Syllabus

Title
0696 Course V - Company Valuation and Capital Budgeting
Instructors
Mag. Georg Mikula
Contact details
  • Type
    PI
  • Weekly hours
    2
  • Language of instruction
    Englisch
Registration
09/14/21 to 10/05/21
Registration via LPIS
Notes to the course
Subject(s) Bachelor Programs
Dates
Day Date Time Room
Tuesday 10/12/21 10:30 AM - 01:00 PM Online-Einheit
Friday 10/15/21 10:30 AM - 01:00 PM Online-Einheit
Tuesday 10/19/21 10:30 AM - 01:00 PM Online-Einheit
Friday 10/22/21 10:30 AM - 01:00 PM Online-Einheit
Friday 10/29/21 10:30 AM - 01:00 PM Online-Einheit
Friday 11/05/21 10:45 AM - 01:15 PM TC.5.01
Monday 11/08/21 10:30 AM - 01:00 PM Online-Einheit
Friday 11/12/21 10:30 AM - 01:00 PM Online-Einheit
Monday 11/15/21 10:30 AM - 01:00 PM Online-Einheit
Monday 11/22/21 10:30 AM - 12:30 PM Online-Einheit

Contents

  • Basic Capital Budgeting Rules
  • Cost of Capital
  • Cash Flow Calculation, Tax Consideration
  • Capital Structure and Valuation
  • Sensitivity Analysis
  • Introduction To Real Options

Learning outcomes

After completing this course the student will have the ability to:

  • distinguish the methods of company valuation and capital budgeting and to know the advantages of each method.
  • price companies and investment projects by use of the DCF method.
  • calculate cost of capital
  • estimate cash flows and to use the findings for further calculations
  • deal with shortage of capital
  • check the robustness of investment decisions using sensitivity analysis and to calculate critical values of input variables
  • consider the flexibility within investment projects and companies within real options

Furthermore, after completing this course the student will have the ability to:

  • activate their mathematical and statistical knowledge
  • deal with options for action usual in practice
  • grasp the complexity of economic relationships and effects
  • work autonomously when solving homework examples
  • identify and price strengths and weaknesses, potential and risk

Attendance requirements

Basically, course attendance is compulsory.

However, each student can miss one unit without any excuse, and one more unit with excuse. Illness or accident, or an exiamination within another course are accepted as excuses. In such cases, students have to provide confirmations.

Teaching/learning method(s)

The core of the course consists of interactions between course instructor and students. In each unit, the conceptual framework will be developed, with the course instructor's lecture being complemented by participation and assistance by the students. Some exercises will be computed together regularly.

Another element of the course are homework assignments to be prepared by the students. Working together in teams is explicitly welcome in this part. The solutions of the examples will be demonstrated by students drawn out before. The course instructor just comments and, if necessary, corrects the presenting student in this part, and he asks comprehension questions.

Assessment

Grading weights:

25% mid-term exam
50% final exam
25% homework assignment and class participation

Details to the partial examinations:

Mid-term exam: After about half of the course units at the beginning of a regular course unit, duration 30 minutes, 25 points can be achieved. Subject of examination is the content of the first course chapters.

Final exam: After the last course unit, duration 60 minutes, 50 points can be achieved. Subject of examination is mainly the content not being examined within the mid-term exam, however some basic knowledge being taught within the first units can be necessary to find the solutions.

Homework assignment and class participation: There will be the chance to prepare five homework exercises per unit, on four predefined course units (20 examples in total). Each student may choose which examples he/she wants to prepare. For each example prepared the student gets one point, i.e. 20 points in total. At the start of each unit students can announce, by ticking the corresponding examples, which homework exercises they have prepared. Based on these announcements, particular students will be drawn out to demonstrate the solution of a particular example.

If a student ticks a homework example he/she actually has not prepared, he/she will lose 25% of the overall points achieved in the course. If this occurs twice he/she will receive a fail grade for the whole course.

Up to 5 additional points can be achieved by general class participation.

There are no minimum points per partial examination defined.

Prerequisites for participation and waiting lists

Positive completion of Course I and Course II

Registration via LPIS

Readings

1 Author: Berk, Jonathan; DeMarzo, Peter
Title:

Corporate Finance


Publisher: Pearson
Edition: 2 or higher
Year: 2011
Content relevant for class examination: Yes
Recommendation: Strongly recommended (but no absolute necessity for purchase)
Type: Book

Recommended previous knowledge and skills

Contents of SBWL Course I to IV - Finance, especially:

  • Arbitrage Pricing
  • Capital Asset Pricing Model
  • Cost of Capital in case of partial debt financing
  • Money and Bond Markets
  • Option Pricing Theory
  • Corporate Risk Management

Availability of lecturer(s)

Last edited: 2021-10-21



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