SYLLABUS

1. Program description
1.1 University Bucharest University of Economic Studies
1.2 Faculty Finance, Insurance, Banks and Stock Exchanges
1.3 Department Finance
1.4 Field of study Finance
1.5 Study cycle Master
1.6 Program of study/ Qualification Financial management and investments

2. Course description
2.1 The name of discipline Corporate Finance: Capital Investment Decisions under
Risk and Uncertainty
Course Code 14.0215ZI2.2-0001
2.2 Professor for the course Prof. univ. dr. Ion Stancu
2.3 Professor for the seminar Prof. univ. dr. Ion Stancu
2.4 Year of 2.5 Semester 2.6 Type of the 2.7 Type of the
II II Exam Mandatory
Study evaluation course

3. Total estimated time (hours/semester of didactic activities)

3.1 Total number of teaching of which:
hours per week 3 3.2 course 2 3.3 seminar/lab 1
activities
3.4 Total number of teaching of which: 3.6 seminar/lab
42 28 14
hours/semester (cf. curricula) 3.5 course activities
Time allotment for individual study hours
Study of the lecture notes, course support, bibliography 35
Additional documentation (in libraries, on electronic platforms, field documentation) 30
Preparation for seminar/ lab classes, homework, referrals, projects and essays 20
Tutorship 1
Evaluation 2
Other activities: Work on the projects assigned at the seminar 20
3.7 Total number of hours for individual
108
study
3.8 Total number of hours per semester
150
(teaching hours and individual study)
3. 9 Number of ECTS credits allocated 6

4. Pre-requisites (if necessary)

4.1 curriculum Advanced Financial Reporting and Analysis, Corporate Finance: Financial
Planning and Policy
4.2 competences Operating with basic concepts regarding statistics, econometrics that were
acquired during bachelor studies
A good knowledge of Microsoft Excel, acquired during bachelor studies
5. Requirements ( if necessary )
5.1. regarding course The lectures will take place in classrooms with multimedia teaching
delivery equipment
5.2. regarding seminar The seminars will take place in classrooms with internet access
delivery

6. Specific competencies acquired

C6 - Planning, development and substantiation of the investment and financing
Professional
competencies

decisions and integration of corporate governance mechanisms

7. Objectives of the discipline (outcome of the acquired competencies)

7.1 General objective of
the discipline
The course addresses capital budgeting analysis, focusing on the
application of concepts in the corporate finance decision process:
-These capital budgeting principles are critical for an analyst
inside a company preparing capital budgeting recommendations as
well as for an analyst estimating the value of the company
-Topics will be developed around key concepts that are relevant to
a capital management of a company: Corporate Governance,
Dividend Policy, Capital Investment Decisions, Business and
Financial Risk, Long-Term Financial Policy, Short-Term Financial
Policy, Mergers and Acquisitions and Corporate Restructuring
Capital projects, which make up the long - term asset portion of
the balance sheet, can be so large that sound capital budgeting
decisions ultimately decide the future of many corporations:
-Define the capital budgeting process, understand the typical steps
in the capital budgeting process, explain the process and design
focus of the process on maximizing shareholder value:
- use several important criteria to evaluate capital investments and
categorize the capital projects that can be evaluated
-explain the principles of capital budgeting, understanding yearly
cash flows (of an expansion capital project and of a replacement
capital project), show how the depreciation method affects those
cash flows and the identification of the proper discount rate
(estimate the standalone risk of a capital project) and effects of
inflation on discount rate and capital budgeting analysis
-describe the role of taxes in the cost of capital from the different
capital sources
After graduation, students can explain the effects of the NPV on a
stock price, by performing sensitivity analysis, scenario analysis,
and Monte Carlo simulation.
-Understand capital budgeting process that companies use for
decision making on capital projects with a life of a year or more.

