《公司理财教学资料 chap010.ppt》由会员分享，可在线阅读，更多相关《公司理财教学资料 chap010.ppt（32页珍藏版）》请在三一文库上搜索。
1、Chapter 10 Making Capital Investment Decisions,3/28/2020,伸宪氧畜靴铡彩自皱透拼姻擎言粟净绎拼钞互翱良蛔珍撕痪窑簧蒸暴埠范公司理财教学资料 chap010公司理财教学资料 chap010,Chapter Outline,Project Cash Flows: A First Look Incremental Cash Flows Pro Forma Financial Statements and Project Cash Flows More about Project Cash Flow Alternative Definitions
2、 of Operating Cash Flow Some Special Cases of Discounted Cash Flow Analysis,10-2,3/28/2020,肃刀谊庙玲狗巫娶鞋仪饯李飘淮闯足创芹零仰贤硬肖柿孩圾离赃嚎叔煤谭公司理财教学资料 chap010公司理财教学资料 chap010,Relevant Cash Flows,The cash flows that should be included in a capital budgeting analysis are those that will only occur (or not occur) if the
3、project is accepted These cash flows are called incremental cash flows The stand-alone principle - analyze each project in isolation from the firm (on its own merits) by focusing on incremental cash flows,10-3,3/28/2020,宋粗座仟基神抖耙螟诈鸳嚼践精鲍佬屋镁冤竞敛释顶膜籍拐节价蛾亥商舶公司理财教学资料 chap010公司理财教学资料 chap010,Asking the Righ
4、t Question,You should always ask yourself “Will this cash flow occur ONLY if we accept the project?” If the answer is “yes,” it should be included in the analysis because it is incremental If the answer is “part of it,” then we should include the part that occurs because of the project If the answer
5、 is “no,” it should not be included in the analysis because it will occur anyway,10-4,3/28/2020,努逞外绕七慑礼豆量絮荫栋俭董锌升滴栅铸稼硼总重附取染石秽征葛磐聘公司理财教学资料 chap010公司理财教学资料 chap010,Common Types of Cash Flows,Sunk costs costs that have accrued in the past Opportunity costs costs of lost options Side effects Positive sid
6、e effects benefits to other projects Negative side effects costs to other projects Changes in net working capital Taxes (use after-tax cash flows) Do not consider Financing Costs (part of R),10-5,3/28/2020,斑区原皇俺劲蚁镐笋彭炭箭饭偿咸钵绘杉昂客贪继匣兴涛多砧赔节瓦狈视公司理财教学资料 chap010公司理财教学资料 chap010,Pro Forma Statements and Cash
7、 Flow,Capital budgeting relies heavily on pro forma accounting statements, particularly income statements Computing cash flows: Operating Cash Flow (OCF) = EBIT + depreciation taxes OCF = Net income + depreciation (when there is no interest expense) Cash Flow From Assets (CFFA) = OCF net capital spe
8、nding (NCS) changes in NWC,10-6,3/28/2020,导同姻唐氓丛榜扶凛浇慌笛氟张配镣拈叫赔庆伍肤漱宋里盖月规兜睁掷议公司理财教学资料 chap010公司理财教学资料 chap010,Table 10.1 (p. 310) Pro Forma Income Statement,10-7,3/28/2020,溶备尼剧庇乓贩页禾肘茫飘馁娇吴咽陨海稚皱峦久绣砒惧尚景嘿掺枉兢桌公司理财教学资料 chap010公司理财教学资料 chap010,Table 10.2 Projected Capital Requirements (balance sheet),10-8,3/2
9、8/2020,酞辱诛癸枚福食诫睬证怖插哆支衰渴芒输搓忠渺碍辗阵迄淫躇幻濒墙硬邓公司理财教学资料 chap010公司理财教学资料 chap010,3/28/2020,Capital spending at the time of project inception (i.e., the “initial outlay”) includes the following items: + purchase price of the new asset - selling price of the asset replaced (if applicable) + costs of site prepa
10、ration, setup, and startup +/- increase (decrease) in tax liability due to sale of old asset at other than book value = net capital spending,央泡馁撕律乒靳削泰苗肥居探说份始试化私禁贺棉郡暴赤请伺呵痢缘蕴稠公司理财教学资料 chap010公司理财教学资料 chap010,Table 10.5 (p. 311) Projected Total Cash Flows,10-10,3/28/2020,瞎情受溉陀秘帚夺嘿囱豺群惑外楷膘泥椰梁撂卤伯葬龄逊志街析衫瞄砸
11、壁公司理财教学资料 chap010公司理财教学资料 chap010,Making The Decision,Now that we have the cash flows, we can apply the techniques that we learned in Chapter 9 Use formulas for PV of discounted cash flows Should we accept or reject the project?,10-11,3/28/2020,冕臣绚哈掇掺型矩痢噎舵蛮扎芦芜气凳傻券屿作掂尿幢瞩锦术凌府倔骗赶公司理财教学资料 chap010公司理财教学资
12、料 chap010,More on NWC,Why do we have to consider changes in NWC separately? GAAP requires that sales be recorded on the income statement when made, not when cash is received GAAP also requires that we record cost of goods sold when the corresponding sales are made, whether we have actually paid our
13、suppliers yet Finally, we have to buy inventory to support sales, although we havent collected cash yet,10-12,3/28/2020,超蚊旬缀触挡请力壹凋竭憾罪疤稀跪无桥存筋豫羡喂渡叹焙桌度乙岿笛墨公司理财教学资料 chap010公司理财教学资料 chap010,Depreciation,The depreciation expense used for capital budgeting should be the depreciation schedule required by th
14、e IRS for tax purposes Depreciation itself is a non-cash expense; consequently, it is only relevant because it affects taxes Depreciation tax shield = DT D = depreciation expense T = marginal tax rate,10-13,3/28/2020,谢六筏宅志旨虞洛套翁作移冒抛酒似胚形讯灌决监矿诺草拐违碉溃陇拿握公司理财教学资料 chap010公司理财教学资料 chap010,Computing Deprecia
15、tion,Straight-line Depreciation D = (Initial cost salvage) / number of years Very few assets are depreciated straight-line for tax purposes MACRS (Modified Accelerated Cost Recovery System) p. 316 Need to know which asset class is appropriate for tax purposes Multiply percentage given in table by th
16、e initial cost Depreciate to zero Mid-year convention,10-14,3/28/2020,烧偷妖韵京敞什摆染匿冬上琵畴尾二佃憋纯卡湾膏枝返帮啦谣垦崭损垣桶公司理财教学资料 chap010公司理财教学资料 chap010,After-tax Salvage,After-tax salvage is the capital recovery cash flow at project end. If the salvage value is different from the book value of the asset, then there
17、is a tax effect Book value = initial cost accumulated depreciation After-tax salvage = salvage Tax*(salvage book value),10-15,3/28/2020,元挣当媒丈质扎盼旭硒宵氮恳泽捎粉哎务祷拆将荷铲驱坛饱诫岿诛内痕势公司理财教学资料 chap010公司理财教学资料 chap010,Example: Depreciation and After-tax Salvage,You purchase equipment for $100,000, and it costs $10,0
18、00 to have it delivered and installed. (What is the capex?) Based on past information, you believe that you can sell the equipment for $17,000 when you are done with it in 6 years. The companys marginal tax rate is 40%. What is the depreciation expense each year and the after-tax salvage in year 6 f
19、or each of the following situations?,10-16,3/28/2020,毫硫丰狙削青蹄笆征妒矛淮薯蛹嗡清榴跺面息岩喝搞父楔肆碌袁捕纺夕卫公司理财教学资料 chap010公司理财教学资料 chap010,Example: Straight-line,Suppose the appropriate depreciation schedule is straight-line D = (110,000 17,000) / 6 = 15,500 every year for 6 years BV in year 6 = 110,000 6(15,500) = 17,0
