Introduction

Review A. The Time Value of Money

Review B. Interest Rates

Part I: Short-Term and Long-Term Financing

Topic 1. Working Capital Management

Topic 2. Short-Term Financial Planning

Topic 3. Equity and Debt Financing

Topic 4. Leasing

Part II: Investment Decisions

Topic 5. Investment Decision Rules

Topic 6. Real Options

The general objective of the course is to provide students with a broad overview of corporate finance, with special focus on the most relevant finance decisions that managers of any business type (large or small) will have to face. The introduction to the course includes two chapters devoted to reviewing the time value of money and interest rate quotes. Then, the topics covered in Part I include short- and long-term financing (focusing on working capital management, equity and debt financing, and leasing). Finally, in Part II, the course deals with investment decisions (covering investment decision rules and real options).

After completing the course, students should:

• Be able to compute the cost of trade credit and compare it to alternative sources of financing.
• Understand the different types of financing that may be used for short-term cash needs.
• Know the ways in which a private company can raise outside capital and understand the effects of a company founder selling stock to an outsider.
• Identify typical sources of debt for corporations and understand their specificities.
• Know the rights and obligations of each party in a lease contract and be able to compute the cost of leasing.
• Recognize different investment decision rules (e.g., NPV, IRR, payback period) and the advantages and disadvantages of each of them.
• Understand the usefulness of real options for corporate decision-making and identify different types of real options

The course will consist of: (a) lectures, in which the different topics will be presented, and (b) seminars devoted to the solution of numerical problems and to the discussion of business cases. Students are expected to prepare the exercises in advance, before solving them in class.

Assessment

The final grade of the course will be a weighted average of the following three components:

1. Active participation and solution of exercises: 25% of the grade

2. Intermediate exam: 25% of the grade

3. Final exam: 50% of the grade

Each component will be graded based on the following scale (percentage grade):

• 91-100% = Very good
• 81-90% = Good
• 66-80% = Satisfactory
• 51-65% = Sufficient
• 0-50% = Not sufficient

Registration should be made via LPIS.

Maximum number of participants: 30.

Students should have basic knowledge of finance concepts and financial mathematics.

Ignacio Requejo: irequejo@usal.es