7.2 Specific objectives of Building the skills for assessing company performance, its
the discipline investment projects and the optimality of its capital
 structure, financing and maximizing shareholders value
Building the skills for selecting the most efficient
investment projects taking into account technical,
economic and financial criteria.

8. Content
8. 1 Course Teaching methods Remarks
The course notes will
be available for
download on the
Lecture and debates
program site prior to
supported by .ppt
every activity.
Company performance and the sustainability of presentations, word
It is recommended that
its investment projects and excel, apps and
the students should
other multimedia
read the course notes
resources.
in advance so that they
will be able to
participate in debates.
Present value, capital opportunity cost,
perpetuities, annuities, real interest rate and Interactive lecture
inflation
Investment decision in a certain environment:
Interactive lecture
NPV, IRR and other selection criteria
A comprehensive study of NPV: initial
investment expenditures, free cash-flows, Interactive lecture
residual value, time period and discount rate
Investment decision under uncertainty: analysis
of business and financial risk, sensitivity
analysis, scenario analysis, break-even point Interactive lecture
analysis, Monte Carlo simulations, decision trees
and real options
Financing decision: adjusted NPV and WACC Interactive lecture
Dividend policy and impact on company value Interactive lecture
Bibliography:
- Bodie Z., Kane A., Marcus A., Investments, 6th edition, McGraw-Hill/Irwin, 2005.
- Brealey, R. and Myers, St.,Principles of Corporate Finance, seventh edition, The
McGraw-Hill Companies, 2003
- Ciobanu, A., Company performance evaluation, Ed. ASE, 2006
- Clayman, M. R. et al., Corporate Finance: A Practical Approach, Wiley, 2008.
- Copeland T., Koller T., Murrin, J., Valuation, measuring and managing the value of
companies, 3rd ed., John Wiley&Sons, Inc., 2000
- Damodaran A., Damodaran on Valuation, 2nd ed., John Wiley&Sons, Inc., 2006
- DeFusco, R. A. et al., Quantitative Investment Analysis, 2nd ed., Wiley, 2007
- Dragot, Victor; Ciobanu, Anamaria; Obreja, Laura; Dragot, Mihaela, Financial
 Managment, Ed. Economic, Bucureti, 2003
- Michelle R. Clayman, Martin S. Fridson, George H. Troughton, Matthew Scanlan
(Foreword by), Corporate Finance: A Practical Approach , 2nd Edition, March 2012
- Michael G. McMillan, CFA, Jerald E. Pinto, Wendy Pirie, CFA, Gerhard Van de Venter,
CFA, Lawrence E. Kochard, CFA (Foreword by), Investments: Principles of Portfolio and
Equity Analysis, March 2011
- Jerald E. Pinto, Elaine Henry, CFA, Thomas R. Robinson, John D. Stowe, CFA, Abby
Cohen, CFA (Foreword by), Equity Asset Valuation, 2nd Edition March 2010
Teaching
8. 2 Seminar/lab activities Remarks
methods
Assessing performance on the basis of accounting reports: Each group
Computing NPV, ROA and ROE vs. break-even point analysis works on
Interactive
Explain how project relative affect the evaluation of a capital case study
seminar
project: (1) independent versus mutually exclusive projects, (2) (investment
project timing, and (3) unlimited funds versus capital rationing. project)
Computation and substantiation of initial investment expenditures,
free cash-flows, residual value, time period and discount rate
-Calculate and interpret the results when evaluating a single capital
project: net present value (NPV), internal rate of return (IRR),
payback period, discounted payback period, average accounting
rate of return (AAR), and profitability index (PI).
-Calculate and interpret accounting income and economic income Interactive Idem
in the context of capital budgeting. seminar
-Determine and interpret the weighted average cost of capital
(WACC) of a company, and explain the necessary adjustments to
derive the cost of capital for a specific project.
-Calculate and analyze the cost of equity capital using the capital
asset pricing model approach, the dividend discount approach, and
the bond yield plus risk premium approach.
Computation and assessment of the selection criteria for investment
projects: NPV, IRR, payback period, profitability index
Calculate and interpret the results when evaluating when evaluating
Interactive Idem
more than one capital project
seminar
Explain the NPV profile, compare and contrast the NPV and IRR
methods, and describe the multiple IRR and no IRR problems that
can arise when calculating an IRR.
Sensitivity analysis, scenario analysis, break-even point analysis,
Monte Carlo simulations, decision trees and real options for an
investment project
Interactive Idem
-Explain the marginal cost of capitals role in determining the net
seminar
present value of a project.
-Explain the country risk premium in the estimation of the cost of
equity for a company situated in a developing market.
Setting the optimal capital structure for financing the investment
project: adjusted NPV and WACC
Interactive Idem
-Describe alternative methods of calculating the weights used in the
seminar
WACC, including the use of the companys target capital structure.
-Discuss the procedure for determining the discount rate for capital
project and illustrate the procedure based on the CAPM.
-Describe and contrast the following valuation models of a capital
project: economic profit (EP), residual income, and claims
valuation.

