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Course Title

FIN 04 C
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CORPORATE FINANCE II TERM: III Credit: 2.5 NA This course aims at providing students with an understanding of corporate investments decisions and analysis of investment and financial risk. It gives exposure to basic concepts underlying valuation of stock and bonds and overview of derivative instruments. By the end of this course students should be able to: 1. Illustrate the estimation of project cash flows 2. Apply various capital budgeting tools and techniques while make investment decision 3. Explain the rationale of leverage analysis 4. Apply the concepts of time value of money in bond valuation 5. Define the need for derivative instruments. Output to: NA CVAM, SAPM, IFM Module 1: 2 Credits Capital Budgeting DCF vs Non-DCF Techniques of Capital Budgeting, Estimating Project Cash Flows, Risk Analysis of Projects cash Flows, Investment appraisal techniques Pay back, Accounting rate of return, Net present Value, Internal Rate of return, Modified Internal Rate of Return, Capital Rationing and Profitability Index, Issues in Capital budgeting. Leverage analysis operating leverage and Financial Leverage, break-even point, EBIT-EPS analysis. Stock and Bond valuation Module 2: 0.5 Credits Dividend Policy Dividend policy in Practice, Stock buyback, Bonus Issue; Stock. Overview of Derivative securities Options, Future and Forwards. Preparation of comprehensive Business plan 1.Prasanna Chandra (2006) Financial Management Theory and Practice (6th Edition) Tata Mcgraw-Hill Publishing Company Limited, New Delhi. 2.Brealey R.A. and S.C.Myers (2005) Principles of Corporate Finance 9th Edition, Mcgraw-Hill 3.Pandey I M (2004) Financial management Vikas Publishing House Pvt. ltd., New Delhi. 4.Khan lain (2000) Basic Financial Management (7th Edition) Tata McGraw-Hill Publishing Company Limited, New Delhi. 5.Aswath Damodaran (1999)Applied Corporate Finance John Wiley & Sons. 6.Shapiro and Balbier (2000), Corporate Finance, Pearson Education Its a core course.

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Pedagogy A variety of learning methods are employed to stimulate interest and meet the differing needs of students including illustrated presentations, group exercises and discussions, case studies and practical problem solving exercises. Students are expected to carefully read all the readings assigned for each class and to actively participate in class discussions.
Method of evaluation

Test Case/Quiz Business plan End term exam Business Plan

20 % 10 % 20 % 50 %

Date of submission: Abstract of business plan: On or before 7th Jan 2013 Interim submission : On or before 21st Jan 2013 Final business plan submission: on or before 4th Feb 2013 You must submit the final report in hard copy.

CORPORATE FINANCE II LESSON PLAN Session 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Topics to be covered Introduction to Capital budgeting Types on Investment decision Estimation of cash flows - Introduction Principles in cash flow estimation Cases in cash flow estimation Cases in cash flow estimation Investment evaluation criteria Payback period, NPV IRR Modified IRR Cases in Capital budgeting Cases in Capital budgeting Risk Analysis in Capital budgeting Leverage analysis - Introduction Operating leverage Financial leverage Cases in Leverage analysis EBIT EPS analysis Case in leverage analysis Bond Valuation introduction Bond valuation calculation of yield Case in bond valuation Dividend policy, Stock buyback and Bonus issue Derivatives - Overview Derivatives - Overview