韩山师范学院财务管理课件第十六章 Long-Term Debt and Lease Financing.ppt

Chapter 16 Long-Term Debt andLease Financing Restatement of Facts PPT 16-4 Old Issue New Issue Size . . . . . . . . $10,000,000 $10,000,000 Interest rate . . . . 11.75% 9.5% Total life . . . . . . 25 years 20 years Remaining life . . . 20 years 20 years Call premium . . . 10% -- Underwriting costs . . $125,000 $200,000 Tax bracket . . . . . 35% Discount rate . . . . 6% Step C—Net Present Value PPT 16-5 We now compare our outflows and our inflows from the prior pages. Outflows Inflows 1. Net cost of call . . $650,000 3. Cost savings in lower premium . . . . interest rates . . . $1,677,488 2. Net cost of under- 4. Net gain from under- writing expense on writing cost on new issue . . . 159,855 old issue . . . . 14,928 $809,855 $1,692,416 Present value of inflows . . . $ 1,692,416 Present value of outflows . . . 809,855 Net present value . . . . . $ 882,561 Chapter 16 - Outline LT 16-1 Bond Terminology More Bond Terminology Priority of Claims Methods of Repayment 3 Types of Bond Yields Other Forms of Bond Financing Advantages and Disadvantages of Debt 2 Types of Leases Advantages of Leasing Bond Terminology LT 16-2 Par Value: principal or face value (usually $1,000) Coupon Rate: actual or stated interest rate Maturity Date: date when repayment of principal is due More Bond Terminology LT 16-3 Indenture: legal document detailing the corporation’s obligations Secured Debt: where specific assets are pledged to bondholders in the event of default Debenture: a L/T unsecured corporate bond Subordinated Debenture: unsecured bond that is paid after senior debenture holders are satisfied Priority of Claims LT 16-4 Secured Debt (first priority) Unsecured Debt (or Debentures) Preferred Stockholders Common Stockholders (last to receive any money) Methods of Rep