第八章 公司战略和净现值分析

McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-0ChapterOutline8.1CorporateStrategyandPositiveNPV8.2DecisionTrees8.3SensitivityAnalysis,ScenarioAnalysis,andBreak-EvenAnalysis8.4Options8.5SummaryandConclusionsMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-1•Introducenewproducts–AppleCorporationandthemouse•Developcoretechnology–Hondaandsmallengines•Createbarriertoentry–Qualcomm’spatentsonproprietarytechnology•Introducevariationsonexistingproducts–Chrysler’sPTCruiser•Createproductdifferentiation–Coca-Cola—it’stherealthing•Utilizeorganizationalinnovation–Motorolajust-in-timeinventorymanagement•Exploitanewtechnology–Yahoo!’suseofbanneradvertisementsonthewebCorporateStrategyandPositiveNPVMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-2CorporateStrategyandtheStockMarket•Thereshouldbeaconnectionbetweenthestockmarketandcapitalbudgeting.•IfthefirminvestsinapositiveNPVprojects,thefirm’sstockpriceshouldgoup.•Sometimesthestockmarketprovidesnegativecluesastoanewproject’sNPV.•ConsiderAT&T’srepeatedattemptstopenetratethecomputer-manufacturingindustry.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-38.2DecisionTrees•Allowustographicallyrepresentthealternativesavailabletousineachperiodandthelikelyconsequencesofouractions.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-4ExampleofDecisionTreeDonotstudyStudyfinanceOpencirclesrepresentdecisionstobemade.Filledcirclesrepresentreceiptofinformatione.g.atestscoreinthisclass.Thelinesleadingawayfromthecirclesrepresentthealternatives.“C”“A”“B”“F”“D”McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-5StewartPharmaceuticals•TheStewartPharmaceuticalsCorporationisconsideringinvestingindevelopingadrugthatcuresthecommoncold.•Acorporateplanninggroup,includingrepresentativesfromproduction,marketing,andengineering,hasrecommendedthatthefirmgoaheadwiththetestanddevelopmentphase.•Thispreliminaryphasewilllastoneyearandcost$1billion.Furthermore,thegroupbelievesthatthereisa60%chancethattestswillprovesuccessful.•Iftheinitialtestsaresuccessful,StewartPharmaceuticalscangoaheadwithfull-scaleproduction.Thisinvestmentphasewillcost$1,600million.Productionwilloccuroverthenext4years.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-6StewartPharmaceuticalsNPVofFull-ScaleProductionfollowingSuccessfulTestNotethattheNPViscalculatedasofdate1,thedateatwhichtheinvestmentof$1,600millionismade.Laterwebringthisnumberbacktodate0.InvestmentYear1Years2-5Revenues$7,000VariableCosts(3,000)FixedCosts(1,800)Depreciation(400)Pretaxprofit$1,800Tax(34%)(612)NetProfit$1,188CashFlow-$1,600$1,58875.433,3$)10.1(588,1$600,1$41ttNPVMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-7DecisionTreeforStewartPharmaceuticalDonottestTestFailureSuccessDonotinvestInvestInvest611,3$NPV0$NPVThefirmhastwodecisionstomake:Totestornottotest.Toinvestornottoinvest.mNPV75.433,3$0$NPVMcGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-8StewartPharmaceutical:DecisiontoTest•Let’smovebacktothefirststage,wherethedecisionboilsdowntothesimplequestion:shouldweinvest?•Theexpectedpayoffevaluatedatdate1is:failuregivenPayofffailureProb.successgivenPayoffsucessProb.payoffExpected25.060,2$0$40.75.433,3$60.payoffExpected95.872$10.125.060,2$000,1$NPV•TheNPVevaluatedatdate0is:Soweshouldtest.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-98.3SensitivityAnalysis,ScenarioAnalysis,andBreak-EvenAnalysis•AllowsustolookthebehindtheNPVnumbertoseefirmourestimatesare.•Whenworkingwithspreadsheets,trytobuildyourmodelsothatyoucanjustadjustvariablesinonecellandhavetheNPVcalculationskeytothat.McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-10SensitivityAnalysisandScenarioAnalysisIntheStewartPharmaceuticalexample,revenueswereprojectedtobe$7,000,000peryear.Iftheyareonly$6,000,000peryear,theNPVfallsto$1,341.64Alsoknownas“whatif”analysis;weexaminehowsensitiveaparticularNPVcalculationistochangesintheunderlyingassumptions.64.341,1$)10.1(928$600,1$41ttNPVInvestmentYear1Years2-5Revenues$6,000VariableCosts(3,000)FixedCosts(1,800)Depreciation(400)PretaxprofitTax(34%)NetProfitCashFlow-$1,600McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-11SensitivityAnalysis%29.14000,7$000,7$000,6$Rev%•WecanseethatNPVisverysensitivetochangesinrevenues.Forexample,a14%dropinrevenueleadstoa61%dropinNPV%93.6075.433,3$75.433,3$64.341,1$%NPV•Forevery1%dropinrevenuewecanexpectroughlya4.25%dropinNPV%29.14%93.6025.4McGraw-Hill/IrwinCopyright©2002byTheMcGraw-HillCompanies,Inc.Allrightsreserved.8-12ScenarioAnalysis•Avariationonsensitivityanalysisisscenarioanalysis.•Forexample,thefollowingthreescenarioscouldapplytoStewartPharmaceuticals:1.Thenextyearseachhaveheavycoldseasons,andsal