20、00 After-tax salvage = 17,000 - .4(17,000 17,000) = 17,000,10-17,3/28/2020,金跪沤粘诞曲因做禽冕味坏榨使徘龟硒趁寐绦滴妇甥撼狗袭屁偏啤瘴舍输公司理财教学资料 chap010公司理财教学资料 chap010,Example: Three-year MACRS p. 316,BV in year 6 = 110,000 36,663 48,895 16,291 8,151 = 0,After-tax salvage = 17,000 - .4(17,000 0) = $10,200,10-18,3/28/2020,皂辐羡枚拯
21、苹胞屈咸敖权羔钧贤炼宜严宽峡累握纲呕迟历瘫事筹认祁选锈公司理财教学资料 chap010公司理财教学资料 chap010,Example: Seven-Year MACRS,BV in year 6 = 110,000 15,719 26,939 19,239 13,739 9,823 9,812 = 14,729,After-tax salvage = 17,000 .4(17,000 14,729) = 16,091.60,10-19,3/28/2020,椽烈脐匪财纽亿定硬餐赔贤空富巫乡窝蒙颜避胃垂肖铸轿蛰绽肚键耽器送公司理财教学资料 chap010公司理财教学资料 chap010,Exam
22、ple: Replacement Problem,Original Machine Initial cost = 100,000 Annual depreciation = 9,000 Purchased 5 years ago Book Value = 55,000 Salvage today = 65,000 Salvage in 5 years = 10,000,New Machine Initial cost = 150,000 5-year life Salvage in 5 years = 0 Cost savings = 50,000 per year 3-year MACRS
23、depreciation Required return = 10% Tax rate = 40%,10-20,3/28/2020,入剂存箍渡袒且事嵌蘸森先鲸瘩愧拆戚桑哇屹观醚若殃疥亮秩盐罪驻扰赢公司理财教学资料 chap010公司理财教学资料 chap010,Replacement Problem Computing Cash Flows,Remember that we are interested in incremental cash flows If we buy the new machine, then we will sell the old machine What are
24、the cash flow consequences of selling the old machine today instead of in 5 years?,10-21,3/28/2020,掘往榆甥玖薄苫型嚎泡卿噎席梆深逐吐电遏遭锻棕匡唁惭辖腋妻百靛乳家公司理财教学资料 chap010公司理财教学资料 chap010,Replacement Problem Pro Forma Income Statements,10-22,3/28/2020,坎换郸济里毛头嘻冀汐编姿邢驼捅衬邓钩普洽溉英问澡驯澜壮免缝幂艰雀公司理财教学资料 chap010公司理财教学资料 chap010,Replace
25、ment Problem Incremental Net Capital Spending,Year 0 Cost of new machine = 150,000 (outflow) After-tax salvage on old machine = 65,000 - .4(65,000 55,000) = 61,000 (inflow) Incremental net capital spending = 150,000 61,000 = 89,000 (outflow) Year 5 After-tax salvage on old machine = -10,000 (outflow
26、 because we no longer receive this),10-23,3/28/2020,瞳只滓黎惕攒宵堂讫讨坞岿衷卒铲淌宪恨螺渭屋欠获远超部拨名停妓妻碎公司理财教学资料 chap010公司理财教学资料 chap010,Replacement Problem Cash Flow From Assets,10-24,3/28/2020,餐寻帅峪谷犀腑色砷竖夷挎毒允季瞳朱奉板泞府耻郝呜看须租赃畅芭堤洒公司理财教学资料 chap010公司理财教学资料 chap010,Replacement Problem Analyzing the Cash Flows,Now that we hav
27、e the cash flows, we can compute the NPV and IRR Enter the cash flows Compute NPV = 54,801.74 Compute IRR = 36.28% Should the company replace the equipment?,10-25,3/28/2020,肃镀疹出罐湾荤秒瓶铂镍档砸网坍予挪肇仿芍歹瓶装靠鹊秧牢犁批萌帛珐公司理财教学资料 chap010公司理财教学资料 chap010,Other Methods for Computing OCF,Bottom-Up Approach Works only
28、when there is no interest expense OCF = NI + depreciation Top-Down Approach OCF = Sales Cash Costs Taxes Dont subtract non-cash deductions Tax Shield Approach OCF = (Sales Costs)(1 T) + Depreciation*T,10-26,3/28/2020,淆釜恤却宋百快告等枷鸡渐纬狈业名烫泞只腻熔调庙惧丸晦砚武莎劫衙咎公司理财教学资料 chap010公司理财教学资料 chap010,Example: Cost Cutt
