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COURSE INFORMATION

Name of Course/Module ADVANCED CORPORATE FINANCIAL MANAGEMENT

Course Code BWFF 5053

Name(s) of academic staff

Credit Value 3

Prerequisite (if any) BWFF 5013 Corporate Financial Management

Objectives:

Students are expected to:

1.acquire knowledge and competencies on how to evaluate and incorporate businessrisk in investment decision-making.

2.acquire knowledge and skills on how to incorporate financing side effects in investmentdecision-making.

3. acquire knowledge and skills on bond refunding analysis and leasing analysis.

4.acquire knowledge and skills on how to apply option pricing techniques in evaluatinginvestment decision-making with real options.

5.understand how to create shareholders wealth through merger and acquisition andother forms of corporate restructuring exercise.

Learning outcomes:

At the end of this course, students will be able to:

1. demonstrate clear understanding of the key concepts, tools and factors to be consideredin corporations financial decision-making. (C2, P1, A3)

2. evaluate and integrate risk, real options and financing side effect in corporate investmentdecision-making analysis.(C6,P4, A4)

3 explain factors that affect financing decisions and analyse bond issuance, leasing andequity offering related decisions. (C6, P4, A4)

4. describe alternative corporate restructuring exercises and solve some financial problemsin merger and acquisition. (C6, P4, A4)

Mode of Delivery Lectures,case analysis, group discussion and individual& group presentation.

Assessment Methods and Coursework (Mid Term Test, Project Paper and

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Types assignments) and Final Examination

Synopsis:

This course is designed for post graduate students wishing to advance their knowledge andskills in corporate finance. Topics covered include incorporating real options and risk in

capital budgeting, valuation and capital budgeting for levered firm, bond refunding analysis,leasing analysis and merger and acquisitions.

Mode of Delivery

Assessment Methods andTypes

Coursework 60%

Final Examination 40%

Mapping of the course/module to the Programme Aims

Content outline of the course/module and the SLT per topic

Topic

1.0 Introduction1.1 Overview of Corporate Finance1.2 Key concepts in Corporate Finance

2.0 Advanced Capital Budgeting: Incorporating Options and Risk2.1 Real options and capital budgeting

- option to expand- option to abandon- timing options

2.2 Risk and capital budgeting

-decision tree

- scenario and sensitivity analysis and Monte Carlo simulation- present value breakeven analysis

3.0 Advanced Capital Budgeting: Capital Budgeting for Levered Firms3.1 Adjusted Present Value approach3.2 Flow to Equity Approach3.3 Weighted Average Cost of Capital Method

4.0 Advanced Capital Structure and Dividend Policy4.1 Market imperfections and capital structure theory4.2 Studies on capital structure theory

4.3 Market imperfections and dividend theory4.4 Studies on dividend policy4.5 Bond refunding analysis4.6 Leasing analysis

5.0 Options Pricing Application in Corporate Finance5.1 A two state option model5.2 The Black Scholes Model

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5.3 Evaluation of real options

6.0 Corporate Restructuring6.1 Merger and acquisition

- Rationale- Difference between merger and acquisition

-Merger valuation

6.2 Divestiture- Types of divestiture (spin off, LBO, MBO etc)- Rationale

References:

Main:

Ross, S. A., Westerfield, R. W. & Jaffe, J. (2010). Corporate Finance, 7th Ed., New York:McGraw-Hill.

Additional:

Berk, J. & DeMarzo, P. (2007). Corporate Finance. USA: Pearson.

Ogden, J. P., Jen, F. C. & OConnor, P. F. (2003). Advanced Corporate Finance: Policiesand Strategies. New Jersey: Prentice Hall.

Smart, S. B. Meggisson, W. L. & Gitman, L. J. (2004). Corporate Finance. USA: ThomsonLearning.