英文版罗斯公司理财习题答案Chap014

CHAPTER14CAPITALSTRUCTURE:BASICCONCEPTSAnswerstoConceptsReviewandCriticalThinkingQuestions1.AssumptionsoftheModigliani-Millertheoryinaworldwithouttaxes:1)Individualscanborrowatthesameinterestrateatwhichthefirmborrows.Sinceinvestorscanpurchasesecuritiesonmargin,anindividual’seffectiveinterestrateisprobablynohigherthanthatforafirm.Therefore,thisassumptionisreasonablewhenapplyingMM’stheorytotherealworld.Ifafirmwereabletoborrowataratelowerthanindividuals,thefirm’svaluewouldincreasethroughcorporateleverage.AsMMPropositionIstates,thisisnotthecaseinaworldwithnotaxes.2)Therearenotaxes.Intherealworld,firmsdopaytaxes.Inthepresenceofcorporatetaxes,thevalueofafirmispositivelyrelatedtoitsdebtlevel.Sinceinterestpaymentsaredeductible,increasingdebtreducestaxesandraisesthevalueofthefirm.3)Therearenocostsoffinancialdistress.Intherealworld,costsoffinancialdistresscanbesubstantial.Sincestockholderseventuallybearthesecosts,thereareincentivesforafirmtolowertheamountofdebtinitscapitalstructure.Thistopicwillbediscussedinmoredetailinlaterchapters.2.False.Areductioninleveragewilldecreaseboththeriskofthestockanditsexpectedreturn.ModiglianiandMillerstatethat,intheabsenceoftaxes,thesetwoeffectsexactlycanceleachotheroutandleavethepriceofthestockandtheoverallvalueofthefirmunchanged.3.False.Modigliani-MillerPropositionII(NoTaxes)statesthattherequiredreturnonafirm’sequityispositivelyrelatedtothefirm’sdebt-equityratio[RS=R0+(B/S)(R0–RB)].Therefore,anyincreaseintheamountofdebtinafirm’scapitalstructurewillincreasetherequiredreturnonthefirm’sequity.4.Interestpaymentsaretaxdeductible,wherepaymentstoshareholders(dividends)arenottaxdeductible.5.Businessriskistheequityriskarisingfromthenatureofthefirm’soperatingactivity,andisdirectlyrelatedtothesystematicriskofthefirm’sassets.Financialriskistheequityriskthatisdueentirelytothefirm’schosencapitalstructure.Asfinancialleverage,ortheuseofdebtfinancing,increases,sodoesfinancialriskand,hence,theoverallriskoftheequity.Thus,FirmBcouldhaveahighercostofequityifitusesgreaterleverage.6.No,itdoesn’tfollow.Whileitistruethattheequityanddebtcostsarerising,thekeythingtorememberisthatthecostofdebtisstilllessthanthecostofequity.Sinceweareusingmoreandmoredebt,theWACCdoesnotnecessarilyrise.7.Becausemanyrelevantfactorssuchasbankruptcycosts,taxasymmetries,andagencycostscannoteasilybeidentifiedorquantified,it’spracticallyimpossibletodeterminetheprecisedebt/equityratiothatmaximizesthevalueofthefirm.However,ifthefirm’scostofnewdebtsuddenlybecomesmuchmoreexpensive,it’sprobablytruethatthefirmistoohighlyleveraged.8.It’scalledleverage(or“gearing”intheUK)becauseitmagnifiesgainsorlosses.B-2SOLUTIONS9.Homemadeleveragereferstotheuseofborrowingonthepersonallevelasopposedtothecorporatelevel.10.Thebasicgoalistominimizethevalueofnon-marketedclaims.SolutionstoQuestionsandProblemsNOTE:Allend-of-chapterproblemsweresolvedusingaspreadsheet.Manyproblemsrequiremultiplesteps.Duetospaceandreadabilityconstraints,whentheseintermediatestepsareincludedinthissolutionsmanual,roundingmayappeartohaveoccurred.However,thefinalanswerforeachproblemisfoundwithoutroundingduringanystepintheproblem.Basic1.a.Atableoutliningtheincomestatementforthethreepossiblestatesoftheeconomyisshownbelow.TheEPSisthenetincomedividedbythe2,500sharesoutstanding.ThelastrowshowsthepercentagechangeinEPSthecompanywillexperienceinarecessionoranexpansioneconomy.RecessionNormalExpansionEBIT£5,600£14,000£18,200Interest000NI£5,600£14,000£18,200EPS£2.24£5.60£7.284%EPS–60–––+30b.Ifthecompanyundergoestheproposedrecapitalization,itwillrepurchase:Shareprice=Equity/SharesoutstandingShareprice=£150,000/2,500Shareprice=£60Sharesrepurchased=Debtissued/SharepriceSharesrepurchased=£60,000/£60Sharesrepurchased=1,000Theinterestpaymenteachyearunderallthreescenarioswillbe:Interestpayment=£60,000(.05)=£3,000CHAPTER14B-3ThelastrowshowsthepercentagechangeinEPSthecompanywillexperienceinarecessionoranexpansioneconomyundertheproposedrecapitalization.RecessionNormalExpansionEBIT£5,600£14,000£18,200Interest3,0003,0003,000NI£2,600£11,000£15,200EPS£1.73£7.33£10.13%EPS–76.36–––+38.182.a.Atableoutliningtheincomestatementwithtaxesforthethreepossiblestatesoftheeconomyisshownbelow.Thesharepriceisstill£60,andtherearestill2,500sharesoutstanding.ThelastrowshowsthepercentagechangeinEPSthecompanywillexperienceinarecessionoranexpansioneconomy.RecessionNormalExpansionEBIT£5,600£14,000£18,200Interest000Taxes1,9604,9006,370NI£3,640£9,100£11,830EPS£1.46£3.64£4.73%EPS–60–––+30b.Atableoutliningtheincomestatementwithtaxesforthethreepossiblestatesoftheeconomyandassumingthecompanyundertakestheproposedcapitalizationisshownbelow.TheinterestpaymentandsharesrepurchasedarethesameasinpartbofProblem1.RecessionNormalExpansionEBIT£5,600£14,000£18,200Interest3,0003,0003,000Taxes9103,8505,320NI£1,690£7,150£9,880EPS£1.13£4.77£6.59%EPS–76.36–––+38.18NoticethatthepercentagechangeinEPSisthesamebothwithandwithouttaxes.3.a.Sincethecompanyhasamarket-to-bookratioof1.0,thetotalequityofthefirmisequaltothemarketvalueofequity.UsingtheequationforROE: