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1、公司理财Corporate Finance授课教师：张群姿Email: The big pictureFinanceFour major topics in Finance (Stephen A. Ross)：lEfficient Market (Fama and French 1972)lReturn and Risk (Portfolio Theory, Markowitz,1952; CAPM, Sharpe, 1962)lOption Pricing Theory (Black, Scholes and Merton 1973)lCorporate Finance (Modiglian

2、iMiller Theorem, 1958, American Economic Review)Course DescriptionAn introductory course provides an overview of corporate finance.It emphasizes an intuitive, logically rigorous understanding of the theory and practice of corporate finance.Topics covered include: valuation theory, corporate risk man

3、agement, capital budgeting, financing decisions and financial market efficiency, dividend policy, etc.RequirementsAttendance: An alert, inquisitive presence in each and every class is mandatory. Attendance in seminar sessions is strongly advised but not required.Readings and Assignments: Students wi

4、ll be expected to read the assigned readings after class. Problem sets will be assigned throughout the course to illustrate and reinforce the concepts presented in class as well as in preparation of the case discussions to follow. Exam: l100% *Final ExamMaterials Textbook: Principles of Corporate Fi

5、nance, 10th Edition, by Richard A. Brealey, Stewart C. Myers and Franklin Allen.Other recommended (but not required) Finance texts:lCorporate Finance, 7th edition, Stephen Ross, Jeffrey Jaffe, and Randolph Westerfield, 2005.Textbook中文版 English VersionMaterials (contd.)Course PlanWeekPart of Textbook

6、Major Topics1Ch 1Introduction 2Ch 2 and 3Present Value and Bond Valuation3Ch 3，4 and 5Bond, Stock Valuation and Introduction of Investment Rules4Ch 5 and 6Application of Investment Rules 5Ch 7-9Asset Pricing in Corporate Finance(WACC)6Ch 10Project Analysis7Ch 13-15Financing Decisions (IPO)8IPO in Ch

7、ina9Part 5 (Part 7) Payout policy and Capital Structure10Part 10Mergers and Acquisitions11-12Part 11International Corporate Management,Review ProcessCHAPTER 1 INTRODUCTIONCorporate Finance公司的三种组织形式单一业主制 (Individual Proprietor)合伙制 (Partnership)公司制 (Corporate)单一业主与合伙制优势组成容易较简单的管理不用承担公司税劣势融资难无限责任有限的生命力

8、公司制优势 持续经营 有限责任 股权转让 有利于融资劣势 双重课税 设立和维持的成本Chapter 1: Introduction to Corporate Finance Corporate investment and financing decisionsThe role of the financial manager and the opportunity cost of capitalGoals of the corporationAgency problems and corporate governance1-1 Corporate Investment and Financi

9、ng DecisionsReal AssetsUsed to produce goods and servicesFinancial Assets/SecuritiesFinancial claims on income generated by firms real assetsCapital Budgeting/Capital Expenditure (CAPEX)Decision to invest in tangible or intangible assets1-1 Corporate Investment and Financing DecisionsInvestment Deci

10、sionPurchase of real assetsFinancing DecisionSale of financial assetsCapital StructureChoice between debt and equity financing1-1 Corporate Investment and Financing DecisionsCapital Budgeting ExamplesTangible Assetsi.e. Expanding stores，buying new machineIntangible Assetsi.e. Research and developmen

11、t for new drug, Patent, marketing teamTable 1.1 Recent Investment/ Financing DecisionsCompanyRecent Investment DecisionsRecent Financing DecisionsLVMH (France)LVMH acquires the Italian Jeweler, Bulgari, for $5 billion.Pays for the acquisition with a mixture of cash and shares.Procter & Gamble (U.S.)

