wir082 Corporate Finance (Complete module description)

Students

• understand the role corporate finance plays in today’s business environment,
• are able to make consistent investment decisions based on established financial models both under certainty and under uncertainty,
• are able to place these models in within the broader context of economic theory, including both neoclassical theory and principal-agent theory,
• are able to assess the limitations of these models,
• analyze firm’s main sources of (long-term) financing.

Course outline:
1. Introduction
2. Valuation and Capital Budgeting
3. Risk and Return
4. Long-Term Financing
This course is an introduction to corporate finance. It covers typical tools and techniques used in making investment and financing decisions, and it provides insights into their theoretical foundations. The concept of time value of money and net present value is discussed in detail, first under certainty, and then in the presence of uncertainty. We will examine the relationship between an investment’s risk and its return, and discuss ways to derive risk-adjusted cost of equity capital. In addition, the course provides insights into firms’ main sources of (long-term) financing.

The topics covered in this course are relevant for financial decision-making in various areas of business management, including operations management, marketing, and in particular corporate strategy.

Main textbook:
Hillier, Ross, Westerfield, Jaffe & Jordan, Corporate Finance, current edition, McGraw-Hill (especially chapters 1, 2, 4-10, 14).
Supplementary readings:
Berk & DeMarzo, Corporate Finance, current edition, Boston (Mass.).
Brealey, Myers & Allen, Principles of Corporate Finance, current edition, Boston (Mass.).
Schmidt und Terberger, Grundzüge der Investitions- und Finanzierungstheorie (4. Aufl.), 1997, Wiesbaden.