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CORPORATE INVESTMENT DECISIONS

2016-2017

IESEG School of Management ( IÉSEG )

Code Cours :

1617-IÉSEG-M1S2-FIN-MA-EI38UE

FINANCE


Niveau Année de formation Période Langue d'enseignement 
Master1S2English
Professeur(s) responsable(s)R.JOLIET
Intervenant(s)Robert JOLIET


Pré requis

Introduction to Financial Markets
Corporate Finance Fundamentals
Capital Structure (strongly recommended)
Option Pricing (strongly recommended)
Statistics and Probability in Finance.

Objectifs du cours

At the end of the course, the student should be able to:
1. Identify the steps involved in estimating the cash flows from investment projects
2. Differentiate between a relevant and an irrelevant cash flow
3. Analyze a project's risks and opportunities
4. Estimate the required rates of return from a project
5. Understand the interactions between investment and financing decisions
6. Assess the various managerial flexibilities involved in the project

Contenu du cours

This course is an in-depth exploration of methods used in corporate investment appraisal, with a focus on practical applications of managerial flexibility.

Course outline:
Part I: Estimating Incremental cash flows

1. Stand-alone principle
2. Operating cash flows, capital spending and changes in net working capital
3. Pitfalls: Sunk costs, opportunity costs, interest expenses and other financing costs
4. Effects of taxes and inflation
5. Sensitivity and scenario analysis

Part II: Estimating a project's cost of capital

1. Unlevered vs. levered cost of equity
2. Risk-free vs. risky debt
3. The weighted average cost of capital (WACC)
4. Financing side effects
5. The pecking-order theory

Part III: Managerial Flexibility and Project Appraisal

1. The use of (real) options to refine the valuation of investment projects
2. European-style real options: R&D
3. European-style real options: Growth
4. American-style real options: Abandonment


Modalités d'enseignement

Organisation du cours

TypeNombre d'heuresRemarques
Face to face
Interactive class16,00  
Independent study
Group Project24,00  
Estimated personal workload10,00  
Charge de travail globale de l'étudiant50,00  

Méthodes pédagogiques

  • Interactive class
  • Case study
  • Conference
  • Tutorial


Évaluation

Students will discuss 3 case studies in class, each related to one of the three parts of the course. Students will then have to work on a final case study outside the class.

Type de ContrôleDuréeNombrePondération
Others
Written Report0,00125,00
Case study0,00175,00
TOTAL     100,00

Bibliographie

  • Valuation: The Art and Science of Corporate Investment Decisions - Titman, S., and Martin, J.

    Prentice Hall. 1st edition 2008

  • An Applied Course in Real Options Valuation - Shockley, R. (Thomson - South Western. 2007) -

  • Advanced Capital Budgeting. Refinements in the economic analysis of investment projects. - Bierman, H. and Smidt, S.

    Routledge 1st edition 2007

  • Capital Budgeting and Long-Term Financing Decisions. - Seitz, N. and Ellison, M.

    South-Western 4th edition 2005


Ressources internet



 
* Informations non contractuelles et pouvant être soumises à modification
 
 
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