Course unit leader:
Aims and objectives
BUDAPEST BUSINESS SCHOOL
Core – Finance and Accounting Module
Introduction into Corporate Finance
Tasi, Péter assistant professor
Office number: B12 e-mail address: [email protected]
In accordance with the general disciplines of the B.A studies, this course in Corporate Finance focuses on how companies invest in real assets and how they raise the money to pay for these investments. The course offers a basic framework for systematically thinking about most of the important financial problems that both firms and individuals are likely to confront. It applies modern finance to give students a working ability to make financial decisions.
Understanding of investment decisions, ability to choose and calculate an adequate investment criteria at financial decisions.
Ability to recognise the meaning of risk, understanding why diversification reduces risk, distinguishing between different types of risk.
Ability to give explanation of the fair pricing of the issued securities.
Understanding of the role and problems in capital structuring.
Ability to construct a simple financial planning model and to develop a short-term financial plan that meets the firm’s need for cash.
Ability to explain why it makes sense for companies to merge and estimate the gains and costs of mergers to the acquiring company.
During this course, students are expected to gain a general insight in financial decisions, and within, the role of investment criteria, the scope of financial planning and special financial situation of the company.
This subject (Corporate Finance) indicates the distinctive role of lectures and seminars as well, both of them will be carried in each week during the semester.
Consultation ( each week for 2+2 hours
week Goals and Governance of the Firm
Investment and Financing Decision; Forms of Business Organization;
Goals of the Corporation; Maximization of Market Value
week Net Present Value and Other Investment Criteria
NPV Rule; Payback, IRR, PI; Evaluation of Mutually Exclusive
Projects; Capital Rationing
week Investment Decisions with Discounted Cash Flow Analysis
Identifying Cash Flows; Calculating Cash Flow: Capital Investment,
Investment in Working Capital, Operating Cash Flow
week Project Analysis
Capital Budget and Project Authorization; Sensitivity and Scenario
Analysis; Break-Even Analysis; Real Options
week Risk, Return, Opportunity Cost of Capital and Capital Budgeting
Measuring Risk; Risk and Diversification; Measuring Market Risk;
Total Risk and Market Risk; The Capital Asset Pricing Model;
Company vs. Project Risk
week The Weighted Average Cost of Capital; Company Valuation
Measuring Capital Structure; Calculating Required Rates of Return as
Expected Returns; Calculating the WACC; Interpreting the WACC;
Valuing Entire Businesses
Creating Value with Financing Decisions; Corporate Debt,
Convertible Securities; Venture Capital, IPOs, Seasoned Offerings
Debt Policy and Payout Policy
Capital Structure and Modigliani-Miller’s Argument; Payout Policy;
Increasing and Reducing Value with Dividends
Long-Term Financial Planning
Financial Planning Models, Pitfalls in Model Design; External
Financing and Growth
Short-Term Financial Planning and Working Capital Management
Links between Long-Term and Short-Term Financing; Working
Capital; Cash Budgeting; A Short-Term Financial Plan; Sources of
Short-Term Financing; The Cost of Bank Loans; Accounts Receivable and Credit Policy; Inventory Management; Cash Management
Mergers, Acquisitions and Corporate Control
Motives and Reasons for Mergers; The Mechanics of a Merger;
Measuring Corporate Performance
Measuring Value, Profitability and Efficiency; Analyzing the Return on
Assets; Measuring Leverage, Liquidity; Financial Ratios
1.) Students are invited for compulsory attendance on the lectures and seminars.
Preparation of a home assignment during the semester and its’ presentation on the seminars
: At the end of the semester, a written exam is closing the course. The exam divides by two parts: a) Theoretic part includes closed tests and some definition. b) Practical part includes simple test exercises and general problems to be solved by students independently.
Assessment and grading
grades will be given according to the following pattern:
written exam: 85 points
home assignment and presentation: 15 points
the points (percentages) corresponding to marks from 1-5:
90-100% fail pass satisfactory good excellent
Brealey, Richard A.; Myers, Stewart C. and Marcus, Alan J.: Fundamentals of Corporate
Finance. Sixth Edition (McGraw-Hill/Irwin, 2009)
(Note: these are recommended, students are not required to read them, since these may not form part of the assessment.)
Bodie, Zvi; Kane, Alex and Marcus, Alan J.: Investments. Sixth Edition (McGraw-Hill/Irwin,
Bruner, Robert F.: Case Studies in Finance. Fourth Edition. (McGraw-Hill Higher Education,