Financial management and analysis phần 4 docx

Investment Expected Return Standard DeviationStock Expected Return Standard Deviation Security Beta... Costs of CapitalSource Weight Cost of Capital... ---Marginal Costs of Debt and Comm

Security Market Line that Describes the Relation Between Expected Asset Returns and Beta

Security Betas of U.S Companies’ Common Stock

Security Security Beta Amount Invested

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Investment Expected Return Standard Deviation

Stock Expected Return Standard Deviation Security Beta

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Competitor’s Reaction Probability Sales

Possible Outcome for Investment 2

Possible Interest Rate Probability of Interest Rate

Covariance between Returns on Securities A and B

Portfolio Variance

Portfolio Standard Deviation

Covariance Between Returns on Assets P and Q

Portfolio Variance

Portfolio Standard Deviation

Security Security Beta

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-Cost of Debt at Varying Tax Rates Marginal Tax Rate After-Tax Cost of Debt *

-Implicit Interest on a Zero-Coupon Bond

Year

End-of-Period

Accrued Value

Previous-Period Accrued Value

Implicit Interest

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Costs of Capital

Source Weight Cost of Capital

-Marginal Costs of Debt and Common Stock

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-Marginal Costs of Capital for Different Levels of Capital

Amount of Debt Raised

Amount of Common Stock Raised

Marginal Cost of Debt

Marginal Cost of

Marginal Cost of Capital

-Determining the Optimal Capital Budget with the Marginal Cost of Capital and the Marginal Efficiency of Investment

Capital Structure of E I Du Pont Corporation, 1991–2001 Panel A Book Value Proportions

Panel B Market Value Proportions

Approach Yield

Approach Yield

-Dividends on E I du Pont Corporation Common Stock, 1960–2001 Year Dividends per Share

-Period Average Annual Return

Returns on E I Du Pont Corporation Common Stock versus Returns on the S&P 500 Index, Monthly, 1996– 2001

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Source of Capital Weight Marginal Cost Weight times Cost

Source of Capital Weight Marginal Cost Weight times Cost

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Issue Dividend per Share Current Market Price per Share

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Percentage of New Capital Raised Financing Arrangement Debt Preferred Stock Common Stock

Amount of New Debt Capital Cost

Amount of New Equity Capital Cost

Return on Donaldson Stock

Return

on the Market

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Expected Cash Flows from the Disposition of an Asset

Original cost > Expected sales price > Tax Basis

(Continued)

Expected sales price > Original cost > Tax basis

Tax basis > Expected sales price

Without Depreciation With Depreciation

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Difference in Depreciation

Difference in Depreciation Tax Shield

Present Value of Difference

An Example of the Calculation of the Change in Operating Cash Flow

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Capital Budgeting Checklists

Capital Budgeting Checklist Nonreplacement Decision

Capital Budgeting Checklist Replacement Decision

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Depreciation on

the Building

Depreciation on the Equipment

Total Depreciation Expense

Year Sales Expenses

Change in Depreciation D

Change in Income After Taxes

(1 )

Change in Operating Cash Flow ( R E D)(1 ) + D

Change in Revenues and Expenses After Taxes

Change in Depreciation Tax Shield

Change in Operating Cash Flow

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Depreciation Expense of Old Equipment

Change in Depreciation Expense

Change in Depreciation

Change in Income After Taxes

(1 )

Change in Operating Cash Flow

Change in Revenues and Expenses After Taxes ( – )(1– )

Change in Depreciation Tax Shield

Change in Operating Cash Flow

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