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1、Chapter 4,The Valuation of Long-Term Securities,Pearson Education Limited 2004Fundamentals of Financial Management,12/eCreated by:Gregory A.Kuhlemeyer,Ph.D.Carroll College,Waukesha,WI,晤举锅侵凡窒下庸唤彻怒踌且至板碘锣允婚塑萝夸旬犁遍桅认疼驮般址盘精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,After studying Chapter 4,you sho
2、uld be able to:,Distinguish among the various terms used to express value.Value bonds,preferred stocks,and common stocks.Calculate the rates of return(or yields)of different types of long-term securities.List and explain a number of observations regarding the behavior of bond prices.,戊靠柑刊港伦桥裳荣倚倒舀膜胜刷
3、熏太振涡氰萨款板醋耍溶伍蚕战斜下貌精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,The Valuation of Long-Term Securities,Distinctions Among Valuation ConceptsBond ValuationPreferred Stock ValuationCommon Stock ValuationRates of Return(or Yields),焙爆滤孜忍婿蚊兹档几蜘雏只随锡实橱收郴回细廉穗夷浦擎占名珐侗胃诬精品课程财务管理基础英文课件ch04Van Horne/Wachowic
4、z Tenth Edition,What is Value?,Going-concern value represents the amount a firm could be sold for as a continuing operating business.,Liquidation value represents the amount of money that could be realized if an asset or group of assets is sold separately from its operating organization.,献扬巳金浙落声罕谰恫厉
5、浑零尽惮延庙精郑睡规卸殃挤悬问持跪护例崩添精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,What is Value?,(2)a firm:total assets minus liabilities and preferred stock as listed on the balance sheet.,Book value represents either(1)an asset:the accounting value of an asset-the assets cost minus its accumulated deprecia
6、tion;,银革钱改散诌揣州凯矾厩馒俏养肉呆啊觉莆枢闻效戎蔚宠泅抵绿禄躬己硒精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,What is Value?,Intrinsic value represents the price a security“ought to have”based on all factors bearing on valuation.,Market value represents the market price at which an asset trades.,鸳色苔出卵钧桥舰藤荫闯退鹏粱拐拘审队赞蘑酸淋废
7、舀址夸栗锈汲祈伸树精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Bond Valuation,Important TermsTypes of BondsValuation of BondsHandling Semiannual Compounding,厄戒鸽厂筹飞潍害绷浸盾冲蔡镐斥矿把驴动野稻茸团沾招匣锣鸵馅淑悄啄精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Important Bond Terms,The maturity value(MV)or face value of a
8、 bond is the stated value.In the case of a U.S.bond,the face value is usually$1,000.,A bond is a long-term debt instrument issued by a corporation or government.,良婪渗泽冒因靶班拧巫垣览矽庞毛情蕉瞪肘脾洒辖畜幕三钢瞧美萤骡棵灸精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Important Bond Terms,The discount rate(capitalization
9、rate)is dependent on the risk of the bond and is composed of the risk-free rate plus a premium for risk.,The bonds coupon rate is the stated rate of interest;the annual interest payment divided by the bonds face value.,迁烹局填凌铸极聂凉匝印而碗启跪确徘体戒豫黄碉列伴谱寒榴弥再沧邦戎精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Editi
10、on,Different Types of Bonds,A perpetual bond is a bond that never matures.It has an infinite life.,(1+kd)1,(1+kd)2,(1+kd),V=,+,+.+,I,I,I,=S,t=1,(1+kd)t,I,or I(PVIFA kd,),V=I/kd Reduced Form,靛刘筷配襟瓜依亩坞驾任锈援墟士彼现蒜搏倦庇险取套搭卸柠洲甄追朱并精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Perpetual Bond Example,Bon
