Course code BUS315

BUS315 Corporate Finance and Valuation

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Showing course contents for the educational year 2022 - 2023 .

Course responsible: Atle Guttorm Guttormsen
ECTS credits: 10
Faculty: School of Economics and Business
Teaching language: NO
(NO=norsk, EN=Engelsk)
Teaching exam periods:
Fall semester.
Course frequency: Annually.
First time: Study year 2015-2016
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.

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 discussion per week
Teaching support:
Course information, assignments, datasets etc., will be posted on Canvas.
Syllabus:
Jonathan Berk and Peter DeMarzo, Corporate Finance, specific chapters
Prerequisites:

BUS220 or equivalent: Finance and investment

BUS110 or equivalent: Accounting - Financial Reporting

Recommended prerequisites:
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.

Assessment:

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. 

Nominal workload:
250 hours.
Entrance 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.
Type of course:
There will be 2 x 2 hours classroom teaching and 2 hours discussion 
Examiner:
External examiner approves homework assignments, midterms and final exam
Examination details: Portfolio: Letter grades