12、Spends $8 billion on advertising.Raises 100 billion Japanese yen by an issue of 5-year bonds.奇虎奇虎360Qihoo 360 TechnologyNSYE2015年2月4日，奇虎360公司斥巨资收购国际顶级域名，收购价格为1700万美元，约合人民币1.1亿元。2015年2月完成了2亿美元的股票回购计划。Alibaba Group2015年10月16日，阿里巴巴出资45亿美金收购优酷土豆。2014年5月完成了优酷土豆18.3%的股票收购。收购预计会于2016年第一季度完成。现金收购。1-1 Corpor

13、ate Investment and Financing DecisionsWhat Is a Corporation?Legal entity, owned by shareholdersCan make contracts, carry on business, borrow, lend, sue, and be suedShareholders have limited liability and cannot be held personally responsible for corporations debtsFigure 1.1 Cash Flow between Financi

14、al Markets and Firms OperationsFinancialmanagerFirmsoperationsFinancialmarkets(1) Cash raised from investors(1)(2) Cash invested in firm(2)(3) Cash generated by operations(3)(4a) Cash reinvested(4a)(4b) Cash returned to investors(4b)1-2 The Financial Goal of the CorporationStockholders Want Three Th

15、ingsTo maximize current wealthTo transform wealth into most desirable time pattern of consumptionTo manage risk characteristics of chosen consumption plan1-2 The Financial Goal of the CorporationProfit MaximizationNot a well-defined financial objectiveWhich years profits? Shareholders will not welco

16、me higher short-term profits if long-term profits are damagedCompany may increase future profits by cutting years dividend, investing freed-up cash in firmNot in shareholders best interest if company earns less than opportunity cost of capital1-2 The Financial Goal of the CorporationThe Investment T

17、rade-offHurdle Rate/Cost of CapitalMinimum acceptable rate of return on investmentOpportunity Cost of CapitalInvesting in a project eliminates other opportunities to use invested cashFigure 1.2 The Investment Trade-off1-2 The Financial Goal of the CorporationShareholders desire wealth maximizationMa

18、nagers have many constituencies, “stakeholders”“Agency Problems” represent the conflict of interest between management and owners1-2 The Financial Goal of the CorporationAgency ProblemsManagers, acting as agents for stockholders, may act in their own interests rather than maximizing valueStakeholder

19、Anyone with a financial interest in the firm Agency ProblemsOwnership versus Management (Managers vs. stockholders)Difference in InformationProject investmentStock return and riskDifferent ObjectivesJob Security Annual bonus vs dividends1-2 The Financial Goal of the Corporation1-2 The Financial Goal

20、 of the CorporationAgency costs are incurred when:Managers do not attempt to maximize firm value Shareholders incur costs to monitor managers and constrain their actions1-2 The Financial Goal of the CorporationTools to Ensure Management Pays Attention to the Value of the FirmManagers actions subject

21、 to the scrutiny of board of directorsFinancial incentives provided, such as stock optionsJob securityPressure to be acquiredOther references （1st class stopped here）Allen, Franklin, James McAndrews, and Philip Strahan. “E-Finance: An Introduction” Working Paper 01-36, Financial Institutions Center,

22、 The Wharton School, University of Pennsylvania. October 2001.Core, J.E., W.R. Guay, and D.F. Larcker. “Executive Equity Compensation and Incentives: A Survey,” Federal Reserve Bank of New York Economic Policy Review, 9 (April 2003), pp. 27-50.Gompers, P.A., J.L. Ishii, and A. Metrick. “Corporate Go

23、vernance and Equity Prices” Quarterly Journal of Economics, 118(1), February 2003, pp. 107-155.L. Guiso, L. Zingales, and P. Sapienza, “Trusting the Stock Market,” Journal of Finance 63 (December 2008), pp. 2557600.Mackie-Mason, J.K., and R.H. Gordon. “How Much Do Taxes Discourage Incorporation?” Jo

24、urnal of Finance, (June 1997).Rappaport, A. “New thinking on how to link executive pay with performance.” Harvard Business Review, March-April 1999, 91-104.CHAPTER 2 PRESENT VALUESCorporate FinanceChapter 2 How to calculate present valuesFuture values and present valuesPerpetuities and annuitiesGrow

25、ing perpetuities and annuitiesHow Interest Is Paid and Quoted2-1 Future Values and present valuesCalculating Future ValuesFuture ValueAmount to which investment will grow after earning interestPresent ValueValue today of future cash flow2-1 Future Values and present valuesFuture Value of $100 =Examp

