Financial Economics & Corporate Finance (2235.YR.003926.1)
General information
Type: |
OBL |
Curs: |
1 |
Period: |
S semester |
ECTS Credits: |
null ECTS |
Teaching Staff:
Prerequisites
Admission to ESADE's Master of Finance program.
Workload distribution
Presential class work 60%
Individual work 30%
Consulting/mentoring 10%
COURSE CONTRIBUTION TO PROGRAM
The objective of the Finance Pre-Program is to introduce participants to the basic principles of modern corporate finance. The content is mainly theoretical although numerous practical applications will be pointed out and illustrated.
Course Learning Objectives
1) Time Value of Money: Basic concepts of investment selection. Present and Future Values. Net Present Value. Internal Rate of Return. Annuities and Perpetuities. Simple and compound Interest. Continuous compounding.
Valuation Techniques: Alternative methods of investment selection. Payback, Average Return on Book Value. Internal Rate of Return. Profitability Index. Contrast with the Net Present Value rule.
2) Topics on Valuation: Special cases of valuation. Capital rationing. Projects with different horizon. Replacement Decisions.
3) Risk and Return: Return and Risk Statistics. Diversification. Capital allocation between the risky asset and the risk-free asset. The Markowitz portfolio selection model. The Capital Market Line and the Capital Asset Pricing Model.
4) Cost of Capital: Theory of Capital Structure and WACC. Combination of WACC and the Capital Asset Pricing Model. Capital Structure and WACC in practice.
5) Firm Valuation: Introduction. Reasons for performing a valuation. How value is created. Different approaches to value a firm. Static valuation. Multiple valuation. Dividend discounting. Discounted cash flows. Contrast and complementarity between multiple valuation and discounted cash flows. Cash flow extraction from the pro-forma financial statements. Horizon and terminal value. The value of flexibility: decision trees and the concept of real options.
CONTENT
1. Time Value of Money (Session 1) |
2. Valuation Techniques (Session 2) |
3. Special Topics on Valuation (Session 3) |
4. Risk and Return (Session 4) |
5. Cost of Capital (Session 5) |
6. Firm Valuation (Session 6) |
Assessment criteria
This is an intensive course so it is very important for the students to study the material and solve the assigned homeworks every day.
There will be a formal evaluation at the end of the course. Results will be on a "Qualified? or "Not Qualified basis?.
