Class notes FNCE 310

SEP-DEC.2022 SEMESTER


COURSE CODE: FNCE 310


COURSE TITLE: CORPORATE FINANCE


Lecturer: J.Maritim 0722300744




LECTURE NOTES




GROUP: Y3S1: BEF & BCOM (ACCT, FNCE)




Unit Code : FNCE 310

Unit title : CORPORATE FINANCE

,Unit Hours : 3 HOURS

Prerequisite : FNCE 220




Purpose of the Course

This course is intended to acquaint the learners with basic tools, models, theories and methods of modern
financial decision-making in corporate set up.

Expected Learning outcomes

At the end of the course the learners should be able to:

1. Explain the meaning and objectives of corporate finance in a firm;
2. Analyze the major types of financial decisions made by companies;
3. Explain the need for working capital management in firms;
4. Appraise capital investments using the techniques of handling risks in capital budgeting;
5. Demonstrate the understanding of measuring the Cost of capital of a company from various
sources
6. Discuss the need for mergers and acquisitions of companies and methods of resisting a hostile
takeover
Course Content




No. Indicative topics and Content week

1.  Introduction 1
 Nature of Corporate Finance
 Objectives of corporate Firms
 Main decisions in Corporate Finance
 Agency theory in Corporate Finance 2

2. Working Capital Management

 Nature of Working Capital 3
 Objectives of Working Capital Management
 Need for working capital–operating cycle, estimation of working capital
requirements
 Management of Cash, Payables and Receivables

, Assignment 1

3. Capital Budgeting under conditions of Uncertainty and Risk:

 Nature and sources of Risks in capital budgeting, 4
 Techniques of handling risks in capital budgeting: Risk Adjusted Discount
Rate, Certainty Equivalent, Sensitivity Analysis, Monte Carlo Simulation,
Decision Trees; Scenario Analysis
5

4 Key Assets Pricing models

 Portfolio Theory 6
 Capital Assets pricing model (CAPM)
 Arbitrage Pricing model (APM)
Assignment 2

5. Cost of Capital:

 Importance of cost of capital,
 Measuring the Cost of capital from various sources,
 Weighted average cost of capital (WACC), 7
 Marginal Cost of Capital(MCC)
 Company Cost of Capital and Capital Structure

8

*CAT*

6. Capital Structure:

 Meaning and importance, 9
 Capital structure design or decisions,
 Optimum Capital Structure,
 Capital structure controversy,
 Theories of Capital Structure Capital Structure


7. Mergers and Acquisitions:

 Rationale for mergers and acquisitions, 10
 Merger Financing
 Methods of resisting hostile takeover
 Analysis of mergers and acquisitions,
 Strategies and tactics of mergers and acquisitions,
 Restructuring of Firms;
 Corporate governance
Assignment 3

, 8. Dividend policy and decisions:

 Dividend Policies, 11
 Alternative Dividend Policies,
 Mode of paying Dividends,
 Dividend Theories
9.  REVISION 12

End of Semester Examination 13




Mode of Delivery

Lectures, exercises, Group discussions, Case studies, Student presentations, online learning, Library
research, Internet research

Instructional Materials/Equipment

Handouts, whiteboard, Laptop and videotapes

Assessment

Continuous assessment tests, individual and group presentations, assignments, and final examination.

Course assessment

Assignments 10%

Continuous assessment tests (CATS) 20%

Final examination 70%

Total 100%

Core reading text books

Brealey, R. and Stewart, M. (2013), Principles of Corporate Finance 11th edition: McGraw-Hill
School Education Group

Richard A.Brealey, Stewat C.Myers and Mohanthy (2011); Principles of Corporate Finance, Tata
McGraw Hill, 9th Edition,

I.M.Pandey (2012); Financial Management, Vikas Publishing House Pvt., Ltd., 12th Edition,