Corporate Finance (CI35867)

General information

Type:	OB	Curs:	1	Period:	S semester
ECTS Credits:	4 ECTS

Teaching Staff:

Group	Teacher	Department	Language
Sec: A	Jaime Sabal Cárdenas	Economía, Finanzas y Contabilidad	ENG

Group	Teacher	Department	Language
Sec: B	Jaime Sabal Cárdenas	Economía, Finanzas y Contabilidad	ENG

Accounting Principles: Financial Statements. Cash Flow extraction.

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.

Proficiency in excel will be also necessary.

The purpose of this course is to complement the basic concepts that students learned in a previous introductory course.
The content is balanced between a theoretical background and practical applications. The focus is mostly quantitative.

1. Corporate Finance Risk and Return: Stock statistics. Returns, Variance, Covariance and Correlation. Their computation and interpretation. The normal distribution. The benefits of diversification. The minimum variance frontier. The efficient frontier. The capital market line. Systematic and unsystematic risk. The capital asset pricing model (CAPM) and the security market line. Portfolio betas. The Weighted Average Cost of Capital (WACC). Impact of corporate taxes. Firm Valuation: Conceptual framework. Static valuation. Multiples-based valuation Dividend Discounting. The Gordon-Shapiro model. Discounted free-cash flows. Cash flow determination and projections. Terminal value. Dividends and Dividend Policy: Theory of Dividend Policy. Types of Dividends. Dividend splits. Stock repurchases. Conditions for dividend irrelevance. Justification of different types of dividends. Dividend smoothing.

There will be 9 class sessions and a final session when the final exam will take place.
Announcements, class material and general course information will be distributed through the intranet.
The course is quite ambitious and class sessions take place at an accelerated pace. Hence, it is very important for the students to prepare the classes in advance.

ASSESSMENT BREAKDOWN

The reference textbooks will be:
Ross S., Westerfield R., Jaffe J., Jordan B. D. 2008, "Modern Financial Management?, 8th Edition, McGraw-Hill.
Brealey R., Myers S., Allen F. 2008, "Principles of Corporate Finance?, 9th Edition, McGraw-Hill.
Bodie Z., Kane A., Marcus A. 2009, "Investments?, 8th Edition, McGraw Hill.

Several copies of these books are available at ESADE's library.
Besides these books the students will count with class slides and exercises. This material will be available through the intranet.

Group	Teacher	Department
Sec: A	Jaime Sabal Cárdenas	Economía, Finanzas y Contabilidad

Group	Teacher	Department
Sec: B	Jaime Sabal Cárdenas	Economía, Finanzas y Contabilidad