罗斯《公司理财》第八版 第八章fmdt.pptx

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1、McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.Making Capital Investment Decisions Chapter 8McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.KeyConceptsandSkillsUnderstandhowtodeterminetherelevantcashflowsforvarioustypesofcapi

2、talinvestmentsBeabletocomputedepreciationexpensefortaxpurposesIncorporateinflationintocapitalbudgetingUnderstandthevariousmethodsforcomputingoperatingcashflowApplytheEquivalentAnnualCostapproachMcGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.ChapterOutline8.1Incr

3、ementalCashFlows8.2TheBaldwinCompany:AnExample8.3InflationandCapitalBudgeting8.4AlternativeDefinitionsofCashFlow8.5InvestmentsofUnequalLives:TheEquivalentAnnualCostMethodMcGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.8.1IncrementalCashFlowsCashflowsmatternotacco

4、untingearnings.Sunkcostsdontmatter.Incrementalcashflowsmatter.Opportunitycostsmatter.Sideeffectslikecannibalismanderosionmatter.Taxesmatter:wewantincrementalafter-taxcashflows.Inflationmatters.McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.CashFlowsNotAccounting

5、Considerdepreciationexpense.Youneverwriteacheckmadeoutto“depreciation.”Muchoftheworkinevaluatingaprojectliesintakingaccountingnumbersandgeneratingcashflows.McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.IncrementalCashFlowsSunkcostsarenotrelevantJustbecause“weha

6、vecomethisfar”doesnotmeanthatweshouldcontinuetothrowgoodmoneyafterbad.Opportunitycostsdomatter.JustbecauseaprojecthasapositiveNPV,thatdoesnotmeanthatitshouldalsohaveautomaticacceptance.Specifically,ifanotherprojectwithahigherNPVwouldhavetobepassedup,thenweshouldnotproceed.McGraw-Hill/IrwinCopyright

7、2007 by The McGraw-Hill Companies,Inc.All rights reserved.IncrementalCashFlowsSideeffectsmatter.Erosionandcannibalismarebothbadthings.Ifournewproductcausesexistingcustomerstodemandlessofcurrentproducts,weneedtorecognizethat.If,however,synergiesresultthatcreateincreaseddemandofexistingproducts,wealso

8、needtorecognizethat.McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.EstimatingCashFlowsCashFlowfromOperationsRecallthat:OCF=EBITTaxes+DepreciationNetCapitalSpendingDontforgetsalvagevalue(aftertax,ofcourse).ChangesinNetWorkingCapitalRecallthatwhentheprojectwindsdo

9、wn,weenjoyareturnofnetworkingcapital.McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.InterestExpenseLaterchapterswilldealwiththeimpactthattheamountofdebtthatafirmhasinitscapitalstructurehasonfirmvalue.Fornow,itsenoughtoassumethatthefirmslevelofdebt(and,hence,inte

10、restexpense)isindependentoftheprojectathand.McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.8.2TheBaldwinCompanyCostsoftestmarketing(alreadyspent):$250,000Currentmarketvalueofproposedfactorysite(whichweown):$150,000Costofbowlingballmachine:$100,000(depreciatedacc

11、ordingtoMACRS5-year)Increaseinnetworkingcapital:$10,000Production(inunits)byyearduring5-yearlifeofthemachine:5,000,8,000,12,000,10,000,6,000McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.TheBaldwinCompanyPriceduringfirstyearis$20;priceincreases2%peryearthereafte

12、r.Productioncostsduringfirstyearare$10perunitandincrease10%peryearthereafter.Annualinflationrate:5%WorkingCapital:initial$10,000changeswithsalesMcGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.TheBaldwinCompanyYear 0Year 1Year 2Year 3Year 4 Year 5 Investments:(1)B

13、owlingballmachine100.0021.76*(2)Accumulated20.0052.0071.2082.7294.24depreciation(3)Adjustedbasisof80.0048.0028.8017.285.76machineafterdepreciation(endofyear)(4)Opportunitycost150.00150.00(warehouse)(5)Networkingcapital10.00 10.0016.3224.9721.220(endofyear)(6)Changeinnet10.006.328.653.7521.22workingc