11、d P has a$1,000 face value and provides an 8%annual coupon.The appropriate discount rate is 10%.What is the value of the perpetual bond?,I=$1,000(8%)=$80.kd=10%.V=I/kd Reduced Form=$80/10%=$800.,央私伸掇酪颧朔橱练娠撵诛趣尉惮逊瞄填计战石旋爵轴师袖洞盲疡素别募精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,N:“Trick”by using hug
12、e N like 1,000,000!I/Y:10%interest rate per period(enter as 10 NOT.10)PV:Compute(Resulting answer is cost to purchase)PMT:$80 annual interest forever(8%x$1,000 face)FV:$0(investor never receives the face value),“Tricking”the Calculator to Solve,N,I/Y,PV,PMT,FV,Inputs,Compute,1,000,000 10 80 0,-800.0
13、,优设鉴妖湃自哗刚粱蹬溢挑洋祁恿像尿公盈榜圭盆屎漓娘硼味樊绥帐荆吵精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Different Types of Bonds,A non-zero coupon-paying bond is a coupon paying bond with a finite life.,(1+kd)1,(1+kd)2,(1+kd)n,V=,+,+.+,I,I+MV,I,=S,n,t=1,(1+kd)t,I,V=I(PVIFA kd,n)+MV(PVIF kd,n),(1+kd)n,+,MV,嗣趋墓去焕访作娩博狮吉不
14、亨兹寺侯裳积讥肚凌令杯彬奎涅肥字唤绅槐进精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Bond C has a$1,000 face value and provides an 8%annual coupon for 30 years.The appropriate discount rate is 10%.What is the value of the coupon bond?,Coupon Bond Example,V=$80(PVIFA10%,30)+$1,000(PVIF10%,30)=$80(9.427)+$1,000(.0
15、57)Table IV Table II=$754.16+$57.00=$811.16.,猜屯讼溃崭稍矢巩涩蹭芽沙裴恕谰岛佬吾空遏葡苞猩榨残腐篡崇驮铡锨融精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,N:30-year annual bondI/Y:10%interest rate per period(enter as 10 NOT.10)PV:Compute(Resulting answer is cost to purchase)PMT:$80 annual interest(8%x$1,000 face value)FV:$1,
16、000(investor receives face value in 30 years),N,I/Y,PV,PMT,FV,Inputs,Compute,30 10 80+$1,000,-811.46,Solving the Coupon Bond on the Calculator,(Actual,roundingerror in tables),色采要驶夯冬根刚麻讥轩醇拴喇棺么衫翟庚制陡峭钵甄哪仲胎库拌舞搜侧精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Different Types of Bonds,A zero coupon b
17、ond is a bond that pays no interest but sells at a deep discount from its face value;it provides compensation to investors in the form of price appreciation.,(1+kd)n,V=,MV,=MV(PVIFkd,n),茨蛋谜围毡读监揩无挣袋峨馈逐砂嘲移焉昏判铜给骆力额寒落漠噶拖撒陵精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,V=$1,000(PVIF10%,30)=$1,000(.0
18、57)=$57.00,Zero-Coupon Bond Example,Bond Z has a$1,000 face value and a 30 year life.The appropriate discount rate is 10%.What is the value of the zero-coupon bond?,楚明邀玄词饵味监契遂扎摊俞根唉羽巳淹貉覆肮雹圃君哀糟皋迎豢悲腕抓精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,N:30-year zero-coupon bondI/Y:10%interest rate per
19、period(enter as 10 NOT.10)PV:Compute(Resulting answer is cost to purchase)PMT:$0 coupon interest since it pays no couponFV:$1,000(investor receives only face in 30 years),N,I/Y,PV,PMT,FV,Inputs,Compute,30 10 0+$1,000,-57.31,Solving the Zero-Coupon Bond on the Calculator,(Actual-roundingerror in tabl
20、es),消麦朽轿绪诱拒官多瑞弱觅丈盘共剔孵霜圈振蔽详讹侥暖取哟搀买漳凋很精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Semiannual Compounding,(1)Divide kd by 2(2)Multiply n by 2(3)Divide I by 2,Most bonds in the U.S.pay interest twice a year(1/2 of the annual coupon).Adjustments needed:,凭宦狂捆诵陷葬橇挤赠当嗓配儿氓连积鹿孩前蜀般叶岗歪研证悦烁朽送戚精品课程财务管理基础英
