Unit name | Corporate Finance |
---|---|
Unit code | EFIM20006 |
Credit points | 20 |
Level of study | I/5 |
Teaching block(s) |
Teaching Block 1 (weeks 1 - 12) |
Unit director | Professor. Acker |
Open unit status | Not open |
Pre-requisites |
EFIM10005 Fundamentals of Accounting and Finance 1 or ACCG10052 Introduction to Accounting plus EFIM10008 Mathematical and Statistical Methods 1 |
Co-requisites |
None |
School/department | School of Economics, Finance and Management |
Faculty | Faculty of Social Sciences and Law |
The course explores aspects of corporate finance, examining how companies interact with the financial markets and how decisions about internal and external financing affect the value and risk of corporate flows. The aim is to provide a well-rounded picture of decisions that company managers make, the effects of these decisions, and the information that should be used as a basis for these decisions.
The topics explored include:
Project appraisal using discounted cash flow in the presence of taxation and inflation.
How the discount rates used in net present value calculations are set: the impact of risk and, in particular, systematic risk in the context of portfolio theory/the Capital Asset Pricing Model.
Use of the dividend valuation model to infer discount rates; the weighted average cost of capital.
The Efficient Market Hypothesis and its implications for share prices.
Whether managers of a firm can affect its value by choice of capital structure or dividend policy, to include the theories of Modigliani and Miller.
Governance issues.
Internal risk management, including hedging with futures and options.
Sources of long-term funds.
Using the Adjusted Present Value technique to evaluate projects which require the raising of long-term funds, in particular including debt.
20 hours lectures for whole cohort
10 hours of exercise lecture for groups of 50-60 students
10 one-hour classes
5 hours of optional clinics
Summative:
Formative:
All learning objectives are assessed by both summative and formative assessment
Hillier, Ross, Westerfield and Jaffe, Corporate Finance, McGraw-Hill 1st or 2nd ed