Course code BUS315

BUS315 Corporate Finance and Valuation

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Showing course contents for the educational year starting in 2020 .

Course responsible: Atle Guttorm Guttormsen
ECTS credits: 10
Faculty: School of Economics and Business
Teaching language: EN
(NO=norsk, EN=Engelsk)
Teaching exam periods:
Autumn semester.
Course frequency: Annually.
First time: 2015H
Course contents:

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.

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 discussion per week
Syllabus:
Syllabus: to be announced.
Prerequisites:

BUS220 or equivalent: Finance and investment

BUS110 or equivalent: Accounting - Financial Reporting

Recommended prerequisites:
Assessment:

Grading will be based upon group work 40% and individual work 60% Group project: Each group will be required to work on one case and one comprehensive project

Case: 10% Project: 30%

Individual Work: Quizes: There will be three quizzes worth 10% each. Total 30%

Final Exam: This will also be an open-book and open-notes cumulative exam worth 30%.

Nominal workload:
300 hours.
Entrance requirements:
The course is for master students enrolled in the following programs: Master in Business and Administration and Master in Economics. It is also open for other master programmes from NMBU with satisfactory competence.
Type of course:
There will be 2 x 2 hours classroom teaching and 2 hours discussion 
Note:

By experiene, the course is quite demanding and the students are required to work continuously throughout the whole semester. On the exam, there may be a significant amount of exercises that are theoretical in order to assess the student's understanding of topics across the whole syllabus. Students must also be comfortable with numerical analyses.

Incoming students can contact student advisors at the School of Economics and Business (studieveileder-hh@nmbu.no) for admission to the course. 

Examiner:
External examiner approves, cases, quizzes and exam
Examination details: Continuous exam: A - E / F