26、le: FVWhat is the future value of $100 if interest is compounded annually at a rate of 7% for two years?tr)1 (100$FV49.114$)07.1 (100$FV49.114$)07. 1 ()07. 1 (100$FV2Figure 2.1 Future Values with compounding2-1 Future Values and present values1factordiscount =PVPV=luePresent vaC2-1 Future Values and

27、 present valuesDiscount factor = DF = PV of $1Discount factors can be used to compute present value of any cash flow2-1 Future Values and present valuesGiven any variables in the equation, one can solve for the remaining variablePrior example can be reversed 10049.114PVDFPV2)07.1 (122CFigure 2.2 Pre

28、sent Values with compounding2-1 Future Values and present valuesValuing an Office BuildingStep 1: Forecast Cash FlowsCost of building = C0 = $700,000Sale price in year 1 = C1 = $800,000Step 2: Estimate Opportunity Cost of CapitalIf equally risky investments in the capital market offer a return of 7%

29、, then cost of capital = r = 7%2-1 Future Values and present valuesValuing an Office BuildingStep 3: Discount future cash flowsStep 4: Go ahead if PV of payoff exceeds investment664,747$PV)07.1 (000,800$)1 (1rC664,47$000700$664,747$NPV,2-1 Future Values and present valuesrCC1=NPVinvestment requiredP

30、V=NPV10Net Present Value2-1 Future Values and present valuesRisk and Present ValueHigher risk projects require a higher rate of returnHigher required rates of return cause lower PVs664,747$.071$800,000PV7%at $800,000 of PV1C2-1 Future Values and present valuesRisk and Net Present Value$47,664 $700,0

31、0047,6647$=NPVinvestment requiredPV=NPV2-1 Future Values and present valuesNet Present Value RuleAccept investments that have positive net present valueUsing the original example: Should one accept the project given a 10% expected return?273,27$1.1$800,000+$700,000=NPV2-1 Future Values and present v

32、aluesRate of Return RuleAccept investments that offer rates of return in excess of their opportunity cost of capitalIn the project listed below, the opportunity cost of capital is 12%. Is the project a wise investment?14.3%or .143,$700,0000,00070$000,00$8investmentprofitReturn2-1 Future Values and p

33、resent valuesMultiple Cash FlowsDiscounted Cash Flow (DCF) formula:ttrCrCrC)1()1()1(0.PV2211TtrCttC1)1(00NPVFigure 2.5 Net Present Values2-2 Perpetuities and annuitiesPerpetuityFinancial concept in which cash flow is theoretically received foreverPVluepresent vaflowcash ReturnCr 2-2 Perpetuities and

34、 annuitiesPerpetuityrC10PVratediscount flowcash flowcash of PV2-2 Perpetuities and annuitiesPresent Value of PerpetuitiesWhat is the present value of $1 billion every year, for eternity, if the perpetual discount rate is 10%?billion 10$PV10. 0bil $12-2 Perpetuities and annuitiesPresent Value of Perp

35、etuitiesWhat if the investment does not start making money for 3 years?billion 51. 7$PV31.10110. 0bil $12-2 Perpetuities and annuitiesAnnuityAsset that pays fixed sum each year for specified number of yearsPerpetuity (first payment in year 1)Perpetuity (first payment in year t + 1)Annuity from year

36、1 to year tAssetYear of Payment1 2.t t + 1Present ValuetrrCrC)1 (12-2 Perpetuities and annuitiesExample: Tiburon Autos offers payments of $5,000 per year, at the end of each year for 5 years. If interest rates are 7%, per year, what is the cost of the car? 2-2 Perpetuities and annuitiestrrrC111annui

37、ty of PV2-2 Perpetuities and annuitiesAnnuityExample: The state lottery advertises a jackpot prize of $365 million, paid in 30 yearly installments of $12.167 million, at the end of each year. Find the true value of the lottery prize if interest rates are 6%.000,500,167$06.106.106.1167.12ValueLottery

38、 30Value2-2 Perpetuities and annuitiesFuture Value of an AnnuityrrCt11annuity of FV2-2 Perpetuities and annuitiesFuture Value of an AnnuityWhat is the future value of $20,000 paid at the end of each of the following 5 years, assuming investment returns of 8% per year?332,117$08.108.1000,20 FV52-3 Gr

