Course: Advanced Corporate Finance
Management Module MN20211
Year: Year 2, Semester 2
Objective
This module aims to extend discussion of the issues raised in MN10311 concerning a
firm’s investment and financing decisions. Subjects covered will include- choosing
between investment alternatives, Mergers and Acquisitions, Project Finance, Funding
with debt and equity, Decision Trees and Real Options and Behavioural Finance.
Course Structure
The course will consist of 11 double lectures per week that all students are expected
to attend. The lectures will cover the basic information. Students will be expected to
have attempted on their own any of the problems that may have been set each week.
Attempting these questions will be important as it provides an opportunity to try
problem solving without any risk if the answer is wrong (contrast this with the exam
environment), raise questions concerning areas not fully understood and to flesh out
the subject of corporate finance.
Assessment
Assessment is by one two-hour examination.
Recommended course book is:
Advanced Corporate Finance, a textbook compiled by Fairchild and Birts from
Corporate Finance, Jonathan Berk and Peter DeMarzo. Publisher, Pearson
Referred to as ACF for the readings for each session.
Note: This course outline is designed to give a little more detail on what will be
covered in the sessions given by Mr A N Birts and should be read in conjunction with
the overall course outline.
Lecturers: Mr A N Birts
X 3675
mnsanb@management.bath.ac.uk
WH 8.56
And Dr Richard Fairchild
X3456
R.Fairchild@bath.ac.uk
WH 8.52
1
Course outline
Sessions 1 & 2
Introduction to Corporate Finance
- What is it?
Revision
- What you should remember from a year ago
- Capital budgeting
- Process of choice
- Payback, ARR, NPV, IRR
- The correct method to use
- CAPM
- WACC
-
Then moving on, how to apply the NPV approach
Free cash flows
WACC vs APV vs FTE
Reading: ACF Chs 1-7 and 18
(Assumed you know CAPM theory If you do not, then any good finance textbook or
Berk and DeMarzo, Corporate Finance: The core. Chs 10 to 12)
Session 4
Funding
- Debt vs Equity (brief revision)
- Equity, the process
- Debt
Short, trade finance
Long, bonds
Reading. ACF Chs 14 and 15, chs 23. For more general information on Bonds ch 24
in Berk and DeMarzo Corporate Finance or any other standard finance textbook.
Session 7
Mergers and Acquisitions
- What are they
- Waves
- Why
- Types
- Valuation
- Form of offer
2
Reading: ACF Chs 28 and 19
Session 8
Project Finance
- Definition
- SPV
- Characteristics
- Why?
- Risk analysis
- Funding
Readings. Corporate Financial Management, Glen Arnold 3rd ed, pgs 554 -555, 612.
pub by FT Prentice Hall. Multinational Business Finance, Eitman, Stonehill and
Moffett 11th ed, pgs451 – 456. Pub by Pearson.
http://www.people.hbs.edu/besty/projfinportal/
http://en.wikipedia.org/wiki/Project_finance
Political Risk, Development Banks and the Choice of Recourse in Syndicated
Lending. Christa Hainz and Stefanie Kleimmeier. Electronic copy available
athttp://ssrn.com/abstract=1539996
Course notes
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