This newly revised and updated introductory course draws upon both finance theory and practical applications to help managers understand key concepts that underlie analysis and execution of financial decisions. Starting with the objectives of the firm and its Chief Financial Officer, the course teaches students how to apply time value of money principles, the capital budgeting framework, and analysis of financing options when making financial decisions.
This curriculum is made up of the following modules:
Merits of using net present value vs. internal rate of return
Special capital budget problems
Examples: capital rationing, projects of different lives
After-tax weighted average cost of capital as discount rate
Calculating cost of debt, equity and cash flows on investments
Duration : 1 hour
Modigliani and Miller propositions
Impact of bankruptcy and ownership structure on financing decisions
Impact of leverage on firm valuation
Identify elements of corporate investment projects
Recognize elements and sources of corporate financing
Identify factors affecting the flow of corporate funds
Relate the Efficient Markets Hypothesis (EMH) to corporate financial decision making
Define the present value of money
Recognize the formulas involved in solving for different examples of present value
Recognize the formulas involved in solving for different examples of future value
Use a financial calculator to practice solving present and future value problems
Evaluate investments by calculating interest rates, annual bond yields, and stock prices
Discuss the factors that affect interest rates and borrowing costs for financing projects
Recognize the advantages of using Net Present Value versus Internal Rate of Return to calculate the value of a project
Recall when and how to use the profitability index to rank the value of a project
Determine the value of projects that have different life spans using the approaches called lowest common denominator and annual equivalency cash flow
Recognize the formulas for the after-tax weighted average cost of capital and capital asset pricing model and how they are used to determine the cost of capital
Identify the formulas for calculating cash flows resulting from investments and how they are used to determine the profitability of a project
Recognize factors influencing a financing decision and characteristics influencing the associated debt/equity mix
Recognize the significance of the debt-to-equity ratio to the financing decision and why firms may choose debt
Recognize the effects of leverage and its relationship to cost of equity (how financing decisions affect the value of a firm)
Calculate the cost of equity under various leverage ratios
Individuals in credit, investment banking, corporate finance, and sales and trading.
