corporate-finance-Leasin课件

1、Corporate Finance Ross Westerfield JaffeSixth EditionSixth Edition21Chapter Twenty One LeasingChapter Outline21.1 Types of Leases21.2 Accounting and Leasing21.3 Taxes, the IRS, and Leases21.4 The Cash Flows of Leasing21.5 A Detour on Discounting and Debt Capacity with Corporate Taxes21.6 NPV Analysi

2、s of the Lease-versus-Buy Decision21.7 Debt Displacement and Lease Valuation21.8 Does Leasing Ever Pay: The Base Case21.9 Reasons for Leasing21.10 Some Unanswered Questions21.1 Types of LeasesThe BasicsA lease is a contractual agreement between a lessee and lessor. The lessor owns the asset and for

3、a fee allows the lessee to use the asset.Operating LeasesUsually not fully amortized.Usually require the lessor to maintain and insure the asset.Lessee enjoys a cancellation option.Financial LeasesThe exact opposite of an operating lease.Do not provide for maintenance or service by the lessor.Financ

4、ial leases are fully amortized.The lessee usually has a right to renew the lease at expiry.Generally, financial leases cannot be cancelled.Sale and Lease-BackA particular type of financial lease.Occurs when a company sells an asset it already owns to another firm and immediately leases it from them.

5、Two sets of cash flows occur:The lessee receives cash today from the sale.The lessee agrees to make periodic lease payments, thereby retaining the use of the asset.Leveraged LeasesA leveraged lease is another type of financial lease.A three-sided arrangement between the lessee, the lessor, and lende

6、rs.The lessor owns the asset and for a fee allows the lessee to use the asset.The lessor borrows to partially finance the asset.The lenders typically use a nonrecourse loan. This means that the lessor is not obligated to the lender in case of a default by the lessee.21.2 Accounting and LeasingIn the

7、 old days, leases led to off-balance-sheet financing.Today, leases are either classified as capital leases or operating leases.Operating leases do not appear on the balance sheet.Capital leases appear on the balance sheetthe present value of the lease payments appears on both sides.Accounting and Le

8、asingBalance SheetTruck is purchased with debtTruck$100,000Debt$100,000Land$100,000Equity$100,000Total Assets$200,000Total Debt & Equity $200,000Operating LeaseTruckDebtLand$100,000Equity$100,000Total Assets$100,000Total Debt & Equity $100,000Capital LeaseAssets leased$100,000Obligations under capit

9、al lease$100,000Land$100,000Equity$100,000Total Assets$200,000Total Debt & Equity$200,000Capital LeaseA lease must be capitalized if any one of the following is met:The present value of the lease payments is at least 90 percent of the fair market value of the asset at the start of the lease.The leas

10、e transfers ownership of the property to the lessee by the end of the term of the lease.The lease term is 75 percent or more of the estimated economic life of the asset.The lessee can buy the asset at a bargain price at expiry.21.3 Taxes, the IRS, and LeasesThe principal benefit of long-term leasing

11、 is tax reduction.Leasing allows the transfer of tax benefits from those who need equipment but cannot take full advantage of the tax benefits of ownership to a party who can.Naturally, the IRS seeks to limit this, especially if the lease appears to be set up solely to avoid taxes.21.3 Taxes, the IR

12、S, and LeasesThe lessee can deduct lease payments if the lease is qualified by the IRS.The term must be less than 30 years.There can be no bargain purchase option.The lease should not have a schedule of payments that is very high at the start of the lease and low thereafter. The lease payments must

13、provide the lessor with a fair market rate of return.The lease should not limit the lessees right to issue debt or pay dividends.Renewal options must be reasonable and reflect fair market value of the asset.21.4 The Cash Flows of LeasingConsider a firm, ClumZee Movers, that wishes to acquire a deliv

14、ery truck.The truck is expected to reduce costs by $4,500 per year.The truck costs $25,000 and has a useful life of 5 years.If the firm buys the truck, they will depreciate it straight-line to zero. They can lease it for 5 years from Tiger Leasing with an annual lease payment of $6,250.21.4 The Cash

15、 Flows of LeasingCash Flows: BuyYear 0Years 1-5Cost of truck$25,000After-tax savings4,500(1-.34) = $2,970Depreciation Tax Shield5,000(.34) = $1,700$25,000$4,670Cash Flows: LeaseYear 0Years 1-5Lease Payments6,250(1-.34) = $4,125After-tax savings4,500(1-.34) = $2,970$1,155Cash Flows: Leasing Instead o

