University of Birmingham - Corporate Finance (Solutions)

To begin with the module aims to develop an understanding of the basic building blocks of finance that are of primary concern to corporate managers and the basic considerations that are needed to make financial decisions both inside and outside a firm. The first half of the module specifically considers the fundamental concept of the time-value-of-money and its application to the evaluation of real investment projects and to the valuation of financial assets. The module then aims to develop an understanding of some of the more advanced building blocks of finance that are of primary concern to corporate managers and some of the more advanced considerations that are needed to make financial decisions both inside and outside a firm. The second half of the module specifically considers the fundamental relationship between return and risk and the theories and practice of financing and dividend decisions.

By the end of the module students should be able to:

• Explain the time-value-of-money concept and apply the quantitative techniques relevant to valuing future cash flows;
• Explain and use discounted-cash-flow analysis for the evaluation of real investment projects in capital budgeting;
• Explain and use typical models for valuing financial assets such as corporate bonds and common stocks;
• Discuss the theoretical principles and apply the quantitative techniques that underlie portfolio selection and diversification and return and risk in the capital-asset-pricing-model;
• Discuss the theories and practice of financing and dividend decisions and apply the quantitative techniques to real investment evaluation for firms with different capital structures.