95624 - Fundamentals of Corporate Finance

Learning outcomes

The aim of this course is to provide students with a set of analytical tools to understand how corporations structured and managed financial decisions. Companies face two broad financial questions: What investments should the firm make? And how should a firm raise money to finance those investments? At the end of the course, students can: (a) make investment decisions based on the net present value rule; (b) understand how much should the firm borrow; (c) calculate the opportunity cost of capital in a framework of the risk and return market model.

Course contents

The students will be first introduced to the major topics of corporate finance, the importance of understanding firm financial statements and cash flows. Successively, they will have to develop an understanding of how to use these financial statements and their importance for long term financial planning and growth.

The second part of the course will deal with the time value of money, the methodology of discounted cash flows and practical applications such as stock and bond valuation.

The instructor will then explain the capital budgeting decision process which is related to the evaluation of investments made by the firm, and related topics such as the opportunity cost of capital, or the internal rate of return.

Finally, firm financing decisions will be investigated, such as optimal firm capital structure, and payout policy.

Readings/Bibliography

Fundamentals of Corporate Finance, by Ross, S., Westerfield, R., and Jordan, B., 2019. 12th edition, McGraw Hill.

Teaching methods

The course will contain a mix of frontal lessons and practical applications which will be performed in Excel. Students are encouraged to attend all classes in order to thoroughfully comprehend the concepts covered in this course.

Assessment methods

The assessment will be divided in two parts. A final writen exam which will account for 70% of the final grade. It will have theoretical questions and problem solving. The remaining 30% of the final grade will be based on a group project. Students will be asked to use Excel to solve a practical case. More details will be provided in class by the instructor on due time.

The passing grades are in the range 18-30 cum laude (30L). These are based on the following evaluation criteria:

18-23: The student has sufficient preparation and analytical skills, spread however, over just few topics taught in the course, the overall jargon is correct
24-27: The student shows an adequate preparation at a technical level with some doubts over the topics. Good, yet not too articulated analytical skills with the use of a correct jargon.
28-30: Great knowledge about most of the topics taught in the course, good critical and analytical skills, good usage of the specific jargon
30 cum laude (30L): Excellent and in depth knowledge of all the topics in the course, excellent critical and analytical skills, excellent usage of specific jargon.

Teaching tools

All teaching material will be uploaded by the instructor on Virtuale.

Office hours

See the website of Andi Duqi