14、apital(7)Totalcashflowof260.006.328.653.75192.98investment(1)+(4)+(6)($thousands)(Allcashflowsoccurattheendoftheyear.)McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.TheBaldwinCompanyAttheendoftheproject,thewarehouseisunencumbered,sowecansellitifwewantto.Year 0Ye

15、ar 1Year 2Year 3Year 4 Year 5 Investments:(1)Bowlingballmachine100.0021.76*(2)Accumulated20.0052.0071.2082.7294.24depreciation(3)Adjustedbasisof80.0048.0028.8017.285.76machineafterdepreciation(endofyear)(4)Opportunitycost150.00150.00(warehouse)(5)Networkingcapital10.00 10.0016.3224.9721.220(endofyea

16、r)(6)Changeinnet10.006.328.653.7521.22workingcapital(7)Totalcashflowof260.006.328.653.75192.98investment(1)+(4)+(6)McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.TheBaldwinCompanyYear 0Year 1Year 2Year 3Year 4 Year 5Income:(8)SalesRevenues100.00163.20249.72212.2

17、0129.90Recallthatproduction(inunits)byyearduringthe5-yearlifeofthemachineisgivenby:(5,000,8,000,12,000,10,000,6,000).Priceduringthefirstyearis$20andincreases2%peryearthereafter.Salesrevenueinyear3=12,000$20(1.02)2=12,000$20.81=$249,720.McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc

18、.All rights reserved.TheBaldwinCompanyYear 0Year 1Year 2Year 3Year 4 Year 5Income:(8)SalesRevenues100.00163.20249.72212.20129.90(9)Operatingcosts50.0088.00145.20133.1087.84Again,production(inunits)byyearduring5-yearlifeofthemachineisgivenby:(5,000,8,000,12,000,10,000,6,000).Productioncostsduringthef

19、irstyear(perunit)are$10,andtheyincrease10%peryearthereafter.Productioncostsinyear2=8,000$10(1.10)1=$88,000McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.TheBaldwinCompanyYear 0Year 1Year 2Year 3Year 4 Year 5Income:(8)SalesRevenues100.00163.20249.72212.20129.90(9

20、)Operatingcosts50.0088.00145.20133.1087.84(10)Depreciation20.0032.0019.2011.5211.52DepreciationiscalculatedusingtheAcceleratedCostRecoverySystem(shownatright).Ourcostbasisis$100,000.Depreciationchargeinyear4=$100,000(.1152)=$11,520.YearACRS%120.00%232.00%319.20%411.52%511.52%65.76%Total 100.00%McGra

21、w-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.TheBaldwinCompanyYear 0Year 1Year 2Year 3Year 4 Year 5Income:(8)SalesRevenues100.00163.20249.72212.20129.90(9)Operatingcosts50.0088.00145.20133.1087.84(10)Depreciation20.0032.0019.2011.5211.52(11)Incomebeforetaxes30.0043

22、.2085.3267.5830.54(8)(9)-(10)(12)Taxat34percent10.2014.6929.0122.9810.38(13)NetIncome19.8028.5156.3144.6020.16McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.IncrementalAfterTaxCashFlowsYear 0Year 1Year 2Year 3Year 4Year 5(1)SalesRevenues$100.00$163.20$249.72$212

23、.20$129.90(2)Operatingcosts-50.00-88.00-145.20133.10-87.84(3)Taxes-10.20-14.69-29.01-22.98-10.38(4)OCF(1)(2)(3)39.8060.5175.5156.1231.68(5)TotalCFofInvestment260.6.328.653.75192.98(6)IATCF(4)+(5)260.39.8054.1966.8659.87224.66McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights

24、 reserved.NPVofBaldwinCompany139.8051.588260CF1F1CF0INPV10154.19CF2F2166.86CF3F3159.87CF4F41224.66CF5F5McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.8.3InflationandCapitalBudgetingInflationisanimportantfactofeconomiclifeandmustbeconsideredincapitalbudgeting.Con

25、sidertherelationshipbetweeninterestratesandinflation,oftenreferredtoastheFisherequation:(1+NominalRate)=(1+RealRate)(1+InflationRate)McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.InflationandCapitalBudgetingForlowratesofinflation,thisisoftenapproximated:RealRat

