Discipline: M BA
Department of Management Sciences
Credit hours: 03
Course code: MBA-706
Course Name: Corporate Finance
Course description and objectives
The objective of this course is to provide a thorough introduction to the fundamental principles of asset valuation and financing in competitive financial markets. The course examines the important issues in corporate finance from a perspective of financial managers who need to make significant investment and financing decisions. We start with the NPV rule, which leads us to the valuation of debt and equity. We then investigate the efficient market hypothesis and examine the Capital Asset Pricing Model (CAPM) and the portfolio theories in such a market. We also learn to use the NPV rule to justify capital investment decisions. Option pricing will be the last step in our venture into the world of corporate finance. While this course is not designed to teach an abstract mathematical theory of modern financial economics, a basic theoretical understanding of various topics is essential to competent analysis and intellectual discussion.
Furthermore, in examining issues in portfolio diversification, knowledge of basic statistics and spreadsheets will be essential and assumed. Prerequisite: Statistics. Co-requisite: Financial
Accounting and/or Managerial Economics.
WEEKS Course Contents
1&2
3&4
5&6
7&8
Introduction to
Corporate
Finance:
Time Value of
Money:
Valuation of
Securities
Net Present Value and Other
Investment
Criteria
What is Corporate Finance?
, The balance sheet model of the firm , Capital Structure , The financial Manager,
Corporate securities as contingent claims on total firm values , The corporate firm , Case study: Making a decision to become a corporation , Goals of the corporation firm , Financial Markets.
Future value and compound interest, Present values,
Multiple cash flows, Level cash flows: Perpetuities and
Annuities, Inflation and the time value of money, Case
Study.
Bonds Characteristics, Bond prices and yields , Stocks and the stock market , Book values, liquidation value and market value , Valuing common stock
Simplifying the dividend discount model, Growth stocks and income stocks, Case study.
Net present value , Other investment criteria , Capital
Rationing , Case study
MID TERM

9&10
11,12&13 Financial
Leverage and
Capital Structure:
14,15&16
Project Analysis: How firm organize the investment process , Some
“what-if questions”
Break even analysis, Real options and the value of flexibility, Sensitivity analysis
Case study
Mergers,
Acquisitions and
Corporate Control
The capital structure question , The effect of financial leverage , Capital structure and the cost of equity capital , Corporate taxes and capital structure ,
Bankruptcy cost , Optimal capital structure , Observed capital structure , Case study
The market for corporate control
Primary contest, Mergers and Acquisitions, Leveraged
Buyouts, Divestitures and spin-offs, Sensible Motives for Mergers, Leveraged Buyouts, The Benefits and
Cost of Merger. Case study
Final Examination
Recommended/ Reference Books:
1) Brealey Mayers Marcus, Fundamentals of Corporate Finance, McGraw-Hill
2) Ross Westerfield Jordan, Essential of Corporate Finance, McGraw-Hill
3) Madura, Jeff, International Corporate Finance, Thomson
METHOD OF LEARNING AND CONTACT HOURS
A variety of techniques will be used to enhance your learning for this course. These include faceto-face lecture, discussion, exams, cases, in-class group activities, and internet research and guest speaker sessions. You are expected to come to every session prepared based on provided material. Weekly contact of this course is 3 hours.
ASSESSMENT ITEMS AND WEIGHTS
Students will have several opportunities to demonstrate their knowledge and understanding of the subject material taught in the class. Though much of the learning is actually achieved inclass, students are expected to complete certain assignment, quizzes, and mini projects to pass the subject. Students will be assessed according to the following criteria.
I. Mid Term Examination (20%)
Midterm exam will consist of applied questions, multiple choice and case studies / scenario
Analysis.
II. Final Examination (60%)
The final exam will consist of application of concepts in terms of numerical, MCQ, case study, and questions on guest speaker sessions (if any)
III. Internals (20%)
Internal marks comprises of the following a. Quizzes
During the semester, at least four quizzes will be given to the class. There will be no retake for those who missed the quiz. b. Project/ Topic / Case Study Presentation
Class will be divided in to reasonable syndicates for case studies / topic presentation/ class project. Each syndicate will present the case / topic according to the recommended format.

Quality Assurance
The completion of the course evaluation survey is mandatory and will be carried before the start of the final exam. The findings of the survey are used in improving the course as well as its delivery. The survey is conducted by quality enhancement cell of the university and is anonymous.