For a complete understanding by the students of the management of

finance of a company, one seminar will address the subject of
alternative Investments on Derivatives by introduction to basic risk
management applications for derivatives, and credit derivatives.
Bibliography:
- Bodie Z., Kane A., Marcus A., Investments, 6th edition, McGraw-Hill/Irwin, 2005.
- Brealey, R. and Myers, St., Principles of Corporate Finance, seventh edition, The
McGraw-Hill Companies, 2003
- Copeland T., Koller T., Murrin, J., Valuation, measuring and managing the value of
companies, 3rd ed., John Wiley&Sons, Inc., 2000
- Damodaran A., Damodaran on Valuation, 2nd ed., John Wiley&Sons, Inc., 2006
- DeFusco, R. A. et al., Quantitative Investment Analysis, 2nd ed., Wiley, 2007
- Michelle R. Clayman, Martin S. Fridson, George H. Troughton, Matthew Scanlan
(Foreword by), Corporate Finance: A Practical Approach , 2nd Edition, March 2012
- Michael G. McMillan, CFA, Jerald E. Pinto, Wendy Pirie, CFA, Gerhard Van de Venter,
CFA, Lawrence E. Kochard, CFA (Foreword by), Investments: Principles of Portfolio and
Equity Analysis, March 2011
- Jerald E. Pinto, Elaine Henry, CFA, Thomas R. Robinson, John D. Stowe, CFA, Abby
Cohen, CFA (Foreword by), Equity Asset Valuation, 2nd Edition March 2010Stancu, I.,
Stancu Dumitra, Corporate Finance with Excel, Ed Economic, Bucureti, 2010.
- Scientific papers and study cases related to the subject of the course.

9. Corroborating the content of the discipline with the expectations of the epistemic
community, professional associations and representative, relevant employers.
The syllabus of the course is discussed with experts from CFA Romnia (Chartered Financial
Analyst), with specialists and representatives of notable companies in the industrial sector

10. Evaluation
10.3 Share in
Type of activity 10.1 Evaluation criteria 10.2 Evaluation methods the final
grade (%)
Minimum 80% attendance
at scheduled activities.
Final exam (project
10.4 Course Involvement in the lecture 50%
presentation)
with comments, questions
and examples.
 Minimum 80% attendance
at scheduled activities.
10.5 Seminar/lab Final exam (project
Involvement in the lecture 50%
activities presentation)
with comments, questions
and examples
10.6 Minimum performance standard
Elaborating a capital budgeting project

Date of syllabus Signature of the professor for the Signature of the professor for the
proposal course, seminar,

10.09.2013 Prof. univ. dr. Ion Stancu Prof. univ. dr. Ion Stancu

Date of the approval in the Signature of the Head of the department,

department

12.09.2013 Conf. univ. dr. Lucian Ttu