EBBA201 – BUSINESS FINANCE, I & II (10 ECTS)

Overview

This course presents the foundations of finance with an emphasis on applications vital for corporate
managers. We discuss most of the major financial decisions made by corporate managers both within the firm and in their interactions with investors. Essential in most of these decisions is the process of valuation, which will be emphasized throughout the course.

Course Objectives

This course focuses on providing theoretical and practical frameworks for understanding how investors, and more importantly, how company managers, can influence both the amount and risk of cash flows to enhance shareholder value. We will examine how managers should make investment, financing, and dividend decisions that enhance stockholders’ investment value and why managements often don’t make decisions that increase shareholder value.

Learning content and outcomes

At the completion of the course the student will be able to:

1. Explain the role of the organisation’s financial managers in realizing these strategic objectives.
2. Be able to describe and evaluate the different sources of corporate finance (e.g.equity, debt, retained earnings and so on …), and be able to explain the relative advantages and disadvantages of each source.
3. Understand how risk and the cost of capital impact on investment appraisal, and explain how such factors affect the value of a capital project.
4. Explain how the corporation’s capital structure, payout policy and risk policy impact upon investment decisions.
5. Have good understanding of, and be able to discuss current topical issues under debate in the world of corporate finance.

Assessment

55% – Classwork (review questions, homework, essay, and other related activities)
5% – Merits
40% – Final Exam

Bibliography

• Jean Tirole, “The Theory of Corporate Finance”, Princeton university press, 2006.
• Brigham, Houston. Essentials of Financial Management, 2nd Edition. Cengage Learning Asia. 2010.
• Brealey, Myers, Marcus. Fundamentals of Corporate Finance, 5th Edition. McGraw-Hill. 2007. Solely distributed by C&E Publishing.
• Keown, Martin, Petty, Scott. Financial Management Principles and Applications, 10th Edition. Prentice-Hall. 2005.