16、f BuyingYear 0Years 1-5$25,000 $1,155 $4,670 = $5,82521.4 The Cash Flows of LeasingCash Flows: Leasing Instead of BuyingYear 0Years 1-5$25,000 $1,155 $4,670 = $5,825Cash Flows: Buying Instead of Leasing Year 0Years 1-5$25,000 $4,670 $1,155 = $5,825However we wish to conceptualize this, we need to ha

17、ve an interest rate at which to discount the future cash flows.That rate is the after-tax rate on the firms secured debt.21.5 A Detour on Discounting and Debt Capacity with Corporate TaxesPresent Value of Riskless Cash FlowsIn a world with corporate taxes, firms should discount riskless cash flows a

18、t the after-tax riskless rate of interest.Optimal Debt Level and Riskless Cash FlowsIn a world with corporate taxes, one determines the increase in the firms optimal debt level by discounting a future guaranteed after-tax inflow at the after-tax riskless interest rate.21.6 NPV Analysis of the Lease-

19、vs.-Buy DecisionA lease payment is like the debt service on a secured bond issued by the lessee.In the real world, many companies discount both the depreciation tax shields and the lease payments at the after-tax interest rate on secured debt issued by the lessee.NPV Analysis of the Lease-vs.-Buy De

20、cisionNPV Buying Instead of Leasing Year 0Years 1-5-$25,000 $4,670 $1,155 = $5,825There is a simple method for evaluating leases: discount all cash flows at the after-tax interest rate on secured debt issued by the lessee. Suppose that rate is 5 percent.NPV Leasing Instead of BuyingYear 0Years 1-5$2

21、5,000 $1,155 $4,670 = -$5,82521.7 Debt Displacement and Lease ValuationConsidering the issues of debt displacement allows for a more intuitive understanding of the lease versus buy decision.Leases displace debtthis is a hidden cost of leasing. If a firm leases, it will not use as much regular debt a

22、s it would otherwise. The interest tax shield will be lost.21.7 Debt Displacement and Lease ValuationThe debt displaced by leasing results in forgone interest tax shields on the debt that ClumZee movers didnt go into when they leased instead of bought the truck. Suppose ClumZee agrees to a lease pay

23、ment of $6,250 before tax. This payment would support a loan of $25,219.20 (see the next slide)In exchange for this, they get the use of a truck worth $25,000. Clearly the NPV is a negative $219.20, which agrees with our earlier calculations.21.7 Debt Displacement and Lease ValuationSuppose ClumZee

24、agrees to a lease payment of $6,250 before tax. This payment would support a loan of $25,219.20 After-Tax Lease Payments6,250(1-.34) = $4,125Forgone Depreciation Tax Shield 5,000(.34) = $1,700-$5,825 Calculate the increase in debt capacity by discounting the difference between the cash flows of the

25、purchase and the cash flows of the lease by the after-tax interest rate. 21.8 Does Leasing Ever Pay: The Base CaseIn the above example, ClumZee Movers chose to buy, because the NPV of leasing was a negative $219.20Note that this is the opposite of the NPV that Tiger Leasing would have: Cash Flows: T

26、iger LeasingYear 0Years 1-5Cost of truck$25,000Depreciation Tax Shield5,000(.34) = $1,700Lease Payments6,250(1-.34) = $4,125 $25,000 $5,82521.9 Reasons for LeasingGood ReasonsTaxes may be reduced by leasing.The lease contract may reduce certain types of uncertainty.Transactions costs can be higher f

27、or buying an asset and financing it with debt or equity than for leasing the asset.Bad ReasonsAccountingA Tax ArbitrageSuppose ClumZee movers is actually in the 25% tax bracket and Tiger Leasing is in the 34% tax bracket. If Tiger reduces the lease payment to $6,200, can both firms have a positive N

28、PV?Cash Flows: Tiger LeasingYear 0Years 1-5Cost of truck$25,000Depreciation Tax Shield5,000(.34) = $1,700Lease Payments6,200(1 .34) = $4,092 $25,000 $5,792NPV = 76.33Cash Flows ClumZee Movers: Leasing Instead of BuyingYear 0Years 1-5Cost of truck we didnt buy$25,000Lost Depreciation Tax Shield5,000(

