Introduction
Corporate Finance
Professor Jaime F. Zender
Course Overview:
Purpose and Focus
Review of the syllabus
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Course objectives and learning goals
 Prerequisites: accounting, economics, statistics
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Steve Ross – the economics of risk and time
Course materials, schedule, assignments
 See D2L
 Homework on myfinancelab.com
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Homework versus Practice
Course policies
Grading guidelines
Corporate Finance Decisions
Financial analysis and planning.

Pro forma financial statements – look
forward.
 Cash flow for valuation.
 Higgins
Capital budgeting.
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Decisions that involve what fixed assets
the firm should acquire.
 “Investment” or “left-hand side” decisions.
Corporate Finance Decisions
Capital structure.
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How best to raise cash to “buy” productive assets.
Financing or “Right-hand side” decisions.
Working capital management.
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“Both sides” of the balance sheet but only
the current section.
Risk and return.
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An important and difficult question is exactly how
we should measure risk.
Valuation Basics – Where We Are Headed
Assets have value due to the future “benefits”
they provide for those who buy them.
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Commonly “benefits” equals cash flow but not always.
The price you are willing to pay depends on the
benefits you receive from owning an asset.
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All else equal, more is better.
Timing matters – a concept labeled the “time
value of money.”
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When you receive the cash has an impact on value.
Risk is also a piece of the puzzle.
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“The benefits you expect to receive.”
Valuation
An important goal for us will be to value
different assets. It is often helpful to see
where we are headed: Discounted cash flow
(DCF) valuation:
C
C
C
C
3
1
2
4  ....
V C 



0 (1  r )
(1  r ) 2 (1  r )3 (1  r ) 4
We can actually see some of where we are
going from this seeming gibberish. Use this
to remind yourself why we are doing things.