Principles of Corporate Finance
Objectives
The objective of this course is to introduce the main concepts and techniques of financial analysis, with a special focus on issues in corporate finance. By the end of the course, students will acquire knowledge and practice on firm/project valuation, capital structure decisions and value creation, and corporate financing. The covered topics include accounting information and financial statement analysis; the net present value and other investment rules; principles of capital budgeting; long-term financing; capital structure; and firm valuation.
General characterization
Code
33161
Credits
6
Responsible teacher
Luís Oliveira
Hours
Weekly - 3
Total - 36
Teaching language
Portuguese
Prerequisites
Not Applicable
Bibliography
Main:
- Hillier, D., Ross, S., Westerfield, R., Jaffe, J., and Jordan, B., 2016. Corporate Finance, Third European Edition, McGraw-Hill.
Complementary:
- Brealey, R., Meyers, S., Allen, F., 2007. Princípios de Finanças Empresariais, 8/e Edition, McGraw-Hill.
- Barroso, C., M. Ferreira, P. Inácio, A. Mota, J. Nunes and L. Oliveira, 2020. Finanças Empresariais: teoria e prática, 6th edition, Sílabo.
- Oliveira, L., L. Laureano, P. Inácio, 2019. Mercados e Instrumentos Financeiros: Fundamentos dos mercados e dos ativos financeiros, 1st edition, Sílabo.
Teaching method
The teaching method is based on theoretical-practical lectures, 1 per week. It will be proposed the resolution in group of a practical case on all the topics taught in class during the cycle. At the end, a final exam will be taken that will cover the whole points of the syllabus.The students will be provided with a collection of cases and exercises for monitoring and training in individual or group study.
Evaluation method
The teaching method is based on theoretical-practical lectures, 1 per week. It will be proposed the resolution in group of a practical case on all the topics taught in class during the cycle. At the end, a final exam will be taken that will cover the whole points of the syllabus.The students will be provided with a collection of cases and exercises for monitoring and training in individual or group study.
Subject matter
1. Introduction
1.1. Introduction to Financial Management
1.2. The Financial Management Decisions
1.3. The Agency Problem and Control of the Corporation
1.4. Accounting Information and Financial Statements
2. Value and Capital Budgeting
2.1. Discounted Cash Flow Valuation
2.2. Discount Rates
2.3. Investment Rules: NPV, IRR, Payback, PI
2.4. Investment Decisions: Special Cases
3. Long-term Financing
3.1. Equity Financing
3.2. Debt Financing
3.3. Equity vs Debt
4. Capital Structure
4.1. Capital Structure: Basic Concepts
4.2. Limits to the Use of Debt
4.3. Valuation and Capital Budgeting for the Levered Firm
5. Enterprise Valuation
5.1. Risk and Return: The Capital Asset Pricing Model
5.2. Discounted Free Cash Flow Valuation (FCFF)
5.3. Economic Value Added (EVA)