29、.25) = $1,250After-Tax Lease Payments6,200(1 .25) = $4,650 $25,000 $5,900NPV = -$543.91Reservations and NegotiationsWhat is the smallest lease payment that Tiger Leasing will accept? Set their NPV to zero and solve for $Lmin:Cash Flows: Tiger LeasingYear 0Years 1-5Cost of truck-$25,000Depreciation T

30、ax Shield5,000(.34) = $1,700Lease Payments$Lmin (1 .34) = $Lmin .66 -$25,000 $1,700 + $Lmin .66Reservations and NegotiationsWhat is the highest lease payment that ClumZee Movers can pay? Set their NPV to zero and solve for $Lmax:Cash Flows ClumZee Movers: Leasing Instead of BuyingYear 0Years 1-5Cost

31、 of truck we didnt buy$25,000Lost Depreciation Tax Shield5,000(.25) = $1,250After-Tax Lease Payments $Lmax( 1 .25) = .75 Lmax $25,000 1,250 .75 LmaxNo lease is possible: Lmin Lmax21.10 Some Unanswered QuestionsAre the Uses of Leases and of Debt Complementary?Why are Leases offered by Both Manufactur

32、ers and Third Party Lessors?Why are Some Assets Leased More than Others?21.11 Summary and ConclusionsThere are three ways to value a lease.Use the real-world convention of discounting the incremental after-tax cash flows at the lessors after-tax rate on secured debt.Calculate the increase in debt ca

33、pacity by discounting the difference between the cash flows of the purchase and the cash flows of the lease by the after-tax interest rate. The increase in debt capacity from a purchase is compared to the extra outflow at year 0 from a purchase.Use APV (presented in the appendix to this chapter).The

34、y all yield the same answer.The easiest way is the least intuitive.Appendix 21A: APV Approach to LeasingAPV = All-Equity Value + Financing NPVCalculations shown on the following slides will show that for the latest Clumzee Movers example (tax rate is 25%)APV = $591.38 $1,135.30APV = $543.91Which is

35、the same value as the easier NPV analysis.Appendix 21A: APV Approach to LeasingAPV = All-Equity Value + Financing NPVTo find the all-equity value, discount the cash flows at the pre-tax interest rate. The after tax rate was 5% which implies a pretax rate of 6.66% = 5%/(1-.25).Cash Flows ClumZee Move

36、rs: Leasing Instead of BuyingYear 0Years 1-5Cost of truck we didnt buy$25,000Lost Depreciation Tax Shield5,000(.25) = $1,250After-Tax Lease Payments6,200(1 .25) = $4,650 $25,000 $5,900Appendix 21A: APV Approach to LeasingAPV = All-Equity Value + Financing NPVThe NPV of the financing is the forgone i

37、nterest tax shields on the debt that ClumZee movers didnt go into when they leased instead of bought the truck.ClumZee agreed to a lease payment of $5,900.This payment would support a loan of $25,543.91Appendix 21A: APV Approach to LeasingThe lost interest tax shield associated with this additional

38、debt capacity of $25,543.91 has a present value of $1,135.3021.7 Debt Displacement and Lease ValuationThe lost interest tax shield associated with this additional debt capacity of $25,219.20 has a present value of $Corporate Finance Ross Westerfield JaffeSixth EditionSixth Edition22Chapter Twenty Tw

39、o Options and Corporate Finance: Basic ConceptsChapter Outline22.1 Options22.2 Call Options22.3 Put Options22.4 Selling Options22.5 Reading The Wall Street Journal22.6 Combinations of Options22.7 Valuing Options22.8 An OptionPricing Formula22.9 Stocks and Bonds as Options22.10 Capital-Structure Poli

40、cy and Options22.11 Mergers and Options22.12 Investment in Real Projects and Options22.13 Summary and Conclusions22.1 OptionsMany corporate securities are similar to the stock options that are traded on organized exchanges. Almost every issue of corporate stocks and bonds has option features.In addi

41、tion, capital structure and capital budgeting decisions can be viewed in terms of options.22.1 Options Contracts: PreliminariesAn option gives the holder the right, but not the obligation, to buy or sell a given quantity of an asset on (or perhaps before) a given date, at prices agreed upon today.Ca

42、lls versus PutsCall options gives the holder the right, but not the obligation, to buy a given quantity of some asset at some time in the future, at prices agreed upon today. When exercising a call option, you “call in” the asset.Put options gives the holder the right, but not the obligation, to sel

43、l a given quantity of an asset at some time in the future, at prices agreed upon today. When exercising a put, you “put” the asset to someone.22.1 Options Contracts: PreliminariesExercising the OptionThe act of buying or selling the underlying asset through the option contract.Strike Price or Exerci

