University of Warwick - IB114: Financial Management (Solutions)

IB114: Financial Management introduces you to the fundamental principles and practices of financial management, fostering an intuitive grasp of core theories and models in the field. Main topics to be covered include financial arithmetic, such as discounted cash flow, net present value (NPV), and internal rate of return (IRR); the workings of financial markets, including equities, bonds, interest rates, and currencies; and the concept of market efficiency, with an emphasis on calendar anomalies and speculative bubbles. You will explore project appraisal methods, encompassing cost of capital, inflation, taxation, and real options, alongside discussions on company financing, examining equity versus debt, rights issues, and the pecking-order hypothesis.

The module also covers capital structure and dividend policy, addressing tax implications, financial distress, agency effects, and share buybacks. You will gain skills in financial planning for managing liabilities and assets effectively over short- and long-term horizons. By the end of the module, you will be able to calculate present values of cash flows, estimate project costs of capital, evaluate market efficiency, and critically assess financing options, capital structures, and dividend policies. These competencies will equip you to understand and navigate the complexities of corporate financial management.