PDF-4.Levered and Unlevered Cost of Capital. Tax Shield. Capital Structure

11Levered and Unlevered Cost of Capital Levered company and CAPM The cost of equity is equal to the return expected by stockholders The cost of equity can be computed using the capital asset prici. Chapter 16. Chapter Outline. 16.1 Capital Structure Choices . 16.2 Capital Structure in Perfect Capital Markets. 16.3 Debt and Taxes. 16.4 Costs of Bankruptcy and Financial Distress. 16.5 Optimal Capital Structure: The Tradeoff Theory. 2. Key Concepts and Skills. Understand the effects of leverage on project value. Value levered projects using. Adjusted Present Value (APV) . Flows to Equity (FTE) . WACC . Leverage and Project Value. BiPAP. Training Presentation. All Rights Reserved. © 2007-2011 . NuMask. ®, Inc.. NuMask. Retention Shield . CPAP/. BiPAP. . Training Presentation. All Rights Reserved. © 2007-2011 . NuMask. ®, Inc.. Capital budgeting considering risk and leverage. Introduction. Today we will discuss three approaches to valuing a . risky. asset for which both . debt and equity financing. are used.. Initial Simplifying Assumptions:. Global Financial Management. Campbell R. Harvey. Fuqua School of Business. Duke University. charvey@mail.duke.edu. http://www.duke.edu/~charvey. Overview. “. Capital Structure does not matter!. ”. rates . VIII: . Bottom up betas II. The law of large numbers is your best friend.. Estimating . Bottom Up Betas & Costs of Equity: Vale. Vale: Cost of Equity Calculation – in nominal $R. To convert a discount rate in one currency to another, all you need are expected inflation rates in the two currencies.. Charged on the profit arising on disposal of capital assets. Rate of CGT in . 2015 . is 33%. Capital Gains Tax. The charge to CGT. Section 28 TCA 97. CGT “…shall be charged in accordance with the Capital Gains Tax Acts in respect of capital gains, that is, in respect of chargeable gains computed in accordance with those Acts and accruing to a person on the disposal of assets.”. Capital Restructuring. Capital restructuring involves changing the amount of leverage a firm has without changing the firm’s assets. The firm can increase leverage by issuing debt and repurchasing outstanding shares. 2. Topics in Chapter. Types of mergers. Merger analysis. Role of investment bankers. LBOs, divestitures, and holding companies. 3. What are some valid economic. justifications for mergers?. Synergy: Value of the whole exceeds sum of the parts. Could arise from:. 2. Topics in Chapter. Types of mergers. Merger analysis. Role of investment bankers. LBOs, divestitures, and holding companies. 3. What are some valid economic. justifications for mergers?. Synergy: Value of the whole exceeds sum of the parts. Could arise from:. In Perfect Markets. Capital Structure is irrelevant. Risks of debt and equity (beta’s) are affected by leverage. EPS risk changes with capital structure. WACC (used to calculate firm value) not affected. OPTIMAL FINANCING MIX V: ALTERNATE APPROACHES If you count the good stuff, you also have to count the bad stuff. I. The APV Approach to Optimal Capital Structure In the adjusted present value approach, the value of the firm is written as the sum of the value of the firm without debt (the unlevered firm) and the effect of debt on firm value Code B004Product DescriptionNEW VERSION HAS DUAL XBEE SOCKETS AND RTC SUPPORT see main pictureSupports XBee XRF Blue Bee RFbee XV XBT X232 etc This new and improved shield has extra features employed What is meant by capital restructuring. What is the primary goal of financial managers?. Can leverage help in achieving such goals?. Capital Restructuring. Capital Restructuring. We are going to look at how changes in capital structure affect the value of the firm, .