29、ing,Your company is considering a new computer system that will initially cost $1 million. The system is expected to last for five years and will be depreciated using 3-year MACRS. The system is expected to have a salvage value of $50,000 at the end of year 5. It will save $300,000 per year in inven
30、tory and receivables management costs. There is no impact on net working capital. The marginal tax rate is 40%. The required return is 8%. Click on the Excel icon to work through the example,10-27,3/28/2020,抓遇撼务迂鱼杖汽丫莫震储孙宽征臃哼丈运靡浊胃效洗悄嫌腋暖贼干喧札公司理财教学资料 chap010公司理财教学资料 chap010,Example: Setting the Bid Pri
31、ce,Consider the following information: Army has requested bid for multiple use digitizing devices (MUDDs) Deliver 4 units each year for the next 3 years Labor and materials estimated to be $10,000 per unit Production space leased for $12,000 per year Requires $50,000 in fixed assets with expected sa
32、lvage of $10,000 at the end of the project (depreciate straight-line) Require initial $10,000 increase in NWC Tax rate = 34% Required return = 15%,10-28,3/28/2020,剔梁铆泵妖葱丑港北怪盗竣甸模攻踏拈暖裳烫角腆担播守寇土涯喝典娶店公司理财教学资料 chap010公司理财教学资料 chap010,Example: Equivalent Annual Cost Analysis,Burnout Batteries Initial Cost
33、= $36 each 3-year life $100 per year to keep charged Expected salvage = $5 Straight-line depreciation,Long-lasting Batteries Initial Cost = $60 each 5-year life $88 per year to keep charged Expected salvage = $5 Straight-line depreciation,The machine chosen will be replaced indefinitely and neither
34、machine will have a differential impact on revenue. No change in NWC is required. The required return is 15%, and the tax rate is 34%.,10-29,3/28/2020,骇捉溅仔妈瑰尚要烫据狮急寨拥傀芽祸权叉腾瑞尔传烷疲隘氏闯戊坎逢低公司理财教学资料 chap010公司理财教学资料 chap010,Quick Quiz,How do we determine if cash flows are relevant to the capital budgeting d
35、ecision? What are the different methods for computing operating cash flow and when are they important? What is the basic process for finding the bid price? What is equivalent annual cost and when should it be used?,10-30,3/28/2020,增洛躁颤玩鳖粤岔莲事纵赎星礁揭令算背省议郑厉禄磺拓唯搓梅惯韵蚂傻公司理财教学资料 chap010公司理财教学资料 chap010,Comp
36、rehensive Problem,A $1,000,000 investment is depreciated using a seven-year MACRS class life. It requires $150,000 in additional inventory and will increase accounts payable by $50,000. It will generate $400,000 in revenue and $150,000 in cash expenses annually, and the tax rate is 40%. What is the
37、incremental cash flow in years 0, 1, 7, and 8?,10-31,3/28/2020,即党简等刽葵荤窖戴溺温迢胳筑趁及坎雀订瞅晾讯垦中角坑惑六玫淄辕津公司理财教学资料 chap010公司理财教学资料 chap010,Key Concepts and Skills,Understand how to determine the relevant cash flows for various types of proposed investments Understand the various methods for computing operating cash flow Understand how to set a bid price for a project Understand how to evaluate the equivalent annual cost of a project,10-32,3/28/2020,嵌屁胆荆休忌盼你阉枢祖倚瓦硒促只胞杀煮竟绷剔脾愧毯释倪异溅教缴缘公司理财教学资料 chap010公司理财教学资料 chap010,