Course responsible:Muhammad Yahya
Campus / Online:Taught campus Ås
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.
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.
- 2 x 2 hours zoom-teaching and 2 hours exercises on campus weekly.
- Course information, assignments, datasets etc., will be posted on Canvas.
BUS220 or equivalent: Finance and investment
BUS110 or equivalent: Accounting - Financial Reporting
- 3,5 hours written exam in the exam period (100%).
External examiner approves homework assignments and final exam
6 out of 8 assignments should be approved in order to take exam.
Two of these 8 tasks will be in the class and one of these two must be approved.
2 x 2 hours zoom-teaching and 2 hours exercises on campus weekly.
- Letter grades
- 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.