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25557 Corporate Finance: Theory and Practice

UTS: Business: Finance and Economics
Credit points: 6 cp

Subject level: Undergraduate

Result Type: Grade and marks

Requisite(s): 25503 Investment Analysis OR 25906 Portfolio Theory and Investment Analysis (Advanced)
These requisites may not apply to students in certain courses.
There are also course requisites for this subject. See access conditions.

Handbook description

This subject consolidates and further develops the concepts of corporate finance introduced in the core business finance subject. This includes an examination of various analytical techniques used in capital budgeting decisions and capital structure decisions. Capital structure, estimation of the cost of capital and the dividend decisions are examined from an empirical and theoretical viewpoint. Other topics include the dividend decision and the relationship between financing decisions and the costs of capital.

Subject objectives/outcomes

On successful completion of this subject, students should be able to:

  1. understand the implications of financial theories for corporate finance policy
  2. apply quantitative techniques to evaluate risky investment alternatives, financing choices and working capital management policy
  3. analyse the implications of financial decisions on corporate strategy and the value of the firm.

Contribution to graduate profile

This course expands and develops the conceptual framework underpinning the firm's investment, financing and dividend decisions. It examines the applications of the theoretical models to resolving problems encountered in corporate finance.

Teaching and learning strategies

The course will be taught using a combination of lectures and tutorials. Both printed and electronic learning materials are available. In the lectures, theories underlying each topic are explained with their applications illustrated through applications to financial problems. The materials are reinforced through discussion of tutorial problems.

Content

  • Financial decision making under conditions of uncertainty
  • Net present value analysis, project evaluation and issues in valuation
  • Risk analysis and appraisal of risky projects
  • Capital structure policy and Modigliani and Miller's work
  • Financing decisions, dividend policy and the cost of capital
  • Working capital management
  • International finance and multinational financial management.

Assessment

Assessment item 1: Case Study (Group)

Objective(s): 1-3
Weighting: 30%
Task: The case study extends students understanding of issues in corporate finance to practical problems in capital budgeting, valuation, cost of capital and financing policy. It will require students to demonstrate proficiency in using analytical techniques to tackle financial problems.

Assessment item 2: Mid-Semester Examination (Individual)

Objective(s): 1-3
Weighting: 20%
Task: The mid semester examination will test students' understanding of essential concepts in corporate finance.

Assessment item 3: Final Examination (Individual)

Objective(s): 1-3
Weighting: 50%
Task: The final examination will test students' appreciation of the investment and financing policies in corporate finance. Students are required to demonstrate their ability to apply the theory to financial decisions generally faced by companies.