34466 - Business and Project Finance M

Learning outcomes

The main goal of the course is to give students the ability to answer two fundamental questions: what investments should a company do and how it should get the capital to fund such investments. Particular attention will be given to the valuation and financing of investments in technological innovation.

Course contents

Prerequisites

Students have a prior knowledge of the basic business economics and understand the relavant statistical and financial math tools. All lessons will be held in Italian. It is therefore necessary to understand the Italian language. Since part of the additional teaching material is in English a good knowledge of the English language can help.

Introduction

• Course Objectives. Introduction to Corporate Finance, the role of the financial manager, corporate objectives and corporate governance (Chapter 1, 4)
• Fundamentals of financial analysis, reclassification of the balance sheet and income statement, main budget indices, (chapter 2, 3)
  
  Investment decisions
• The present value, the value of an annuity, compound interest, real and nominal rates (see section 4.5)
• Valuation of shares and bonds through discounted cash flows, price / earnings ratios (cap.6)
• VAN as the best criterion, methods other than VAN, limited  capital and TIR (Chapter 7)
• Decisions with the VAN (Chapter 8)
• Risk and performance introduction, measure of variability (cap.9,10)
• Portfolio Theory and CAPM (cap.10)
• Risk and Capital Budgeting (cap.11)
• Capital Budgeting Analysis and Simulations (Chapter 12)
• Financing decisions Financing decisions and capital market efficiency (Chapter 14)
• Equity securities and bonds (cap.15)
• Financing through venture capital and stock market listing (Chapter 16)
• The dividend policy (Chapter 17) The irrelevance of capital structure, the thesis of Modigliani and Miller(Chapter 18)
• Correct Measure of Financial Debt, Cost of Debt (cap.19)
• Interaction between investment and financing policies, weighted average cost of capital (cap.20)
• Debt financing, credit risk, rating and probability of insolvency (Chapter 25)
  Other corporate finance issues
• Management of the working capital and short-term financial planning (Chapter 30.3)
• Project finance
• Theory and valuation of options and derivative products (ch.21,22 and dispensations)

Readings/Bibliography

Reference Texts:

• R. Brealey, S. Myers, F. Allen, S. Sandri, Principi di Finanza Aziendale, Sesta Edizione, McGraw Hill Libri Italia, 2011.
•  E. Bajo, S. Sandri, Finanza Aziendale. Temi d'esame, Seconda Edizione, Pitagora Editrice Bologna, 2007.
  
  
  Other relevant texts:
• M. Massari, L. Zanetti, Valutazione - Fondamenti teorici e best practice nel settore industriale e finanziario. II Edizione, McGraw Hill Libri Italia, 2008
• A. Damodaran, Valutazione delle aziende. Apogeo, 2002
• R. Cesari, E. Susini, Introduzione alla Finanza Matematica. Concetti di base, tassi, obbligazioni. McGraw Hill Libri Italia, 2005
• R. Cesari, E. Susini, Introduzione alla Finanza Matematica. Mercati azionari, rischi e portafogli. McGraw Hill Libri Italia, 2005

  Other relevant texts for exercises:

• S. Mengoli, Esercizi di Finanza, Seconda Edizione, Dupress, 2009
•  S. A. Ross, R. W. Westerfield, J. F. Jaffe Finanza Aziendale. Il Mulino, 2005
• A. Damodaran Finanza Aziendale. Seconda Edizione, Apogeo, 2006

Teaching methods

Frontal lessons

Assessment methods

The preparation of the students will be evaluated through a written exam and an optional oral test. The written exam consists of three exercises (max 20 points) and two open questions (max 12 points). The optional oral test (+/- 3 points) consists of three open questions relevant to the entire program. The lasting of the written exam is 90 minutes.

If the exam is repeated, the previous reported vote is automatically canceled. Oral exam is optional and takes place in case the student demands in the same day as the written test.

At the end of the correction the student will promptly notify the lecturer of the willingness to perform the oral test.

The results of the exams are registered automatically (on Almaesami) at the end of the session. If the student intends not to accept the vote, he has to promptly inform the lecturer via mail.

Teaching tools

Case studies exercise materials, slides and any further teaching material used during the lessons will be made available on the lecturers's personal site before each lecture.

Office hours

See the website of Antonio Arfè