44、se PriceRefers to the fixed price in the option contract at which the holder can buy or sell the underlying asset.ExpiryThe maturity date of the option is referred to as the expiration date, or the expiry. European versus American optionsEuropean options can be exercised only at expiry.American opti

45、ons can be exercised at any time up to expiry.Options Contracts: PreliminariesIn-the-MoneyThe exercise price is less than the spot price of the underlying asset.At-the-MoneyThe exercise price is equal to the spot price of the underlying asset.Out-of-the-MoneyThe exercise price is more than the spot

46、price of the underlying asset.Options Contracts: PreliminariesIntrinsic ValueThe difference between the exercise price of the option and the spot price of the underlying asset.Speculative ValueThe difference between the option premium and the intrinsic value of the option.Option Premium=Intrinsic Va

47、lueSpeculative Value+22.2 Call OptionsCall options gives the holder the right, but not the obligation, to buy a given quantity of some asset on or before some time in the future, at prices agreed upon today. When exercising a call option, you “call in” the asset.Basic Call Option Pricing Relationshi

48、ps at ExpiryAt expiry, an American call option is worth the same as a European option with the same characteristics.If the call is in-the-money, it is worth ST - E.If the call is out-of-the-money, it is worthless.CaT = CeT = MaxST - E, 0WhereST is the value of the stock at expiry (time T)E is the ex

49、ercise price.CaT is the value of an American call at expiryCeT is the value of a European call at expiryCall Option Payoffs-201009080706001020304050-40200-604060Stock price ($)Option payoffs ($)Buy a callExercise price = $50Call Option Payoffs-201009080706001020304050-40200-604060Stock price ($)Opti

50、on payoffs ($)Write a callExercise price = $50Call Option Profits-201009080706001020304050-40200-604060Stock price ($)Option profits ($)Write a callBuy a callExercise price = $50; option premium = $1022.3 Put OptionsPut options gives the holder the right, but not the obligation, to sell a given quan

51、tity of an asset on or before some time in the future, at prices agreed upon today. When exercising a put, you “put” the asset to someone.Basic Put Option Pricing Relationships at ExpiryAt expiry, an American put option is worth the same as a European option with the same characteristics.If the put

52、is in-the-money, it is worth E - ST.If the put is out-of-the-money, it is worthless.PaT = PeT = MaxE - ST, 022.5 Reading The Wall Street JournalThis makes a call option with this exercise price in-the-money by $3.25 = $138 $135. Puts with this exercise price are out-of-the-money.22.5 Reading The Wal

53、l Street JournalOn this day, 2,365 call options with this exercise price were traded.22.5 Reading The Wall Street JournalThe CALL option with a strike price of $135 is trading for $4.75.Since the option is on 100 shares of stock, buying this option would cost $475 plus commissions.22.5 Reading The W

54、all Street JournalOn this day, 2,431 put options with this exercise price were traded.22.5 Reading The Wall Street JournalThe PUT option with a strike price of $135 is trading for $.8125.Since the option is on 100 shares of stock, buying this option would cost $81.25 plus commissions.22.6 Combinatio

55、ns of OptionsPuts and calls can serve as the building blocks for more complex option contracts.If you understand this, you can become a financial engineer, tailoring the risk-return profile to meet your clients needs.Protective Put Strategy: Buy a Put and Buy the Underlying Stock: Payoffs at ExpiryB

56、uy a put with an exercise price of $50Buy the stockProtective Put strategy has downside protection and upside potential$50$0$50Value at expiryValue of stock at expiryProtective Put Strategy ProfitsBuy a put with exercise price of $50 for $10Buy the stock at $40$40Protective Put strategy has downside

57、 protection and upside potential$40$0-$40$50Value at expiryValue of stock at expiryCovered Call StrategySell a call with exercise price of $50 for $10Buy the stock at $40$40Covered call$40$0-$40$10-$30$30$50Value of stock at expiryValue at expiryLong Straddle: Buy a Call and a PutBuy a put with an e

58、xercise price of $50 for $10$40A Long Straddle only makes money if the stock price moves $20 away from $50.$40$0-$20$50Buy a call with an exercise price of $50 for $10-$10$30$60$30$70Value of stock at expiryValue at expiryShort Straddle: Sell a Call and a PutSell a put with exercise price of$50 for $10$40A Short Straddle only loses money if the stock price moves $20 away from $50.-$40$0-$