CORPORATE FINANCE
- Overview
- Assessment methods
- Learning objectives
- Contents
- Full programme
- Bibliography
- Delivery method
- Teaching methods
- Contacts/Info
There are no explicit prerequisites. However, a good understanding of basic principles of Corporate Finance, Accounting and Financial Statements and Financial Mathematics is recommended.
Final written test, which lasts an hour and a half, divided as it follows:
3 theoretical questions (with a maximum of 9 points), to test the knowledge of definitions and basic principles of Corporate Finance
3 exercises (max. 15 points), to verify the application of financial instruments for projects’ and firms’ valuations;
4 multiple-choice questions (max. 6 points), to test reasoning ability.
If, during the academic year 2020/21, due to the restriction measures related to the health emergency, it will not be possible to take face-to-face examinations, the final exam will be carried out via the e-learning platform and will be structured as it follows:
15 closed-ended questions (such as multiple choice, calculated, drag & drop, matching, etc.) to be completed in 30 minutes (max. 15 points overall);
2 exercises to be carried out in “pen & paper” mode, to be uploaded to the e-learning platform for evaluation (time available equal to 40 minutes max. of 15 points overall).
For the purpose of passing the exam is necessary to achieve a score of at least 18 points over 30. If the student got the maximum score (30 over 30 points) he will be awarded a final score of 30 over 30 cum laude.
Mid-term exams are not scheduled.
The course covers a selection of the major advanced topics of corporate finance, focusing on some of the “pillars” of Corporate Finance:
the investment policy;
financing decision;
the dividend policy;
firm valuation.
We will examine the variables and the main algorithms to estimate the value of firms. We also focus on issues related to the complex choices of capital budgeting (real options and under uncertainty) and to the decisions on the composition of the firms’ financial structure and their impact on firms’ value.
Learning Outcomes
At the end of the course the student will be able to know and understand the main economic and financial variables used to estimate the value of a company.
Results of estimations should be analyzed by the student in order to make a judgment related to the acceptability or otherwise of an investment or financing decision. For example: whether or not to replace the firm’s car fleet, purchasing a new machine for the production chain,
compare the cost of a debt issue and a share issue, to assess M&A operations.
Basics of capital budgeting (review of the course content of Corporate Finance’s undergraduate courses, 10 hours)
1.1 The capital budgeting’s criteria
1.2 The estimation of cash flows
Advanced topics in capital budgeting (6 hours)
2.1 Sensitivity analysis
2.2 Break-even point analysis
Real options and decision trees (6 hours)
3.1 Extended NPV
3.2 The valuation of real options
The firm’s capital structure (6 hours)
4.1 The propositions of Modigliani-Miller
4.2 The weighted average cost of capital
4.3 The effect of corporate taxes
4.4 The effects of the collapse, the agency conflicts and information asymmetries
The capital budgeting for levered firms (6 hours)
5.1 Investments’ valuation for levered firms
5.2 The debt’s tax shield
5.3 How to choose funding sources?
“In-depth” topics (6 hours)
6.1 The dividend policy
6.2 International corporate finance
6.3 The firm’s valuation
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The course material required is as it follows:
For a review of basic capital budgeting is recommended: Brealey R.A., Myers S.C., Allen F. and Sandri S., “Principles of Corporate Finance” [it], McGraw-Hill, Milan, 2020, 8th edition, chapters. 2, 5 and 6, or an equivalent handbook available at the Library of Economics.
For all students: Brealey R.A., Myers S.C., Allen F. and Sandri S., “Principles of Corporate Finance” [it], McGraw-Hill, Milan, 2020, 8th edition.
Required parts will be indicated in class and reported within the syllabus/timetable on e-learning platform.
Other materials (slides of the lectures, tutorials and study materials) will be available online on e-learning platform.
No other teaching materials (handouts, summaries, etc..) are authorized by the teacher.
Teaching lessons and exercises, for a total of 40 hours.
No other forms of supplementary teaching are scheduled.
As required by the University guidelines, teaching lessons will be accessible remotely and recorded. All information will be provided at the beginning of the semester.
Office Hours
Room #20, first floor, Department of Economics, Via Monte Generoso, 71 – Varese
Office hours is currently available only remotely, via Microsoft Teams. The calendar is available on the teacher’s webpage (https://www.uninsubria.it/hpp/andrea.uselli).
Students can e-mail the teacher to arrange a meeting in another date/time.
Join the virtual classroom
For those students that will cannot attend lessons in person, in the e-learning page of the course (https://elearning.uninsubria.it/course/view.php?id=10446), all useful information in order to join the virtual classroom and distance learning will be available to join the virtual classroom and distance lessons.