39、owing perpetuities and annuitiesConstant Growth PerpetuityThis formula can be used to value a perpetuity at any point in timegrC10PVg = the annual growth rate of the cash flowgrCtt1PV2-3 Growing perpetuities and annuitiesConstant Growth PerpetuityWhat is the present value of $1 billion paid at the e

40、nd of every year in perpetuity, assuming a rate of return of 10% and constant growth rate of 4%?billion 667.16$04.10.1PV02-3 Growing perpetuities and annuitiesGrowing AnnuitiesGolf club membership is $5,000 for 1 year, or $12,750 for three years. Find the better deal given payment due at the end of

41、the year and 6% expected annual price increase, discount rate 10%. 2-4 How Interest is Paid and QuotedEffective Annual Interest Rate (EAR)Interest rate annualized using compound interestAnnual Percentage Rate (APR)Interest rate annualized using simple interest2-4 How Interest is Paid and outlaidGive

42、n a monthly rate of 1%, what is the (EAR)? What is the (APR)?12.00%or .12,=12 .01=APR12.68%or .1268,=1.01)+(1=EAR=1.01)+(1=EAR1212rCHAPTER 3 VALUING BONDSCorporate FinanceChapter 3 Valuing BondsUsing present-value formulas to value bondsHow bond prices vary with interest ratesExplaining the term str

43、uctureReal and nominal rates of interestCorporate bonds and the risk of default3-1 Using the present value formula to value bondsNNrCrCrC)1 (000, 1.)1 ()1 (PV2211ExampleToday is October 1, 2010; what is the value of the following bond? An IBM bond pays $115 every September 30 for five years. In Sept

44、ember 2015 it pays an additional $1,000 and retires the bond. The bond is rated AAA (WSJ AAA YTM is 7.5%).84.161, 1$075. 1115, 1075. 1115075. 1115075. 1115075. 1115PV54323-1 Using the present value formula to value bondsExample: FranceIn October 2011 you purchase 100 euros of bonds in France which p

45、ay a 5% coupon every year. If the bond matures in 2016 and the YTM is 2.4%, what is the value of the bond?11.112024. 10 .105024. 15024. 15024. 15024. 15PV54323-1 Using the present value formula to value bondsAnother Example: JapanIn July 2010 you purchase 200 yen of bonds in Japan which pay an 8% co

46、upon every year. If the bond matures in 2015 and the YTM is 4.5%, what is the value of the bond?57.243045.1216045.116045.116045.116045.116PV54323-1 Using the present value formula to value bondsExample: USAIn February 2012 you purchase a three-year U.S. government bond. The bond has an annual coupon

47、 rate of 11.25%, paid semiannually. If investors demand a 0.085% semiannual return, what is the price of the bond?40.331, 1$00085. 125.105600085. 125.5600085. 125.5600085. 125.5600085. 125.5600085. 125.56PV654323-1 Using the present value formula to value bonds3-2 how bond prices vary with interest

48、ratesExample, Continued: USATake the same three-year U.S. government bond. If investors demand a 4.0% semiannual return, what is the new price of the bond?05.1203$04. 125.105604. 125.5604. 125.5604. 125.5604. 125.5604. 125.56PV65432Figure 3.1 Interest rate on 10-year treasuries0246810121416190019101

49、92019301940195019601970198019902000Yield, %YearInterest rate, %3-2 HOW BOND PRICES VARY WITH INTEREST RATES Bond priceFigure 3.2 Maturity and Prices05001000150020002500300035004000450050000246810121416182022242628When interest rate = 11.25% coupon, both bonds sell for face value Bond priceInterest r

50、ate, %3-2 how bond prices vary with interest ratesPV)(PV.PV)(PV3PV)(PV2PV)(PV1Duration321TCTCCCyield1duration(%) volatilityduration Modified3-2 Duration calculationYearPayment CtPV(Ct) at 4.0%Fraction of Total ValuePV(Ct)/VYear fraction of total value t PV(Ct)/PV1$90$86.540.06660.066629083.210.06400