ADVANCED CORPORATE FINANCE

Description

Objectives: The course will present and discuss corporate finance topics including advanced capital budgeting techniques, capital structure design, dividend policy and firm valuation. The aim of the course is to combine standard academic teaching with case studies and personal work experience presentations from the lecturers in order to provide students with a framework to analyze even complex investment and financing decisions and understand how financial theory can be used to address practical issues. Assessment: Written (compulsory) exam Teaching Methods: The course will combine standard academic teaching (covering theoretical background and formal models) with lectures oriented towards practical issues, case studies and excel-based tutorial sessions. Selected problem sets or projects may be assigned as individual or team work over the semester in order to stimulate active participation by students. Prerequisites: Corporate finance, financial mathematics, accounting, statistics Contents: The course will cover the following topics: Risk and return models, CAPM, APM, Multifactor models; Cost of Equity, Cost of Capital, WACC; Return on investments, Capital budgeting; Capital structure design; Dividend policy; Firm valuation, DCF Models, Relative valuation and multiples; Valuation in IPO, M&A LBOs; Reference Texts: Damodaran, A. (2015) Applied Corporate Finance, 4th Edition; Berk/DeMarzo (2014) Corporate Finance; Thesis assignment criteria: Personal judgment and full marks for the exam session. Extended Program And Reference Reading Material: Week 1: Topics: Introduction to the course; The objective in decision making; Analyzing Risk; Reading material: Damodaran (2015), chapters 2 and 3 Extended Program And Reference Reading Material: Week 10: Real Options. Real versus financial options, the option to delay an investment opportunity, multiple projects. Reading material: Berk/DeMarzo (2014), Chapter 22. Extended Program And Reference Reading Material: Week 11: Raising Equity Capital. Equity financing for private companies, Initial Public Offering, Seasoned Equity Offering. Reading material: Berk/DeMarzo (2014), Chapter 23 Extended Program And Reference Reading Material: Week 12: Mergers and acquisitions. Market reaction to a takeover, reasons to acquire, the takeover process, value added in takeovers. Reading material: Berk/DeMarzo (2014), Chapter 28. Extended Program And Reference Reading Material: Week 2: Topics: The Investment decision; Risk and return models; Estimating discount rates; Reading material: Damodaran (2015), chapter 4 Extended Program And Reference Reading Material: Week 3: Topics: Investment Apprisal/Capital budgeting; Return on Investments; Project Interactions, side costs and benefits. Reading material: Damodaran (2015), chapters 5 and 6 Extended Program And Reference Reading Material: Week 4: Topics: Capital Structure/Financing decision; The optimal financial mix; Financing details. Reading material: Damodaran (2015), chapters 7,8 and 9 Extended Program And Reference Reading Material: Week 5: Topics: Dividend policy; Analyzing cash returned to stockholders. Reading material: Damodaran (2015), chapters 10 and 11 Extended Program And Reference Reading Material: Week 6: Topics: Valuation: introduction and objectives. Financial Statements Review Free Cash Flow computation; APV and WACC methods Extended Program And Reference Reading Material: Week 7: Valuation I: Valuing Stocks. Dividend Discount Model, Total Payout Model, Discounted Free-Cash Flow Model, Multiple-based valuation. Reading material: Berk/DeMarzo (2014), Chapter 9. Extended Program And Reference Reading Material: Week 8: Valuation II: Estimating the cost of capital. Beta estimation, the debt cost of capital, project’s cost of capital. Reading material: Berk/DeMarzo (2014), Chapter 12. Extended Program And Reference Reading Material: Week 9: Valuation III: Capital budgeting and valuation with leverage. Weighted average cost of capital, project-based cost of capital. Reading material: Berk/DeMarzo (2014), Chapter 18. Intended learning outcomes: Students are expected to acquire deep understanding of the theory related to the course topics and to be able to apply the theoretical knowledge to practice