BUS315 Corporate Finance and Valuation

Credits (ECTS):10

Course responsible:Muhammad Yahya

Campus / Online:Taught campus Ås

Teaching language:Engelsk

Course frequency:Annually.

Nominal workload:250 hours.

Teaching and exam period:Fall semester.

About this course

The course is built around three main parts:

Financial strategy: Capital structure, dividend policy and issuing of securitie
Valuation and value creation: How to discount cash flows, interaction between financing and investment decisions
Options in corporate finance: real options, equity and debt as options, convertible debt.

In the financial strategy part, we will highlight the tradeoff between cost and benefits when a firm chooses between equity and debt financing. We will study different capital structure theories and discuss optimal capital structure. In addition, we also look at dividend policy and the issuance process for debt and equity

The second part deals with valuation and value creation. We will study cash flow based techniques such as APV and WACC, and take financing effects into account.

In the third part of the course, we study the role of options in corporate finance. We will consider valuation when there are real options embedded in investment proposals. In addition we will also learn how we can see debt and equity as options

In the course there will also be room for various special topics which may include topics related to mergers and acquisitions, IPOs, financial distress and risk management.

Learning outcome

Knowledge - After completing this course a student should have the knowledge to:

Evaluate different capital structure theories.

Discuss how changes in dividend policy may affect firm value.

Compare different techniques to discount cash flows.

Understand how financing may affect investment decisions.

Analyze bonds

Value options

Skills - After completing this course a student should have the skills to:

Use capital structure theories to suggest a suitable capital structure for a firm.

Use complex discounted cash flow methods and assign cost of capital.

Analyze investment decisions with embedded real options.

Analyze consequences of different risk management strategies.

Analyze transaction structures for mergers and acquisitions.

General competence -

Use the theories and ideas from corporate finance to contribute to problem solving in different types of organizations.

Learning activities
2 x 2 hours classroom teaching and 2 hours exercises on campus weekly.
Teaching support
Course information, assignments, datasets etc., will be posted on Canvas.
Prerequisites
BUS220 or equivalent: Finance and investment
BUS110 or equivalent: Accounting - Financial Reporting
Assessment method
Portfolio grading. Grading will be based upon two elements:
40% Best of two midterms
60% Final written exam at the end of the teaching period
There will not be any retake exam in the course.

Portfolio
Grading: Letter grades
Examiner scheme
External examiner approves homework assignments and final exam
Mandatory activity
6 out of 8 assignments should be approved in order to take exam,
The mandatory activity is valid only for one semester, i.e., if a student would like to retake the course, the mandatory activity also need to be retaken.
Teaching hours
2 x 2 hours classroom teaching and 2 hours exercises on campus weekly.
Admission requirements
The course is for master students enrolled in the following programs: Master in Business and Administration and Master in Applied Economics and sustainability It is also open for other master programmes from NMBU with satisfactory competence.