CFA II Corporate Finance 笔记

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Capital projects

Incremental cash flows增量现金流

Ignore:Sunk costs and Financing costs

Include:Externalities(Cannibalization) Opportunity costs 蚕食替代

Based on Cash flows

Timing of cash flows is important

Cash flow are analyzed on an after tax basis

Financing costs are reflect in the project's required rate of return

Basic principles★★

Profitability is lower than expected

Reduces the real tax savings of depreciation

Increases the corporations real taxes

Decreases the value of bondholders

If inflation is higher than expected

了解inflation影响

MACRS

Independent Projects

Mutually Exclusive Projects

有限资本下选择 project

Capital Rationing

基本概念

Expansion project

Replacement proiect

常见projects分析

.Least common multiple of lives approach .Equivalent annual annuity (EAA)approach

计算

注意：多项目组合时不互斥，NPV加总即可

Capital rationing

Mutually exclusive projects with different lives

Timing options

Sizing options

Flexibility options

Fundamental options依赖于基本面，如石油价格

分类

DCF without considering options

Use decision trees

Use option pricing models

Projects With Real Options

Economic income Vs.Accounting income

Economic profit approach

Residual income approach

Claims valuation approach归属价值

Other Valuation Models

风险评估

Investment Decision -Capital Budgeting

.minimize the firm's WACC .maximize the firm's value

●not maximum EPS or ROE

Capital Structure Objective

MM's proposition

Costs Of Financial Distress

optimal proportion of debt

Static trade-off theory

Pecking order(most favored to least favored)

managers prefer to make financing choices that are least likely to send signals to investors

Pecking order theory

Capital Structure Theory

Practical Issues In Capital Structure Policy

Financing Decision -Capital Structure

decrease of assets and equity.

no effect on shareholder wealth

影响

Cash dividends

.Increase：Number of shares outstanding

Constant

Stock dividends

Dividend 分类

MM theory

Dividend policy does not matter

Bird in hand argument

Tax aversion

Dividend policy matters

影响偏好的角度

怎么决定分红前卖还是分红后卖

Clientele effect

Signaling

Agency issues

Effective tax rate

Dividend Policy

Dividends

Buy in the open market

Buy a fixed number of shares at a fixed price 要约回购

Repurchase by direct negotiation （Dutch Auction）

Three Methods For Share Repurchase

Financial Statement Effects Of Repurchases

Tax advantages

Share price support/signaling

share repurchases are not a long-term commitment.managers have discretion over \"market timing\"repurchases.

Added flexibility

Offsetting dilution from employee stock options

Increase financial leverage

Rationales for share repurchase

Share Repurchases

Distribution Decision -Dividends and Share Repurchases

Conflicts within Different Ownership Structures

Types of Influential (有影响力的)Shareholders

Ownership Structures

1.Board Policies and Practices 董事会

2.Executive Remuneration 高管薪酬

3.Shareholder voting rights

评价标准

Evaluating Corporate Governance

Environmental risk Social risk Governance risk

ESG factors

ESG information and metrics may be reported inconsistently by companies.

Imformation

Some companies may use the term \"material\

Materiality

Investment Horizon

Challenges

ESG integration

can command a premium over comparable conventional bonds Lower cost of capital due to green bond premium

Advantages

Additional costs related to the monitoring and reporting of the use of the bond's proceeds Lack of liquidity of green bonds when purchased and held by buy-and hold investors

Disadvantages

GreenBond

Esg-related Risks And Opportunities

Foundation of Corporate Finance -Corporate Governance

Internal Issue

Classifications Of Mergers

Additional Classifications

不同生命周期阶段并购目的

Merger motivations

Form of acquisition

如何选择支付方式★

Method of payment

Basic Concept

Friendly merger

Tender offer

Proxy battle

如果失败

Bear hug 绕过CEO找董事会

Hostile merger offers

Pre-offer Takeover Defense

Post-offer defense mechanisms

应对悉意并购

Attitude of target management

discounted cash flow analysis

comparable company analysis

comparable transaction analysis

方法

Valuing a target company

重组原因

Corporate Restructuring

External Issue

Corporate Finance