Course description

Corporate Finance

Introduction

The main aim of the course is to provide a detailed insight into more advanced topics in corporate finance with practical applications, which is necessary for both financial managers, financial analysts and consultants. It starts with a review of the basic concepts of financial management and valuation. It then focuses on optimal corporate policy, in regards to capital structure, investment and payout policy, in the presence of market imperfections. The final part of the course looks at advanced topics in valuation. 

Course content

  • Financial statements and capital budgeting
    • Financial statement analysis (information, statements, Bloomberg)
    • The time value of money and the law of one price
    • Investment decision rules
    • Forecasting cash-flows
    • Cost of capital (determinants of interest rates, debt cost of capital, using CAPM)
  • Capital structure
    • Perfect markets
    • Debt and taxes
    • Financial distress, managerial incentives and information
  • Payout policy and stock valuation
    • Valuation models (dividend-discount, total payout, free cash flow, comparable firms)
    • Payout policy (dividends vs. share repurchases, dividend and capital gains taxes, dividend smoothing and signalling)
  • Advanced valuation
    • Capital budgeting and valuation with leverage
    • The project cost of capital
    • Financial modelling
    • Real options

Learning outcome knowledge

At the end of the course students should be able to understand and implement financial decisions concerning capital budgeting and capital structure. 

Acquired Knowledge
The students are expected to become familiar with in-depth details of capital budgeting and capital structure, including the issues raised by taxes, information asymmetries and the nonlisted status of most companies in the economy. 

Students should have a good grasp of investment decision rules, cash flow forecasting, the equity and debt cost of capital, capital structure decisions in the presence of taxes and costs of financial distress, adverse selection issues in raising debt and equity capital, payout policy and stock valuation.

Students should also understand the theoretical issues raised by the valuation of firms and projects with various financing structures, in preparation for further courses on applied valuation. 

Exam organisation

  • Written assignment: 10%
  • Written assignment: 10%
  • Written exam: 20%
  • Written exam: 60%