MM Model formula
老师您好,
(1)Ke = Kei +(1-T)(Kei - Kd)*(Vd/Ve)
Neo老师讲到公式加号前的是business risk, 加号后的是financial risk, (Kei - Kd)是财务风险溢价,请问您可以分别解释这三部分吗?Vd/Ve是杠杆比例,是Vd越大,杠杆比例越高吗?
(2)请问什么叫geared company 和 ungeared company
问题来源:
Modigliani and Miller's Model(M&M)
• Modigliani and Miller's Theory
• Modigliani and Miller's Formula
• AFM Exam Question for M&M Model: 201306Q1-a(1)
M&M demonstrated that, ignoring tax, the use of debt simply transfers more risk to shareholders, and that this makes equity more expensive so that the use of debt does not reduce finance costs, ie does not reduce the WACC.
M&M then introduced the effect of corporation tax to demonstrate that if debt also saves corporation tax,then this extra effect means that the WACC will fall. This suggests that a company should use as much debt finance as it can.
Modigliani and Miller's Formula
M&M’s formula for Ke of a geared company reflects the effects of using debt finance ie the benefit of the tax relief and the extra financial risk that it brings.
Formula provided
Ke= cost of equity of a geared company, Kei= cost of equity in an ungeared company
Kd= cost of debt (pre-tax)
Vd, Ve= market value of debt and equity
An ungeared company with a cost of equity of 12% is considering adjusting its gearing by taking out a loan at 6% and using it to buy back equity. After the buyback the ratio of the market value of debt to the market value of equity will be 1:1. Corporation tax is 30%.
Required:
(a) Calculate the new Ke’ after the buyback.
(b) Calculate and comment on the WACC after the buyback.
(a) Ke=12+(1-30%)×(12-6) ×1/1=12+4.2+16.2%
(b) WACC=(0.5×16.2)+[0.5×0.6×(1-30%)]=8.1+2.1=10.2%
The use of debt will bring benefit to the company because the lower WACC will enable future investment to bring greater wealth to the company’s shareholders.
霍老师
2021-03-05 20:48:01 678人浏览
1.business risk:商业风险:是指在商业活动中,由于各种不确定因素引起的,给商业主体带来获利或损失的机会或可能性的一切客观经济现象。
financial risk:财务风险:是指在各项财务活动过程中,由于各种难以预料或控制的因素影响,财务状况具有不确定性,从而使企业有蒙受损失的可能性。
财务风险溢价:是指是对于风险资产,投资者要求较高的投资收益从而对不确定性作出补偿,这种超出无风险收益率之上的必要收益率补偿就是财务风险溢价。
Vd/Ve是杠杆比例,Vd越大,杠杆比例越高,杠杆体现的就是公司举债的情况。
2.geared company即有杠杆的公司,指利用财务杠杆作用的公司。即依靠银行借款或发行公司债券筹集资金的公司。
ungeared company即无无杠杆公司,与“有杠杆公司”相对。指不利用财务杠杆作用的公司。即不依靠银行借款或不发行公司债券筹集资金的公司杠杆的公司。
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