6.53$8.16Althoughthesharesofstockbecomeriskierwithdebtfinancing,theexpectedearningspersharegoup.Inafrictionlessfinancialenvironment,theneteffectistoleavethepriceofthestockunaffected.Instructor’sManualChapter16Page177Leasing2.PlentileaseandNoleasearevirtuallyidenticalcorporations.TheonlydifferencebetweenthemisthatPlentileaseleasesmostofitsplantandequipmentwhereasNoleasebuysitsplantandequipmentandfinancesitbyborrowing.Compareandcontrasttheirmarket-valuebalancesheets.SOLUTION:Market-ValueBalanceSheetsofNoleaseandPlentileaseCorporationsa.NoleaseCorporationAssetsLiabilitiesandShareholders’EquityPlantandequipmentBondsOtherassetsEquityTotalTotalb.PlentileaseCorporationAssetsLiabilitiesandShareholders’EquityPlantandequipmentLeaseOtherassetsEquityTotalTotalThemaindifferencebetweenthebondsandtheleaseasaformofdebtfinancingiswhobearstheriskassociatedwiththeresidualmarketvalueoftheleasedassetattheendofthetermofthelease.SinceNoleaseCorporationhasboughtitsequipment,itbearsthisrisk.InPlentilease’scase,however,itisthelessorthatbearsthisresidual-valuerisk.Instructor’sManualChapter16Page178PensionLiabilities3.EuropensandAsiapensarevirtuallyidenticalcorporations.TheonlydifferencebetweenthemisthatEuropenshasacompletelyunfundedpensionplan,andAsiapenshasafullyfundedpensionplan.Compareandcontrasttheirmarket-valuebalancesheets.Whatdifferencedoesthefund