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This course examines corporate finance theory and its application to practice with particular attention to how financial decisions affect firm value. A range of topics are covered including financial asset management, asset and project valuation, capital structure and dividend policy, corporate restructuring, and other contemporary issues in corporate finance.
This course is designed to give students an in-depth understanding of the theory and practice of corporate finance. The principal contention of the course is that managers should maximise firm value. To do this, managers make investment decisions by allocating resources to “good” projects. Managers also make financing decisions by choosing the “appropriate mix” of debt and equity and investing the “right amount” back into operations. Students will learn how to choose “good” projects and how to finance these projects. The emphasis will be on the “why” more than the “how” in understanding finance. This will prepare them to be a financial manager of a firm that will maximise firm value.
By the end of this course students will be able to:1. Perform a capital budgeting exercise that may include any of the following: the effect of expected inflation, fluctuations in net working capital requirement, variable cash flows, replacement of assets and the decision whether to buy or lease assets.2. Value a bond during, the life of which, changes in prevailing interest rates are expected, and where a call is expected.3. Perform a valuation of a firm in terms of each of Miller and Modigliani’s three capital structure models, the flows-to-equity model and the adjusted present value model.4. Evaluate the strengths and weaknesses of a range of dividend-setting policies for a firm with a given set of characteristics (expected earnings, capital structure and investment opportunity set)5. Critically evaluate the advantages and pitfalls associated with a proposed takeover by one firm of another6. Calculate the net present value of a takeover proposal involving, a cash payment or payment in terms of the acquirer’s ordinary shares.7. Critically evaluate the strengths and weaknesses of a domestic firm becoming a multinational firm.8. Calculate a cost of capital adjusted for changes in market risk and, where cross-border investment is contemplated the cost of capital adjusted for exchange rate and interest rate differences9. Explain in depth why maximisation of a firm’s market capitalisation is a financial officer’s “objective function” and how this “objective function” operates as a self-correcting mechanism.10. Evaluate a project employing a real options methodology.
MBAZ601 and MBAZ603; subject to the approval of the Programme Director. RP: MBAZ604
MBAZ604
Wednesday 5pm – 7pm in TBA but initially lectures will be provided remotely via Echo360Thursday 5pm – 6pm both in TBA but initially lectures will be provided remotely via Echo360Lecturer: Warwick Anderson. Phone 369-3764. Each week a list of tutorial questions and every second week a list of homework questions will be provided in LEARN.
Warwick Anderson
Dr. Warwick AndersonRoom 403 Law BuildingPhone 369-3764Email: warwick.anderson@canterbury.ac.nz
Assessment for the course is comprised of the following:(a) Four homework assignments contributing 10% each towards the final grade (b) Test contributing 20% of the final grade (mid-term break),(c) Final examination contributing 40% towards the final grade (exam week). The dates of assessments are:Assignment 1: 5pm Friday 5th JuneAssignment 2: 5pm Friday 19th JuneAssignment 3: 5pm Friday 10th JulyAssignment 4: 5pm Tuesday 28th July
The course textbook is: Ross, Westerfield, Jaffe and Jordan, Corporate Finance, 11th Edition, McGraw Hill, 2015 (RWJ)It is also recommended that you have calculators that do financial functions and scientific functions. A Texas Instruments financial calculator is okay, but so are just about all other financial calculators. But if your financial calculator does not do functions such as inverse, exponential, logarithmic and power functions, a scientific calculator is also required. Programmable calculators are not permitted in exams or tests.
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Domestic fee $1,218.00
International Postgraduate fees
* All fees are inclusive of NZ GST or any equivalent overseas tax, and do not include any programme level discount or additional course-related expenses.
For further information see Business Taught Masters Programmes .