37729 - Finance Laboratory

Learning outcomes

At the end of the course, the students can face the main topics in valuations, as the determination of the free cash flows, the company's cost of capital and the main multiples adopted. A more practical insight is provided through a case studies analisys.

Course contents

This course offers a practical and analytical approach to corporate valuation, focusing on key concepts such as the time value of money, capital investment appraisal techniques, and the calculation of free cash flows and cost of capital. Students will also become familiar with the most commonly used valuation multiples. The course combines theoretical foundations with hands-on experience through real-world case studies, enabling students to effectively analyze financial scenarios and apply valuation methods in a business context.

Structure of the course:

Module 1:

1 Course introduction, introduction to valuation and applications to the time value of money

2 Applications to the time value of money (continued)

3 Capital budgeting. Assessment methods (NPV; IRR; Payback). Free cash flow

4 FCFF and FCFE. Incremental FCFFs.

5 Case study | Capital Budgeting (Windowlux)*

6 Case study | Company Valuation (Eurano A)*

7 Case study presentation (Fonderia di Torino)

Module 2:

1 Optimal Financial Structure: Modigliani and Miller’s Models (Bigelli)

2 Optimal Financial Structure: Trade-off Theory and Pecking Order Theory (Bigelli)

3 Company Valuation: methods, DCF and WACC parameters (Bigelli)

4 WACC, Adjusted Present Value and some valuation cases (Bigelli)

5 Case Study - LBO Biotech Case Study * (Bigelli)

6 Case studies presentation (Bigelli)

7 Exam preparation (Bigelli)

* to be solved in class

Readings/Bibliography

Required Readings:

Ivo Welch, Corporate Finance [https://www.ivo-welch.info/home/] : 5th Edition, 2022 (Chapters: 2-4; 13, 14)

Case studies (provided in class)

Slides used in class (Pdf copies of the slides free downloadable from ww.virtuale.unibo.it)

Textbook: Marco Bigelli, Corporate Finance: A Practical Guide for Managers

https://tinyurl.com/5dkpfrmf

 

Teaching methods

The main instructional approaches used in the course are:

- Lectures

- Case Studies

- Problem-Based Learning

- Group work

Assessment methods

Though not compulsory, class attendance and participation in team-work assignments is strongly encouraged.

Course evaluation will be different depending on the attendance.

Attending Students:

Component Weight (%)

Final Exam 100

Class Participation + up to 3 points

Non attending Students:

Component Weight (%)

Final Exam 100

- Exam and group project structure:

The final exam will assess the comprehensive understanding of the course material from both modules. For attending students, the evaluation will be based on a final exam administered at the end of the two modules. The exam will typically consist of 10 multiple-choice questions (worth 10 out of 30 points), a few short exercises (worth a total of 10 points), and one longer valuation exercise (worth 10 points). The exam will last 90 minutes. The theoretical maximum score, including class participation, is 33 points. For non-attending students, the maximum achievable grade is 30.

For the presentation of the Fonderia di Torino case, the instructor will, at his discretion, define groups consisting of no more than 4 people. Each group will be required to prepare a presentation discussing the problem to be solved, the main assumptions used, and, most importantly, the recommendations for the company’s management. These recommendations must be supported by numerical analyses, which should also be discussed as part of the presentation.

For the presentation of the case studies to be done with the AI help, the instructor (Prof. Bigelli) will use the same groups previously formed. Each group will be required to prepare a short PPT presentation discussing the points to be investigated (plus potentially others), using all possible source of information, AI tools included.

Exam policy:

Grading scale:

< 18: failed

18-23: sufficient

24-27: good

28-30: very good

30 e lode: outstanding

Erasmus: at most 8 not CLAMDA students (Erasmus, Overseas and UADE students), selected in chronological order, will be admitted to the course and the exam.

Students with disability or specific learning disabilities (DSA) are required to make their condition known to find the best possibile accommodation to their needs.

Exam registration policy for the whole integrated exam of Corporate Finance

The final grade for the integrated course (Corporate finance) will be computed as a credit-weighted average of the three modules of the integrated course: Corporate Governance (6 credits) Risk Management (6 credits) and Financial Laboratory (4 credits). However, the minimum grade to be taken in each of the three modules is equal or above 16/30

All positive grades for the integrated exam (under condition that each partial exam mark is above or equal 16/30) will be automatically registered within two weeks from grading unless students ask not to proceed.

In the re-take exam dates of January-February all integrated exam-grades above 23 should be automatically registered and cannot be rejected.

Teaching tools

Tools, platforms, or resources used during the course:

- Learning platform: Virtuale (virtuale.unibo.it) contains the slides and the team-work assignments

- Presentation software: PowerPoint or other chosen by students

- Communication tools: Email; Teams; Forum on Virtuale

- Other digital software: MS Excel

Office hours

See the website of Emanuele Bajo

See the website of Marco Bigelli