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BWFF 5053

COURSE INFORMATION Name of Course/Module Course Code Name(s) of academic staff Credit Value Prerequisite (if any) 3 BWFF 5013 Corporate Financial Management ADVANCED CORPORATE FINANCIAL MANAGEMENT BWFF 5053

Objectives: Students are expected to: 1. 2. 3. 4. 5. acquire knowledge and competencies on how to evaluate and incorporate business risk in investment decision-making. acquire knowledge and skills on how to incorporate financing side effects in investment decision-making. acquire knowledge and skills on bond refunding analysis and leasing analysis. acquire knowledge and skills on how to apply option pricing techniques in evaluating investment decision-making with real options. understand how to create shareholders wealth through merger and acquisition and other forms of corporate restructuring exercise.

Learning outcomes: At the end of this course, students will be able to: 1. 2. 3 4. demonstrate clear understanding of the key concepts, tools and factors to be considered in corporations financial decision-making. (C2, P1, A3) evaluate and integrate risk, real options and financing side effect in corporate investment decision-making analysis.(C6,P4, A4) explain factors that affect financing decisions and analyse bond issuance, leasing and equity offering related decisions. (C6, P4, A4) describe alternative corporate restructuring exercises and solve some financial problems in merger and acquisition. (C6, P4, A4) Lectures,case analysis, group discussion and individual & group presentation. Coursework (Mid Term Test, Project Paper and 1

Mode of Delivery Assessment Methods and

BWFF 5053 Types Synopsis: This course is designed for post graduate students wishing to advance their knowledge and skills in corporate finance. Topics covered include incorporating real options and risk in capital budgeting, valuation and capital budgeting for levered firm, bond refunding analysis, leasing analysis and merger and acquisitions. Mode of Delivery Assessment Methods and Types Coursework Final Examination Mapping of the course/module to the Programme Aims Content outline of the course/module and the SLT per topic Topic 1.0 Introduction 1.1 Overview of Corporate Finance 1.2 Key concepts in Corporate Finance Advanced Capital Budgeting: Incorporating Options and Risk 2.1 Real options and capital budgeting - option to expand - option to abandon - timing options 2.2 Risk and capital budgeting - decision tree - scenario and sensitivity analysis and Monte Carlo simulation - present value breakeven analysis Advanced Capital Budgeting: Capital Budgeting for Levered Firms 3.1 Adjusted Present Value approach 3.2 Flow to Equity Approach 3.3 Weighted Average Cost of Capital Method Advanced Capital Structure and Dividend Policy 4.1 Market imperfections and capital structure theory 4.2 Studies on capital structure theory 4.3 Market imperfections and dividend theory 4.4 Studies on dividend policy 4.5 Bond refunding analysis 4.6 Leasing analysis Options Pricing Application in Corporate Finance 5.1 A two state option model 5.2 The Black Scholes Model 2 60% 40% assignments) and Final Examination

2.0

3.0

4.0

5.0

BWFF 5053 5.3 Evaluation of real options

6.0 Corporate Restructuring 6.1 Merger and acquisition - Rationale - Difference between merger and acquisition - Merger valuation 6.2 Divestiture - Types of divestiture (spin off, LBO, MBO etc) - Rationale References: Main: Ross, S. A., Westerfield, R. W. & Jaffe, J. (2010). Corporate Finance, 7th Ed., New York: McGraw-Hill. Additional: Berk, J. & DeMarzo, P. (2007). Corporate Finance. USA: Pearson. Ogden, J. P., Jen, F. C. & OConnor, P. F. (2003). Advanced Corporate Finance: Policies and Strategies. New Jersey: Prentice Hall. Smart, S. B. Meggisson, W. L. & Gitman, L. J. (2004). Corporate Finance. USA: Thomson Learning.

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