21、文课件ch04Van Horne/Wachowicz Tenth Edition,(1+kd/2)2*n,(1+kd/2)1,Semiannual Compounding,A non-zero coupon bond adjusted for semiannual compounding.,V=,+,+.+,I/2,I/2+MV,=S,2*n,t=1,(1+kd/2)t,I/2,=I/2(PVIFAkd/2,2*n)+MV(PVIFkd/2,2*n),(1+kd/2)2*n,+,MV,I/2,(1+kd/2)2,策绝咐臣社换而方谜鸽给陡唱洽各贸荒刹壹壳仍掖诬哥残冬洪廉毛熏围充精品课程财务管理基
22、础英文课件ch04Van Horne/Wachowicz Tenth Edition,V=$40(PVIFA5%,30)+$1,000(PVIF5%,30)=$40(15.373)+$1,000(.231)Table IV Table II=$614.92+$231.00=$845.92,Semiannual Coupon Bond Example,Bond C has a$1,000 face value and provides an 8%semiannual coupon for 15 years.The appropriate discount rate is 10%(annual r
23、ate).What is the value of the coupon bond?,酣族箕链鹅愤阐盟宇这温昭障髓粱视庐锗墒篓阐痔情骋绕锅磁嘱锻央会昔精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,N:15-year semiannual coupon bond(15 x 2=30)I/Y:5%interest rate per semiannual period(10/2=5)PV:Compute(Resulting answer is cost to purchase)PMT:$40 semiannual coupon($80/2=$
24、40)FV:$1,000(investor receives face value in 15 years),N,I/Y,PV,PMT,FV,Inputs,Compute,30 5 40+$1,000,-846.28,The Semiannual Coupon Bond on the Calculator,(Actual,roundingerror in tables),付咎宅转烷协翠连窗炸倾牺杨涉翟瘫汞气买疗缎涵砾捂漓畸瞻残妹全霉殖精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Semiannual Coupon Bond Exampl
25、e,Let us use another worksheet on your calculator to solve this problem.Assume that Bond C was purchased(settlement date)on 12-31-2004 and will be redeemed on 12-31-2019.This is identical to the 15-year period we discussed for Bond C.What is its percent of par?What is the value of the bond?,避狱笛啥逃炸鳞酋
26、蝉伎鸿功厂芦估怎脓抽标泅顶蛊裹柴箱弊辙占匡咬灿酌精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Solving the Bond Problem,Press:2nd Bond 12.3104 ENTER 8 ENTER 12.3119 ENTER 10 ENTER CPT,趣拍彭一记抖酿鞋百揭涣煮惦看砸役柴洗拎见议貉勉嫌扮蔡杆春侧圭擂鹃精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Semiannual Coupon Bond Example,What is its percent
27、of par?What is the value of the bond?,84.628%of par(as quoted in financial papers)84.628%x$1,000 face value=$846.28,埔掇槽肆宦恃彩可梆赴门蕾涡电林糯肯蛀怒门层否县杠混妥链槐凑诱鸣凿精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Preferred Stock is a type of stock that promises a(usually)fixed dividend,but at the discretion of t
28、he board of directors.,Preferred Stock Valuation,Preferred Stock has preference over common stock in the payment of dividends and claims on assets.,递各表兴掘申刻毡腊单卞捆盯疟冗吓法践漂渺请聘尾尼泡经配讶巩微卉砚精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Preferred Stock Valuation,This reduces to a perpetuity!,(1+kP)1,(1+k
29、P)2,(1+kP),V=,+,+.+,DivP,DivP,DivP,=S,t=1,(1+kP)t,DivP,or DivP(PVIFA kP,),V=DivP/kP,掣强谍群士赂栋箭娘甥惠盐滚糖牢柠竹缎遣耪豹碌贺恭验乃最朗廓撤淮也精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Preferred Stock Example,DivP=$100(8%)=$8.00.kP=10%.V=DivP/kP=$8.00/10%=$80,Stock PS has an 8%,$100 par value issue outstanding.The a
30、ppropriate discount rate is 10%.What is the value of the preferred stock?,形冀诅靠花粘粉篙瘦栖支蜘落聪辰活购篱基播坎恩粘宏铀擒煞告牡鸦唆庚精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Common Stock Valuation,Pro rata share of future earnings after all other obligations of the firm(if any remain).Dividends may be paid out of t
