Postgraduate Course: Corporate Finance (CMSE11342)
Course Outline
| School | Business School |
College | College of Arts, Humanities and Social Sciences |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Available to all students |
| SCQF Credits | 15 |
ECTS Credits | 7.5 |
| Summary | This course provides an introduction to the core concepts and skills in corporate finance. It considers the main financial decision facing a company, reviews current academic thinking on how these decisions are made and introduces analytical tools that can assist in financial decision-making. |
| Course description |
Syllabus:
1. Companies and projects: discounted cash flow
2. Discounted cash flow continued, and other applications of interest rates
3a. Equity, debt and the cost of capital
3b. Cost of capital continued
3c. Cost of capital: a case study
4. Real options
5. Managing currency and interest rate risk
6. Corporate governance, dividend policy and debt policy
7. Corporate investment decisions in practice
8. Mergers and Acquisitions (1 & 2)
Student Learning Experience:
Tutorial/seminar hours represent the minimum total live hours - online or in-person - a student can expect to receive on this course. These hours may be delivered in tutorial/seminar, lecture, workshop or other interactive whole class or small group format. These live hours may be supplemented by pre-recorded lecture material for students to engage with asynchronously.
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
|
Co-requisites | |
| Prohibited Combinations | |
Other requirements | For Business School PG students only, or by special permission of the School. Please contact the course secretary. |
Information for Visiting Students
| Pre-requisites | Business School postgraduate students only. |
| High Demand Course? |
Yes |
Course Delivery Information
|
| Academic year 2021/22, Not available to visiting students (SS1)
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Quota: None |
| Course Start |
Semester 1 |
Timetable |
Timetable |
| Learning and Teaching activities (Further Info) |
Total Hours:
150
(
Seminar/Tutorial Hours 15,
Summative Assessment Hours 3,
Programme Level Learning and Teaching Hours 3,
Directed Learning and Independent Learning Hours
129 )
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| Additional Information (Learning and Teaching) |
Seminar/Tutorial hrs are the min total live hrs, online or in-person, students can expect to receive
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| Assessment (Further Info) |
Written Exam
100 %,
Coursework
0 %,
Practical Exam
0 %
|
| Additional Information (Assessment) |
100% exam (individual) - assesses all course Learning Outcomes |
| Feedback |
Formative:
Formative feedback is provided through weekly seminars and discussions. Students are strongly encouraged to ask questions and participate in group discussions.
Summative: Students will received detailed feedback on the summative assessment, whether this is in numerical or in verbal form. There will be detailed solutions in the numerical problems, and indicative answers to all essay type questions.
There will be general feedback on the exam performance. |
| Exam Information |
| Exam Diet |
Paper Name |
Hours & Minutes |
|
| Main Exam Diet S1 (December) | Corporate Finance (CMSE11342) | 3:00 | |
Learning Outcomes
On completion of this course, the student will be able to:
- Understanding of the core concepts and methods of analysis in corporate finance.
- Understanding and applying discounted cash flow analysis to value projects, including effect of gearing, estimation of the cost of capital, and assessment of the credibility of a valuation.
- Understanding of currency risk and interest-rate risk, and the use of financial products to manage these risks.
- Understanding of real options, and simple valuations of real options.
- Understanding of the main theories to explain a company's gearing, capital structure, and dividend policies, as well as the valuation principles and practices of Mergers and Acquisitions.
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Reading List
The main text is:
- Brealey, R.A., Myers, S.C & Allen, F., Principles of Corporate Finance, 12th edition, 2017, McGraw-Hill
Other good corporate finance texts (which will not be used) include:
- Hillier, D. et al., (2014) Corporate Finance, 2nd European Edition, New York: McGraw-Hill Education
- Damodaran, A. (2015) Applied Corporate Finance, 5th Edition, New York, John Wiley & Sons Ltd.
- Berk, J. & DeMarzo, P., Corporate Finance, Pearsons
- Megginson, W.L., Smart, S.B & Gitman, L.J., Corporate Finance, Thomson South-Western
Resource List:
https://eu01.alma.exlibrisgroup.com/leganto/public/44UOE_INST/lists/27868232390002466?auth=SAML |
Additional Information
| Graduate Attributes and Skills |
Knowledge and understanding
After completing this course, students should understand:
- the core concepts and methods of analysis in corporate finance;
- how to conduct a discounted cash-flow analysis to arrive at an estimate of net present value (NPV), including how to allow for uncertainty;
- how the NPV framework of analysis relates to the assumed aim of value maximisation;
- the use of discounting and rates of return in financial calculations more broadly;
- the nature of equity and debt, the concept of the weighted average cost of capital (WACC), and the effect of gearing on WACC and on the cost of equity;
- how the cost of capital is estimated in practice;
- the strategic and product-market requirements for a large positive (NPV) to be credible;
- how a company can use the main techniques and financial products available to manage currency risk and interest-rate risk;
- what determines in simple terms the price of certain financial products used by companies, such as interest-rate swaps;
- the concept of real options, and how to conduct simple valuations of real options;
- the main theories to explain a company's gearing and dividend policies
- introduction to mergers and acquisitions and the 5-stage model;
- motives for mergers and acquisitions, acquisition strategies & alternative perspectives.
Cognitive skills
After completing this course, students should:
- have better awareness of finance thinking and reasoning;
- have improved their ability to reason, solve problems, perform calculations, and explain concepts;
- understand (parts of) finance textbooks, and use them to promote good analysis and decision-making.
Subject-specific skills
After completing this course, students should be able to:
- calculate the NPV of an investment project, assess what might affect a project's value, and assess how reliable the estimated value is;
- estimate the cost of capital for a company or a project;
- assess exposure to currrency risk and interest-rate risk, and use financial products to manage these risks;
- identify real options available to a company, and know how to conduct a simple valuation of a real option;
- explain how finance contributes to company decision-making (such as capital structure, dividend policy, mergers and acquisitions), and explain some of the main activities of the finance or treasury department in a company. |
| Keywords | Not entered |
Contacts
| Course organiser | Dr Leonidas Barbopoulos
Tel:
Email: Leonidas.Barbopoulos@ed.ac.uk |
Course secretary | Miss Charlotte Brady
Tel: (0131 6)50 8074
Email: C.Brady@ed.ac.uk |
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