Unit information: Corporate Finance in 2016/17

Unit name	Corporate Finance
Unit code	EFIM20006
Credit points	20
Level of study	I/5
Teaching block(s)	Teaching Block 1 (weeks 1 - 12)
Unit director	Professor. Acker
Open unit status	Not open
Pre-requisites	EFIM10005 Fundamentals of Accounting and Finance 1 or ACCG10052 Introduction to Accounting plus EFIM10008 Mathematical and Statistical Methods 1
Co-requisites	None
School/department	School of Economics, Finance and Management
Faculty	Faculty of Social Sciences and Law

Description including Unit Aims

The course explores aspects of corporate finance, examining how companies interact with the financial markets and how decisions about internal and external financing affect the value and risk of corporate flows. The aim is to provide a well-rounded picture of decisions that company managers make, the effects of these decisions, and the information that should be used as a basis for these decisions.

The topics explored include:

Project appraisal using discounted cash flow in the presence of taxation and inflation.

How the discount rates used in net present value calculations are set: the impact of risk and, in particular, systematic risk in the context of portfolio theory/the Capital Asset Pricing Model.

Use of the dividend valuation model to infer discount rates; the weighted average cost of capital.

The Efficient Market Hypothesis and its implications for share prices.

Whether managers of a firm can affect its value by choice of capital structure or dividend policy, to include the theories of Modigliani and Miller.

Governance issues.

Internal risk management, including hedging with futures and options.

Sources of long-term funds.

Using the Adjusted Present Value technique to evaluate projects which require the raising of long-term funds, in particular including debt.

Intended Learning Outcomes

• To have an understanding of basic tools of analysis used in finance.
• To be aware of the main issues addressed in corporate finance and relevant aspects of asset pricing.
• To think logically and analytically, apply mathematical techniques to a variety of problems, and critically evaluate these techniques.
• To be able to explain theories and mathematical procedures in non-technical terms.

Teaching Information

20 hours lectures for whole cohort

10 hours of exercise lecture for groups of 50-60 students

10 one-hour classes

5 hours of optional clinics

Assessment Information

Summative:

• 100% on 3 hour written exam at the end of the relevant teaching block.

Formative:

• Tutorials: worked exercises
• Exercise Lectures: worked exercises

All learning objectives are assessed by both summative and formative assessment

Reading and References

Hillier, Ross, Westerfield and Jaffe, Corporate Finance, McGraw-Hill 1st or 2nd ed