Brealey Myers，公司金融原理 第七版PPT Chapter_11.pptVIP

Slides by Matthew Will Topics Covered Look First To Market Values Forecasting Economic Rents Marvin Enterprises Market Values Smart investment decisions make MORE money than smart financing decisions Market Values Smart investments are worth more than they cost: they have positive NPVs Firms calculate project NPVs by discounting forecast cash flows, but . . . Market Values Projects may appear to have positive NPVs because of forecasting errorse.g. some acquisitions result from errors in a DCF analysis Market Values Positive NPVs stem from a comparative advantage Strategic decision-making identifies this comparative advantage; it does not identify growth areas Market Values Don’t make investment decisions on the basis of errors in your DCF analysis. Start with the market price of the asset and ask whether it is worth more to you than to others. Market Values Don’t assume that other firms will watch passively.Ask --How long a lead do I have over my rivals? What will happen to prices when that lead disappearsIn the meantime how will rivals react to my move? Will they cut prices or imitate my product? Department Store Rents Using Market Values Using Market Values Do Projects Have Positive NPVs? Rents = profits that more than cover the cost of capital NPV = PV (rents) Rents come only when you have a better product, lower costs or some other competitive edge Sooner or later competition is likely to eliminate rents Competitive Advantage Proposal to manufacture specialty chemicals Raw materials were commodity chemicals imported from Europe Finished product was exported to Europe High early profits, but . . . . . . what happens when competitors enter? Marvin Enterprises Marvin Enterprises Marvin Enterprises Marvin Enterprises Marvin Enterprises Marvin Enterprises 11- * McGraw Hill/Irwin Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Where Positive Net Present Values Come From Principles of Corporate Finance Seventh Edit