32244 - Corporate Valuation

Learning outcomes

The class investigates the nature of the variables determining the enterprise value and how they can be maximized. At the end of the course the student will be able to: - use the main corporate valuation methods, such as discounted cash flow and relative valuation, along with the estimation practices for computing their inputs; - critically apply these methods, as research evidence recommending specific valuation procedures depending on different corporate operations.

Course contents

Theoretical framework

Approaches and methods of valuation

Discounted Cash Flow (DCF) method: typical procedures

Estimating cash flows

Estimating the cost of capital

Estimating the growth rate

Relative valuation: theoretical framework and practical issues

ERASMUS STUDENTS: we suggest to attend this course only if you are a master student or only if you have already attended a course in Corporate Finance The course in Corporate Valuation can be considered an advanced course in Corporate Finance.

Readings/Bibliography

- Lecture slides and notes. Slides will be available on the platform “Insegnamenti on line”.

Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, Second Edition. Chapters: 1, 2, 4, 5, 7, 8 and 9.

Principles of Corporate Finance, R. Brealey, S. Myers and F. Allen, 2014.

Chapter: 9

Teaching methods

The program of the course will be presented in-depth in class. Theoretical and practical classes will be provided. Practical classes (n.2) will be based on the resolution of exercises and on the presentation of corporate case studies.

 

Assessment methods

Valuation is based on a written exam.

The exam is based on 11 Multiple Choices and 1 exercise OR 1 open question. The exam lasts 40 minutes. The Corporate Valuation module belongs to the integrated course “Corporate Valutaion, Mergers and Acquisitions”. The final mark will be the weighted average of the mark obtained in “Corporate Valuation” module (2/3) and the mark obtained in “Mergers and Acquisitions” module” (1/3).

The correct answer to a Multiple Choice gives 2 points. There is no penalty for the wrong answer and there is only one correct answer. The exercise/open question has a value up to 10 points.

Students are not allowed to use notes or books.

A list of the most important formulas is provided within the exam text.

The final mark is expressed in thirties.

The course will be taught during the first semester. While the first call will be set in October, the second one will be set during the winter period (January-February) and the last one in September. A call will be set in the second half of July on request of at least one student.

Teaching tools

The teaching tools are the projector and the blackboard for exercises.

Office hours

See the website of Barbara Petracci