News
Our Degree Programs
Establishment
Language of instruction
English
Teaching content
FINANCE
This course occurs in the following program(s)
IESEG Degree - Programme Grande École
- Crédits ECTS: 2.00
Training officer(s)
R.JOLIET
Stakeholder(s)
Robert Joliet
Présentation
Prerequisite
Students are definitely expected to have background in Finance
Introduction to Financial Markets
Corporate Finance Fundamentals (basics of corporate capial budgeting and capital structure)
Portfolio Management and Analysis
Statistics and Probability in Finance.
Introduction to Financial Markets
Corporate Finance Fundamentals (basics of corporate capial budgeting and capital structure)
Portfolio Management and Analysis
Statistics and Probability in Finance.
Goal
1. Identify the steps involved in estimating the cash flows from investment projects,
2. Estimate the required rates of return from a project,
3. Understand the interactions between investment and financing decisions,
4. Analyze a project's risks and opportunities
5. Assess the various managerial flexibilities involved in the project.
6. Able to value the dynamics of the projects using lattice-based models (binomial trees)
2. Estimate the required rates of return from a project,
3. Understand the interactions between investment and financing decisions,
4. Analyze a project's risks and opportunities
5. Assess the various managerial flexibilities involved in the project.
6. Able to value the dynamics of the projects using lattice-based models (binomial trees)
Presentation
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. Sensitivity and scenario analysis
5. Company strategy, Supply Chain strategy and financial impacts
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: Wait
5. American-style real options: Abandonment
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. Sensitivity and scenario analysis
5. Company strategy, Supply Chain strategy and financial impacts
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: Wait
5. American-style real options: Abandonment
Modalités
Organization
| Type | Amount of time | Comment | |
|---|---|---|---|
| Présentiel | |||
| Cours interactif | 16,00 | ||
| Travail personnel | |||
| Group Project | 20,00 | ||
| Individual Project | 15,00 | ||
| Overall student workload | 51,00 | ||
Evaluation
Students will prepare and discuss 3 case studies, related to one of the three parts of the course
Ressources
Bibliography
Berk, J., and DeMarzo, P., 2011. Corporate Finance, 2nd Edition, Pearson. -
Seitz, N., and Ellison, M., 2005. Capital Budgeting and Long-Term Financing Decisions. South-Western 4th edition. -
Shockley, R., 2007. An Applied Course in Real Options Valuation, Thomson, South Western. -
Titman, S., and Martin, J., 2008. Valuation. The Art and Science of Corporate Investment Decisions, Pearson Education. -
Seitz, N., and Ellison, M., 2005. Capital Budgeting and Long-Term Financing Decisions. South-Western 4th edition. -
Shockley, R., 2007. An Applied Course in Real Options Valuation, Thomson, South Western. -
Titman, S., and Martin, J., 2008. Valuation. The Art and Science of Corporate Investment Decisions, Pearson Education. -