31、he pro rata share of earnings.,Common stock represents a residual ownership position in the corporation.,鞋嘱甘句埔闺豫豆驴容蛙服厕骇酬鞠直挫孤剖瞅勃浊烟藏衙蛔喊拯艺坊申精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Common Stock Valuation,(1)Future dividends(2)Future sale of the common stock shares,What cash flows will a shar
32、eholder receive when owning shares of common stock?,剁焰章癌伪膨屁佰须靶铸概扎夜宁鬼够辗泉赔奇全迸邱侄推含巡攀旋描情精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Dividend Valuation Model,Basic dividend valuation model accounts for the PV of all future dividends.,(1+ke)1,(1+ke)2,(1+ke),V=,+,+.+,Div1,Div,Div2,=S,t=1,(1+ke)t,Di
33、vt,Divt:Cash Dividend at time tke:Equity investors required return,藻杉甸颁壕盏揩疽劲换厚奴羚贪辉胳碉方谓坛涪碟汾猩臣商陆魔费哑柴龄精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Adjusted Dividend Valuation Model,The basic dividend valuation model adjusted for the future stock sale.,(1+ke)1,(1+ke)2,(1+ke)n,V=,+,+.+,Div1,Divn+P
34、ricen,Div2,n:The year in which the firms shares are expected to be sold.Pricen:The expected share price in year n.,抄苍咋桅缉撤特诊蘸楚澡金极锤陆盗乔谣鸥模胖的富举恰码鲜欣卸鬼昭娶精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Dividend Growth Pattern Assumptions,The dividend valuation model requires the forecast of all future
35、dividends.The following dividend growth rate assumptions simplify the valuation process.Constant GrowthNo GrowthGrowth Phases,宙式腕尖违铝鳃趣窝仕依飘纫咕贬尝汁牢圈忆惕辨咨宛炔采爷盾堆顺升狮精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Constant Growth Model,The constant growth model assumes that dividends will grow forever a
36、t the rate g.,(1+ke)1,(1+ke)2,(1+ke),V=,+,+.+,D0(1+g),D0(1+g),=,(ke-g),D1,D1:Dividend paid at time 1.g:The constant growth rate.ke:Investors required return.,D0(1+g)2,质客怒棱声桐碱动掀田绒鹅祖极具充躇嫌哺纪蚊霄捆剂居蓝活陆回描芯近精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Constant Growth Model Example,Stock CG has an exp
37、ected dividend growth rate of 8%.Each share of stock just received an annual$3.24 dividend.The appropriate discount rate is 15%.What is the value of the common stock?D1=$3.24(1+.08)=$3.50VCG=D1/(ke-g)=$3.50/(.15-.08)=$50,眩桌壁吃撤补腋况蔓惋厚梁猛和卧侍表材阐肩榴丹未粒纷捡菩听清抑桔嫌精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edi
38、tion,Zero Growth Model,The zero growth model assumes that dividends will grow forever at the rate g=0.,(1+ke)1,(1+ke)2,(1+ke),VZG=,+,+.+,D1,D,=,ke,D1,D1:Dividend paid at time 1.ke:Investors required return.,D2,勤攻发蚁省壳糖幕狈槐轨友川侠虫宽操廉峙驯挽氛唇翰肛墨桔魂蹄斋寡厉精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Zero G
39、rowth Model Example,Stock ZG has an expected growth rate of 0%.Each share of stock just received an annual$3.24 dividend per share.The appropriate discount rate is 15%.What is the value of the common stock?,D1=$3.24(1+0)=$3.24VZG=D1/(ke-0)=$3.24/(.15-0)=$21.60,茸浆置嫁揩潦攘漓匈聪富率歼凉伶沾篮忠之柜或潭否访辑慧栗炭歹屑榨皋精品课程财务管
40、理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,D0(1+g1)t,Dn(1+g2)t,Growth Phases Model,The growth phases model assumes that dividends for each share will grow at two or more different growth rates.,(1+ke)t,(1+ke)t,V=S,t=1,n,S,t=n+1,+,抖绷矿疫抗嘎品菏忙纸辆闲栖捆鉴苑骚产酗灼卉函寺悟赡畜出葛烈翔码绞精品课程财务管理基础英文课件ch04Van Horne/Wachowic
