Advanced Corporate Finance
BU.231.790.81
Summer 2024
Course Description
By employing a case study approach, students learn how the theoretical concepts and tools learned in Corporate Finance and other finance classes are applied in solving real-world problems. Through such key concepts as financial forecasting, cost of capital, capital budgeting, optimal capital structure, dividend policy, and firm valuation, students learn the analytical techniques necessary to make rational financial decisions.
Prerequisite(s)
BU.231.620 or BU.910.611
Learning Objectives
By the end of this course, students will be able to:
1. Evaluate investment proposals in relation to a company's overall strategy and objectives.
2. Appraise and develop a firm's capital structure policy.
3. Appraise and develop a firm's dividend policy.
4. Determine the relationship and trade-offs among a company's investment, financing, and dividend policies.
5. Exercise various valuation models/skills in valuing a company.
6. Discuss and appraise alternative views on financial problems on a group basis as a result of working in co-operation with other class members.
To view the complete list of the Carey Business School’s general learning goals and objectives, visit the Carey website.
Attendance Policy
It is imperative that you attend every class. Missing classes will certainly have a negative impact on your exam scores. If you miss a class, it is your responsibility to keep up with materials that were covered during your absence. My attendance policy is the 20% rule: Missing more than 20% of total contact hours, which means two classes, is not acceptable and will result in a grade of F.
Makeup Exam
Makeup exams may be available only to students who have a legitimate excuse for missing an exam such as illness, business travel, death in the immediate family, etc. If a student knows in advance that she/he must miss an exam, she/he must contact me in advance, and bring documentation to support the anticipated absence. If a student misses an exam unexpectedly because of last minute illness or accident, the student should contact the instructor when she/he is available, with documentation of the situation. I may give the makeup exam only prior to the scheduled exam.
Assignments & Rubrics
Determination of course grades will be based upon your point accumulation from the following sources:
Assignment
|
Learning Objectives
|
Weight
|
Case Presentation*
|
1, 2, 3, 4, 5, 6
|
25%
|
Quizzes
|
1,2,3,4,5
|
15%
|
Homework/Reports*
|
1, 2, 3, 4, 5
|
30%
|
Final Exam
|
1, 2, 3, 4, 5
|
30%
|
Total
|
|
100%
|
*The case presentation and homework points will be adjusted up to 20% depending on the peer evaluation, which will be conducted during the final exam.
Case Presentation
· PowerPoint slides should be used to present cases. Presentation should be preceded by a report. Contents of the report are detailed below.
· All members should participate in the analysis and oral presentation.
· All members in the presenting group will receive the same score (out of a possible 40 points) based on three categories, which are listed in the following rubric:
Evaluation Criteria
|
Point Range
|
1. Delivery Skills
|
0–15
|
2. Organization of Ideas
|
0–20
|
3. Equal Participation in the Group
|
0–5
|
Contents of Report:
The case report should start with a good executive summary and will be followed by a thorough albeit to-the- point justification of the analysis and recommendations. The development of the report should contain tables/and or charts referenced in the text. All calculations should be presented in a well-organized Excel Spreadsheet. Reports with tables and charts should not exceed 4-5 pages. All members in the presenting group will receive the same score (out of possible 60 points) based on the following categories:
Evaluation Criteria
|
Point Range
|
Executive Summary
|
0-20
|
Quality of Analysis and calculations
|
0-30
|
Presentation and Organization
|
0-10
|
Case Homework
· I will assign homework for each case for non-presenting groups. The purpose of this homework is to ensure that students are prepared to participate in the class discussions with case study readings completed. While presenting groups should develop a report according to the description above, other groups might develop their assignments in a question/answer format in a well organized excel spreadsheet with the corresponding calculations. These assignments could be developed either individually or in groups.
· At the end of the semester, you will evaluate your group members based on your perception of their contribution to presentation and homework. See the Peer Evaluation Rubric below.
Submission: All assignments and power point presentations should be uploaded to CANVAS according to the schedule provided
Quizzes: There are two quizzes, one by the end of week three covering material from weeks 1, 2, and 3, and another by the end of week 7, covering material from weeks 4, 5, 6, and 7. Both quizzes will be done using CANVAS. They are open book, but should be worked individually. Quizzes will be opened on Friday of the proposed week and could be accessed through Saturday, but will have a limit time of 2 hours to be developed.
Grading
The grade of A is reserved for those who demonstrate extraordinary performance as determined by the instructor. The grade of A- is awarded only for excellent performance. The grades of B+ and B are awarded for good performance. The grades of B-, C+, C, and C- are awarded for adequate but substandard performance. The grades of D+, D, and D- are not awarded at the graduate level. The grade of F indicates the student’s failure to satisfactorily complete the course work. For Core/Foundation courses, the grade point average of the class should not exceed 3.35. For Elective courses, the grade point average should not exceed 3.45.
Students close to a cutoff point may receive subjective consideration based on their class attendance and participation. Please participate actively, and ask questions whenever something is not clear.
Tentative Course Calendar
*The instructors reserve the right to alter course content and/or adjust the pace to accommodate class progress. Students are responsible for keeping up with all adjustments to the course calendar.
Note: BM refers to Corporate Finance by Berk and DeMarzo.
Week
|
Lecture
|
Cases
|
Homework and Presentations
|
1
|
DCF Valuation Principles
- Calculating CF
- Calculating WACC
|
New Heritage Doll Company (project perspective)
|
Case Presentation and Assignment 1 due in Week 2 (June 4)
Review Power points for Week 1
|
2
|
Discounted Cash Flow: Incremental and International Valuation
|
Groupe Ariel S.A.
|
Case Presentation and Assignment 2 due in Week 3 (June 11)
Review Power points for Week 2
|
3
|
DCF Valuation and
Real Option Valuation
Adjusted present value
methodology
|
Capital Projects as Real Options
MW Petroleum Corporation
|
Case Presentation and Assignment 3: Due in Week 4 (June 18)
-Quiz 1
-Options Concepts and Valuation
-Capital Projects as Real Options
-Options Valuation Chapter
- Study BM Chapter 22
|
4
|
Capital Structure Theory
|
Chestnut Foods B
Blaine Capital Structure
California Pizza Kitchen
|
- Case Presentation and Assignment 4 due in Week 5 (June 25)
- Study BM Chapters 14, 15, 16
|
5
|
Dividend Payout Policy
|
Berkshire Hathaway
|
- Case presentation and Assignment 5 due in week 6 (Jul 2)
-
- Study BD Chapter 17
|
6
|
Business & Equity Valuation
|
Amazon Valuation:
Enterprise value and market cap value
Reorganization of Financials Forecast Metrics
Free cash flow for EV
Horizon Value
Market Cap and stock price
|
-Assignment 6 due in Week 7 (Jul 9)
|
7
|
Private Equity and International Valuation
|
Palamon Capital
|
- In class discussion of Palamon Capital and in- class exercise
- Quiz 2
|
8
|
Final Exam
|
|
|