GRA 8051 Corporate Finance

APPLIES TO ACADEMIC YEAR 2012/2013

GRA 8051 Corporate Finance

Responsible for the course
Dag Michalsen

Department
Department of Financial Economics

Term
According to study plan

ECTS Credits
5

Language of instruction
English

Introduction
The objective of the course is to familiarise the participants with how organisations should make and do make financial decisions.

    Objective
    The objective of the course is to familiarise the participants with how organisations should make financial decisions. For a firm, these decisions are:
    · The real asset decision:
    · How should the firm invest in real productive assets?
    · How should the firm assess risk?
    · The financing decision:
    · How should the firm finance its real assets (debt or equity)?
    · The dividend decision: To what extent should the firm distribute profits to the owners and to what extent should the profits be retained (reinvested)?
    Typically, these decisions are strategic in nature since they are frequently costly to reverse and have significant, long-term and risk consequences.

    Learning outcome
    Acquired knowledge:
    · Project cash flow analysis
    · Methods for evaluating investment projects
    · Handling risk in project analysis
    · Determining a company and project cost of capital
    · Determination of the appropriate firm capital structure
    · Determination of the firms’ dividend policy
    · Leasing
    · Mergers and acquisitions

    Acquired skills:
    · Choosing between good and bad investment projects
    · Adjusting project returns for risk
    · Choosing the appropriate capital structure and dividend policy for a firm
    · Analyzing the advantages and disadvantages of leasing
    · Estimating the economics consequences of mergers and acquisitions

    Reflection:
    The participants should be able to evaluate the trade-off between risk and return in making financial decisions.

    Prerequisites
    Bachelor degree or equivalent,5 years work experience, managerial experience and good written and oral knowledge of the English language.

    Compulsory reading
    Books:
    Hillier, David; Ross, Stephen; Randolph W. Westerfield; Jeffrey Jaffe; Bradford D. Jordan. 2010. Corporate finance. European ed. McGraw-Hill

    Other:
    Cases (will be distributed)


    Recommended reading

    Course outline
    1. Introduction to financial management (1-2)
    2. Cash flow (3)
    3. Net present value (4-5)
    4. Investment rules (6)
    5. Economic project analysis (7-8)
    6. Risk (9, 10, 12)
    7. Financial strategy/leverage (13-17)
    8. Dividend policy (18)
    9. Issuing securities (19)
    10. Leasing (21)
    11. Options (22)
    12. Mergers and acquisitions (29)

    Computer-based tools
    Spreadsheets will be used extensively in the course

    Course structure
    Learning process and workload
    The course is conducted through a total of 32 hours of lectures and casework. The cases are prepared in groups and discussed in class. It is expected that the participants actively participate in class discussions.

    Coursework requirements
    A number of cases will be used throughout the course. It is expected that the participants have prepared themselves beforehand for the discussion of the cases in the classroom.


    Examination
    1. Individual hand-in case (will be distributed): 60 % of the grade
    2. Group hand-in case (will be distributed): 40 % of the grade

    Examination code(s)
    GRA 80511; accounts for100 % to pass the course GRA 8051, 5 ECTS credits.
    The course is a part of a full Executive Master of Business Administration Program and all evaluations must be passed to obtain a certificate for the degree.

    Examination support materials


    Re-sit examination
    Re-takes are only possible at the next time a course will be held. When course evaluation consists of class participation or process elements, the whole course must me re-evaluated when a student wants to retake an exam. Retake examinations entail an extra examination fee.

    Additional information

    Semesters

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