Fundamentals of Corporate Finance
Objectives
This course is devoted to the fundamentals of modern corporate finance
theory. It assumes that students had previously attended the Investments
course.
General characterization
Code
14506
Credits
6
Responsible teacher
Irem Demirci
Hours
Weekly - Available soon
Total - Available soon
Teaching language
English
Prerequisites
Available soon
Bibliography
Berk,
Jonathan and DeMarzo, Peter, “Corporate finance”, 4th ed, Pearson, 2016.
Teaching method
This is a fundamentals course and thus most of the classes will follow a
traditional lecture format. However, in order to bridge the gap between theory
and practice, two case studies will be used, one on capital budgeting and
another on the estimation of the cost of capital (with leverage).
Evaluation method
The assessment of this curricular unit is done together with the block
of curricular units of the same area of knowledge. This assessment has 3
moments, which together define the final grade of the curricular unit:
•
Individual exam with a weighting of 50% of the total mark
•
Group work with a weighting of 35% of the total grade value
•
Individual reflection-action exercise carried out at the end of the curricular
unit, with a weighting of 15% of the total grade value. The set of individual
action-reflection exercises is a journaling activity, which will constitute, at
the end, a learning portfolio capable of synthesising the contributions of the
Executive Master for that student.
Subject matter
The course will be structured around the following topics.
•
Introduction to corporate finance
•
Enterprise value and the value of debt and equity
•
Measuring value creation: Net present value and its relation with the internal
rate of return
•
Capital budgeting
•
Topics: capital constraints, inflation and sensitivity analysis
•
Real options in capital budgeting
•
Capital structure and its impact on the value of the firm and its cost of
capital
•
Bankruptcy costs and agency costs of debt
•
Interaction between financing and investment decisions; methods APV, WACC and
FTE
•
Distributions to equityholders: dividends and share buybacks