debtpolicydoesn’tmatter(英文版)(已修改)
2025-01-14 07:44 本頁面
【正文】 1 Review ? Pre MidTerm Debt vs. Equity overview ? Last Lecture (Ch 17) reintroduced these topics ? Now We will begin to add real world plexities. 2 Topics Covered ? Debt and Value in a Tax Free Economy ? Corporate Taxes and Debt Policy ? Cost of Financial Distress ? Explaining Financial Choices 3 MM (Debt Policy Doesn’t Matter) ? Modigliani Miller – When there are no taxes and capital markets function well, it makes no difference whether the firm borrows or individual shareholders borrow. Therefore, the market value of a pany does not depend on its capital structure. 4 MM (Debt Policy Doesn’t Matter) Assumptions ? By issuing 1 security rather than 2, pany diminishes investor choice. This does not reduce value if: – Investors do not need choice, OR – There are sufficient alternative securities ? Capital structure does not affect cash flows ... – No taxes – No bankruptcy costs – No effect on management incentives 5 Example River Cruises All Equity Financed D a t aN u m b e r o f s h a r e s 1 0 0 , 0 0 0P r i c e p e r s h a r e $10M a r k e t V a l u e o f S h a r es $ 1 m i l l i o nO u t c o m e S t a t e o f t h e E c o n o m yS l u m p E x p e c t e d B o o mO p e r a t i n g I n c o m e $ 7 5 , 0 0 0 1 2 5 , 0 0 0 1 7 5 , 0 0 0E a r n i n g s p e r s h a r e $ . 7 5 1 . 2 5 1 . 7 5R e t u r n o n s h a r e s ( % ) 7 . 5 % 1 2 . 5 1 7 . 5MM (Debt Policy Doesn’t Matter) 6 Example cont. 50% debt D a t aN u m b e r o f s h a r e s 5 0 , 0 0 0P r i c e p e r s h a r e $10M a r k e t V a l u e o f S h a r es $ 5 0 0 , 0 0 0M a r k e t v a l u e o f d e b t $ 5 0 0 , 0 0 0O u t c o m e S t a t e o f t h e E c o n o m yS l u m p E x p e c t e d B o o mO p e r a t i n g I n c o m e $ 7 5 , 0 0 0 1 2 5 , 0 0 0 1 7 5 , 0 0 0I n t e r e s t $ 5 0 , 0 0 0 5 0 , 0 0 0 5 0 , 0 0 0E q u i t y e a r n i n g s $ 2 5 , 0 0 0 7 5 , 0 0 0 1 2 5 , 0 0 0E a r n i n g s p e r s h a r e $ . 5 0 1 . 5 0 2 . 5 0R e t u r n o n s h a r e s ( % ) 5% 15 25MM (Debt Policy Doesn’t Matter) 7 Example River Cruises All Equity Financed Debt replicated by investors O u t c o m e S t a t e o f t h e E c o n o myS l u m p E x p e c t e d B o o mE a r n i n g s o n t w o s h a r es $ 1 . 5 0 2 . 5 0 3 . 5 0L E S S : I n t e r e s t 1 0 % $ 1 . 0 0 1 . 0 0 1 . 0 0N e t e a r n i n g s o n i n v e s t m e n t $ . 5 0 1 . 5 0 2 . 5 0R e t u r n o n $ 1 0 i n v e s t m e n t ( % ) 5% 15 25MM (Debt Policy Doesn’t Matter) 8 Financial Risk Risk to shareholders resulting from the use of debt. Financial Leverage Increase in the variability of shareholder returns that es from the use of debt. Interest Tax Shield Tax savings resulting from deductibility of interest payments.
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