Managers play a key role in resource generation and allocation and must be conversant with external economic influences and their relationship to the types of financial decisions made by organizations.  The course will provide students with an understanding of the components of an organization’s internal financial conditions and how decision-makers manage these resources in the context of external markets and institutions.  It will explore the finances of economic development and consider sources of early- and late-stage financing.  The real-world challenges of corporate finance will be covered, including evaluating financial tools, e.g., mergers and acquisitions, leveraged buyouts, hostile takeovers, and initial public offerings; employing basic financial analysis tools, e.g., credit market analysis, option pricing, valuation of interest tax shields, and weighted average cost of capital; acquiring an understanding of core financial decisions, e.g., finance with debt or equity and distributing cash to shareholders; and considering aspects that can hinder/sideline financial stability, e.g., costs of financial distress, transaction costs, information asymmetries, taxes, and agency conflicts.  Specific skills acquired will be financial trend analysis for financial statement interpretation; calculating the present value of cash streams leading to the ability construct capital budgets; calculating bond interest tax shields and its impact on a firm’s average cost of capital; constructing corporate valuation models; and assessing the impact of various sources of capital infusions on the cost of capital structure of a firm.

Learning Objectives and Outcomes:

By the end of this course students will be able to:

1. Interpret financial statements.
2. Calculate net present values of expected future cash flows and its applications.
3. Analyze equity and fixed income yields including tax shield effects.
4. Determine whether to raise capital through debt or equity by taking into account cost of capital.

Course Schedule and Topics

This course will cover the following topics in eight learning sessions, with one Unit per week.

Week 1: Unit 1 – Financial Statement Review, Capital Structure, and Bankruptcy Issues

Week 2: Unit 2 – Cash Flows and Discount Cash Flow Analysis

Week 3: Unit 3 – Capital Budgets

Week 4: Unit 4 – Investor Yields: Equities and Fixed Income (with tax shield effect)

Week 5: Unit 5 – Methods of Computing Company Valuations

Week 6: Unit 6 – Mergers, Buy-Outs, Initial Public Offering (IPO) Process, Functions of Money, and the Financial Manager

Week 7: Unit 7 – Cost of Capital: Weighted Cost of Capital (WACC) and the Impact on New Capital Infusions

Week 8: Unit 8 – Course Wrap-Up

Learning Guide

The following is an outline of how this course will be conducted, with suggested best practices for students.

Unit 1: Financial Statement Review, Capital Structure, and Bankruptcy Issues

• Read the Learning Guide and Reading Assignments
• Participate in the Discussion Assignment (post, comment, and rate in the Discussion Forum)
• Complete and submit the Written Assignment
• Respond to the Portfolio Activity

Unit 2: Cash Flows and Discount Cash Flow Analysis

• Peer assess Unit 1 Written Assignment
• Read the Learning Guide and Reading Assignments
• Participate in the Discussion Assignment (post, comment, and rate in the Discussion Forum)
• Complete and submit the Written Assignment
• Respond to the Portfolio Activity

Unit 3: Capital Budgets

• Peer assess Unit 2 Written Assignment
• Read the Learning Guide and Reading Assignments
• Participate in the Discussion Assignment (post, comment, and rate in the Discussion Forum)
• Complete and submit the Written Assignment

Unit 4: Investor Yields: Equities and Fixed Income (with tax shield effect)

• Peer assess Unit 3 Written Assignment
• Read the Learning Guide and Reading Assignments
• Participate in the Discussion Assignment (post, comment, and rate in the Discussion Forum)
• Complete and submit the Written Assignment
• Respond to the Portfolio Activity

Unit 5: Methods of Computing Company Valuations

• Peer assess Unit 4 Written Assignment
• Read the Learning Guide and Reading Assignments
• Participate in the Discussion Assignment (post, comment, and rate in the Discussion Forum)
• Complete and submit the Written Assignment
• Respond to the Portfolio Activity

Unit 6: Mergers, Buy-Outs, Initial Public Offering (IPO) Process, Functions of Money, and the Financial Manager

• Peer assess Unit 5 Written Assignment
• Read the Learning Guide and Reading Assignments
• Participate in the Discussion Assignment (post, comment, and rate in the Discussion Forum)
• Complete and submit the Written Assignment
• Begin working on the Group Activity
• Respond to the Portfolio Activity

Unit 7: Cost of Capital: Weighted Cost of Capital (WACC) and the Impact on New Capital Infusions

• Peer assess Unit 6 Written Assignment
• Read the Learning Guide and Reading Assignments
• Participate in the Discussion Assignment (post, comment, and rate in the Discussion Forum)
• Complete and submit the Written Assignment
• Continue working on the Group Activity

Unit 8: Course Wrap-Up

• Peer assess Unit 7 Written Assignment
• Read the Learning Guide and Reading Assignments
• Participate in the Discussion Assignment (post, comment, and rate in the Discussion Forum)
• Respond to the Portfolio Activity
• Submit the Group Activity
• Complete and submit the anonymous Course Evaluation