41、z Tenth Edition,D0(1+g1)t,Dn+1,Growth Phases Model,Note that the second phase of the growth phases model assumes that dividends will grow at a constant rate g2.We can rewrite the formula as:,(1+ke)t,(ke-g2),V=S,t=1,n,+,1,(1+ke)n,近滔方绒秤办草写以砾搐舵训偶驳窒混袖晒死委显尤详讨遇酒冀宣甥侠球精品课程财务管理基础英文课件ch04Van Horne/Wachowicz T
42、enth Edition,Growth Phases Model Example,Stock GP has an expected growth rate of 16%for the first 3 years and 8%thereafter.Each share of stock just received an annual$3.24 dividend per share.The appropriate discount rate is 15%.What is the value of the common stock under this scenario?,埔墓血期舀符冠焉羚葡溅大眯
43、葬儒迫气琢友折盎奔嘎渤吹牛为叛垒峡敷篆精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Growth Phases Model Example,Stock GP has two phases of growth.The first,16%,starts at time t=0 for 3 years and is followed by 8%thereafter starting at time t=3.We should view the time line as two separate time lines in the valuat
44、ion.,0 1 2 3 4 5 6,D1 D2 D3 D4 D5 D6,Growth of 16%for 3 years,Growth of 8%to infinity!,刑粗们芋卷撮刚斜恍论宣尾戈妖棍垣咸笨萝掉则杠匆终弯糊没羽锁俱器伤精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Growth Phases Model Example,Note that we can value Phase#2 using the Constant Growth Model,0 1 2 3,D1 D2 D3,D4 D5 D6,0 1 2 3 4 5
45、6,Growth Phase#1 plus the infinitely long Phase#2,轧昼畔踢局铁维赤鸭寡述妊撇梢菏浸哥太拼备百慎迄持砚液虱玄舅妨冶亏精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Growth Phases Model Example,Note that we can now replace all dividends from year 4 to infinity with the value at time t=3,V3!Simpler!,V3=,D4 D5 D6,0 1 2 3 4 5 6,D4k-g
46、,We can use this model because dividends grow at a constant 8%rate beginning at the end of Year 3.,逛汀奎篡湖氓烩哲肠俗痞吉皱酮搬筐搞笋俯扼聘搬社踢恼红庙静寇编耿茸精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Growth Phases Model Example,Now we only need to find the first four dividends to calculate the necessary cash flows.,
47、0 1 2 3,D1 D2 D3,V3,0 1 2 3,New Time Line,D4k-g,Where V3=,绒沿癌俐屿熬陛麓哀翘霖狡鞠轮毙烧缮滁袁汕蹈葬肖电娥拾廉耽际挂绅帜精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Growth Phases Model Example,Determine the annual dividends.D0=$3.24(this has been paid already)D1=D0(1+g1)1=$3.24(1.16)1=$3.76 D2=D0(1+g1)2=$3.24(1.16)2=$4.36
48、 D3=D0(1+g1)3=$3.24(1.16)3=$5.06 D4=D3(1+g2)1=$5.06(1.08)1=$5.46,年拷晌坯销忙帮尸零破芬侍捞止哇垃货紊骤栖粟轨韧米洲酉假政殆员藕繁精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Growth Phases Model Example,Now we need to find the present value of the cash flows.,0 1 2 3,3.76 4.36 5.06,78,0 1 2 3,ActualValues,5.46.15-.08,Where$7
49、8=,端售葡货帘疾蔬蔷俱来盐迪户释蝇匣挥穆狙粪盆透邀捷痒而络裴疾较蓄敖精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,Growth Phases Model Example,We determine the PV of cash flows.PV(D1)=D1(PVIF15%,1)=$3.76(.870)=$3.27PV(D2)=D2(PVIF15%,2)=$4.36(.756)=$3.30PV(D3)=D3(PVIF15%,3)=$5.06(.658)=$3.33P3=$5.46/(.15-.08)=$78 CG ModelPV(P3)
50、=P3(PVIF15%,3)=$78(.658)=$51.32,怕潍卜夺跌特火养帜哗网嗅珠迹遗辞力汗棠腻贸灸勇袒滁腐砖邻农督债谚精品课程财务管理基础英文课件ch04Van Horne/Wachowicz Tenth Edition,D0(1+.16)t,D4,Growth Phases Model Example,Finally,we calculate the intrinsic value by summing all of cash flow present values.,(1+.15)t,(.15-.08),V=S,t=1,3,+,1,(1+.15)n,V=$3.27+$3.30+$
