Finance Corporate 307: Unit Outline

Course Overview

Finance Corporate 307 delves into advanced topics in corporate finance, building upon foundational knowledge gained in introductory courses. This course is designed to equip students with the theoretical framework and practical skills necessary to analyze complex financial decisions within a corporate setting. The focus is on value creation, risk management, and efficient resource allocation.

Unit Breakdown

Unit 1: Capital Budgeting and Valuation Refinement

This unit revisits and expands on capital budgeting techniques, moving beyond basic NPV and IRR calculations. We explore real options analysis, which recognizes the flexibility management has to alter investment decisions in response to changing market conditions. Students will learn to incorporate factors such as abandonment options, expansion options, and timing options into their project valuations. Sensitivity analysis, scenario planning, and Monte Carlo simulation will be utilized to assess project risk and uncertainty.

Unit 2: Advanced Capital Structure Theory

Building on traditional capital structure models, this unit examines the trade-off theory and the pecking order theory in greater depth. We analyze the implications of information asymmetry, agency costs, and signaling effects on corporate financing decisions. Topics covered include optimal debt levels, the impact of financial distress costs, and the role of equity issuance. The unit also explores the use of hybrid securities and innovative financing instruments.

Unit 3: Dividend Policy and Share Repurchases

This unit analyzes the controversies surrounding dividend policy and explores various dividend payment mechanisms, including cash dividends, stock dividends, and share repurchases. We examine the factors influencing dividend decisions, such as taxation, investor clientele effects, and signaling. Students will learn to evaluate the impact of dividend policy on shareholder value and analyze the rationale behind share repurchase programs, including their potential use for managing earnings per share.

Unit 4: Mergers and Acquisitions (M&A)

This unit provides a comprehensive overview of the M&A process, from deal origination to post-merger integration. We examine the motivations behind M&A activity, including synergy creation, market power enhancement, and diversification. Students will learn to analyze M&A transactions using valuation techniques, including discounted cash flow analysis and relative valuation. We also explore the legal and regulatory aspects of M&A, as well as the ethical considerations involved.

Unit 5: Corporate Restructuring and Distress

This unit focuses on the financial challenges faced by companies in distress and explores various corporate restructuring strategies, including asset sales, spin-offs, bankruptcies, and reorganizations. We examine the legal and financial implications of bankruptcy and the role of stakeholders in the restructuring process. Students will learn to analyze the causes of financial distress and evaluate the effectiveness of different restructuring options.

Assessment

The course assessment typically comprises a combination of: * Midterm Examination: Covering the theoretical concepts and analytical techniques from the first half of the course. * Case Studies: Applying the course concepts to real-world corporate finance scenarios. * Group Project: A comprehensive project involving the analysis of a complex corporate finance decision. * Final Examination: A comprehensive assessment of the entire course material.

Learning Outcomes

Upon successful completion of Finance Corporate 307, students will be able to: * Apply advanced capital budgeting techniques to evaluate investment opportunities. * Analyze corporate financing decisions within the framework of modern capital structure theory. * Assess the impact of dividend policy and share repurchases on shareholder value. * Evaluate M&A transactions and understand the M&A process. * Analyze corporate restructuring strategies and understand the implications of financial distress.