26、eNominalRateInflationRateWhilethenominalrateintheU.S.hasfluctuatedwithinflation,therealratehasgenerallyexhibitedfarlessvariancethanthenominalrate.Incapitalbudgeting,onemustcomparerealcashflowsdiscountedatrealratesornominalcashflowsdiscountedatnominalrates.McGraw-Hill/IrwinCopyright 2007 by The McGra

27、w-Hill Companies,Inc.All rights reserved.OtherMethodsforComputingOCFBottom-UpApproachWorksonlywhenthereisnointerestexpenseOCF=NI+depreciationTop-DownApproachOCF=SalesCostsTaxesDontsubtractnon-cashdeductionsTaxShieldApproachOCF=(SalesCosts)(1T)+Depreciation*TMcGraw-Hill/IrwinCopyright 2007 by The McG

28、raw-Hill Companies,Inc.All rights reserved.8.5InvestmentsofUnequalLivesTherearetimeswhenapplicationoftheNPVrulecanleadtothewrongdecision.Considerafactorythatmusthaveanaircleanerthatismandatedbylaw.Therearetwochoices:The“Cadillaccleaner”costs$4,000today,hasannualoperatingcostsof$100,andlasts10years.T

29、he“Cheapskatecleaner”costs$1,000today,hasannualoperatingcostsof$500,andlasts5years.Assuminga10%discountrate,whichoneshouldwechoose?McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.InvestmentsofUnequalLivesAtfirstglance,theCheapskatecleanerhasahigherNPV.101004,614.

30、464,000CF1F1CF0INPV1055002,895.391,000CF1F1CF0INPV10CadillacAirCleanerCheapskateAirCleanerMcGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.InvestmentsofUnequalLivesThisoverlooksthefactthattheCadillaccleanerlaststwiceaslong.Whenweincorporatethat,theCadillaccleaneri

31、sactuallycheaper(i.e.,hasahigherNPV).McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.InvestmentsofUnequalLivesReplacementChainRepeatprojectsuntiltheybeginandendatthesametime.ComputeNPVforthe“repeatedprojects.”TheEquivalentAnnualCostMethodMcGraw-Hill/IrwinCopyrigh

32、t 2007 by The McGraw-Hill Companies,Inc.All rights reserved.ReplacementChainApproachTheCadillaccleanertimelineofcashflows:-$4,000 100 -100 -100 -100 -100 -100 -100 -100 -100 -1000 1 2 3 4 5 6 7 8 9 10-$1,000 500 -500 -500 -500-1,500 -500 -500 -500 -500 -5000 1 2 3 4 5 6 7 8 9 10TheCheapskatecleanert

33、imelineofcashflowsover ten years:McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.ReplacementChainApproach101004,6144,000CF1F1CF0INPV1045004,6931,000CF1F1CF0INPV10CadillacAirCleanerCheapskateAirCleaner11,500CF2F25500CF3F3McGraw-Hill/IrwinCopyright 2007 by The McGr

34、aw-Hill Companies,Inc.All rights reserved.EquivalentAnnualCost(EAC)ApplicabletoamuchmorerobustsetofcircumstancesthanthereplacementchainTheEACisthevalueofthelevelpaymentannuitythathasthesamePVasouroriginalsetofcashflows.Forexample,theEACfortheCadillacaircleaneris$750.98.TheEACfortheCheapskateairclean

35、eris$763.80,whichconfirmsourearlierdecisiontorejectit.McGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.CadillacEACwithaCalculator101004,614.464,000CF1F1CF0INPV10750.98104,614.4610PMTI/YFVPVNPVMcGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rig

36、hts reserved.CheapskateEACwithaCalculator55002,895.391,000CF1F1CF0INPV10763.8010-2,895.395PMTI/YFVPVNPVMcGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies,Inc.All rights reserved.QuickQuizHowdowedetermineifcashflowsarerelevanttothecapitalbudgetingdecision?Whatarethedifferentmethodsforcomputingoperatingcashflow,andwhenaretheyimportant?Howshouldcashflowsanddiscountratesbematchedwheninflationispresent?Whatisequivalentannualcost,andwhenshoulditbeused?