MBA 2424 Corporate Finance
MBA 2424 Corporate Finance
This course is to provide students with a conceptual framework and a set of technical tools for making corporate investment decisions. The focus will be maximizing the value of the firm. Various ethical issues will be highlighted throughout the course.
- The objectives of corporate financial management and potential financial and ethical conflicts of stakeholders.
- Financial metrics for evaluating corporate financial performance.
- Basics of financial markets and instruments.
- The tradeoff between financial risk and financial reward, and its implications for investment and financing decisions.
- Evaluating of corporate financial performance.
- Making financial plans for company growth.
- Performing corporate investment analysis.
After taking this course, students are expected to reexamine the financial management of their own companies, including performance measurements and financial control, and make connections between their own job functions and their corporate financial objectives.
1 The Objective of Corporation.
What is a corporation? What is the objective of a corporation? Who are responsible for achieving such objective? What are the issues that can arise when a corporation is publicly owned?
Readings: Notes.
2. Accessing Financial Performance
What are the drivers of financial performance? We will discuss the basics of evaluating financial performance based on financial statements.
Readings: Higgins Chapter 1, 2
3. Managing Growth
How should the firm manage its short term cash flow? How can a firm sustain its growth?
Readings: Higgins Chapters 3, 4.
4. The Time Value of Money and Discounted Cash Flow.
A dollar today is more than a dollar tomorrow. The concepts of future value of money (compounding) and present value of money (discounting) will be introduced to make money of different periods comparable. We will also look at two special types of cash flows of multiple periods: annuity and perpetuity, and their applications.
Reading: Higgins, pp. 250-254
5. Financial Markets and Instruments.
We will discuss the basic features of bond, common stock and preferred stock. We will introduce Discounted Dividend Model for valuations of stocks, and in particular, we will emphasize the relationship between dividend growth rate and stock price. How firms raise capital. We will focus on equity financing, and in particular IPO.
Readings: Higgins Chapter 5, 6.
6. Risk Analysis & Cost of Capital.
We will discuss the concept of risk and characterize the relationship between risk and expected return by using Security Market Line. We will also look at the history of capital markets. We will discuss how to estimate the cost of equity and debt, and we will show the cost of a firm’s capital is the weighted average of the costs of its debt and equity. We will find the cost of capital and the expected return on capital are the two sides of the same coin.
Readings: Higgins Chapter 8.
7. Net Present Value and other Investment Criteria.
We will introduce Net Present Value as the basic investment criterion. We will also lay out a few alternative criteria and compare their strengths and weaknesses. We will see NPV in action by examining a few cases of investment decisions. Some practical details in using NPV will also be discussed.
Readings: Higgins Chapter 7.
The course is conducted as a teaching module, where students have classes all day for four subsequent days, a total of 32 hours.
This is a course with continuous assessment (several exam components) and one final exam code. Each exam component will be graded using points on a scale 0 -100. The components will be weighted together according to the information in the course description in order to calculate the final letter grade for the course. Students who fail to participate in one/some/all exam components will get a lower grade or may fail the course. Candidates may be called in for an oral hearing as a verification/control of written assignments.
Specific information regarding the points system and the mapping scale beyond the information given in the course description will be provided in class. This information may be relevant for requirements for term papers or other hand-ins, and/or where class participation can be one of several elements of the overall evaluation.
The course is a part of a full MBA and examination in all courses in the MBA programme must be passed in order to obtain a certificate for the MBA degree.
Granted admission to the BI-Fudan MBA programme. Please consult our student regulations.
| Assessments |
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Exam category: Submission Form of assessment: Written submission Weight: 10 Grouping: Individual Duration: 1 Semester(s) Comment: Pre-course work (A pre-course assignment will be distributed in course preview), counts 10% of the total grade. Exam code: MBA 24241 Grading scale: Point scale leading to ECTS letter grade Resit: Examination when next scheduled course |
Exam category: Activity Form of assessment: Class participation Weight: 20 Grouping: Individual Comment: Class participation, including case write-ups, counts 20% of the total grade. Exam code: MBA 24241 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 70 Grouping: Individual Support materials:
Duration: 2 Hour(s) Comment: Final written exam, counts 70% of the total grade. Exam code: MBA 24241 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 4 ECTS credit corresponds to a workload of at least 110 hours.