Beruflich Dokumente
Kultur Dokumente
SYLLABUS
Corporate Finance
(2 SKS)
1.
Course Description
Course Objectives
Required Texts
Recommended Texts
5. Evaluation
Quizzes
Assignments
Mid Term Exam
Final Exam
Total
6.
10%
20%
30%
40%
100%
Course Outline
common set of regular cash flows called an annuity, both perpetuities and
annuities when the cash flows grow at a constant rate, computes the number of
periods, cash flow, or rate of return of a loan or investment
Reference (Berk): Chapter 3.
Session 4 : Interest Rates
This session describes the different ways interest rates are quoted, uses
quoted rates to calculate loan payments and balances, knows how inflation,
expectations, and risk combine to determine interest rates, understands the link
between interest rates in the market and a firms opportunity cost of capital.
Reference (Berk): Chapter 4.
Session 5 : Bonds
This session focuses the understanding of bond terminology, computes the price
and yield to maturity of a zero-coupon bond, computes the price and yield to
maturity of a coupon bond, analyzes why bond prices change over time, knows
how credit risk affects the expected return from holding.
Reference (Berk): Chapter 5.
Session 6 : Stock Valuation and Stock Valuation : A Second Look
This session describes the basics of common stock, preferred stock, and stock
quotes, compares how trades are executed on the NYSE and NASDAQ, values
a stock as the present value of its expected future dividends, understands the
tradeoff between dividends and growth in stock valuation, appreciate the
limitations of valuing a stock based on expected dividends, values a stock as the
present value of the companys total payout.
Reference (Berk): Chapter 6.
Session 7 : Investment Decision Rules and Fundamentals of Capital
Budgeting
This session calculates Net Present Value, uses the NPV rule to make
investment decisions, understands alternative decision rules and their
drawbacks, chooses between mutually exclusive alternatives, evaluates projects
with different lives, ranks projects when a companys resources are limited so
that it cannot take all positive-NPV projects, identifies the types of cash flows
needed in the capital budgeting process, forecasts incremental earnings in a pro
forma earnings statement for a project, converts forecasted earnings to free
cash flows and compute a projects NPV, recognizes common pitfalls that arise
in identifying a projects incremental free cash flows, assess the sensitivity of a
projects NPV to changes in your assumptions, identifies the most common
options available to managers in projects and understands why these options
can be valuable.
This session examines how capital structures vary across industries and
companies, understands why investment decisions, rather than financing
decisions, fundamentally determine the value and cost of capital of the firm,
describes how leverage increases the risk of the firms equity, demonstrates how
debt can affect a firms value through taxes and bankruptcy costs, shows how
the optimal mix of debt and equity trades off the costs (including financial
distress costs) and benefits (including the tax advantage) of debt, analyze how
debt can alter the incentives of managers to choose different projects and can
be used as a signal to investors, weighs the many costs and benefits to debt that
a manager must balance when deciding how to finance the firms investments.
This session also identifies the different ways in which corporations can make
distributions to shareholders, understands why the way in which they distribute
cash flow does not affect value absent market imperfections, demonstrates how
taxes can create an advantage for share repurchases versus dividends, explains
how increased payouts can reduce agency problems but potentially reduce
financial flexibility, understand the role of payout policy in signaling information to
the market, describes alternate non-cash methods for payouts
Reference (Berk): Chapter 12.
Session 13 : Financial Modeling and Pro Forma Analysis
This focuses on determining the optimal level of product availability and how the
Understand the goals of long-term financial planning, creates pro forma income
statements and balance sheets using the percent of sales method, develops
financial models of the firm by directly forecasting capital expenditures, working
capital needs, and financing events, distinguishes between the concepts of
sustainable growth and value-increasing growth, uses pro-forma analysis to
model the value of the firm under different scenarios, such as expansion
Reference (Berk): Chapter 13.
Session 14 : Working Capital Management and Short-Term Financial
Planning
This session understands the cash cycle of the firm and why managing working
capital is important, uses trade credit to the firms advantage, makes decisions
on extending credit and adjusting credit terms, manages accounts payable,
knows the costs and benefits of holding additional inventory, contrasts the
different instruments available to a financial manager for investing cash
balances. This session also forecasts cash flows and short-term financing
needs, understands the principle of matching short term needs to short-term
funding sources, knows the types of different bank loans and their tradeoffs,
understands the use of commercial paper as an alternative to bank financing,
uses financing secured by accounts receivable or inventory and knows how to
create a short-term financial plan. Reference (Berk): Chapter 19 and Chapter
20.