20507 Corporate Finance
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particular session, location and mode of offering is the authoritative source
of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.
Subject handbook information prior to 2024 is available in the Archives.
Credit points: 6 cp
Subject level:
Undergraduate
Result type: Grade and marksThere are course requisites for this subject. See access conditions.
Description
This subject develops the concepts of corporate finance introduced in 25300 Fundamentals of Business Finance. This includes an examination of analytical techniques used in capital budgeting decisions and the capital structure decisions. Capital structure, estimation of the cost of capital and the dividend decision are examined from empirical and theoretical viewpoints.
Subject learning objectives (SLOs)
| 1. | analyse and evaluate investment projects; identify and mitigate the underlying risks; and determine the appropriate funding structures |
|---|---|
| 2. | explain how firms can use market prices in their investment decisions and how their decisions are reflected in market prices; how incentives interfere with the process of value creation |
| 3. | identify the relevant parameters affecting a project; estimate their values using different approaches; and understand the implications of each approach |
Contribution to the development of graduate attributes
The subject contributes to the aim of preparing students to commence a fulfilling and effective career in business, especially in finance-related professions. Its specific contributions are to enable students to develop their knowledge and understanding of the theory and practice of firm’s investment, financing and dividend decisions.
This subject contributes to the development of the following graduate attributes:
- Business knowledge and concepts
- Attitudes and values
This subject also contributes specifically to develop the following Program Learning Objectives:
- Show an understanding of essential concepts necessary for a career in business (1.1)
- Demonstrate interrelationships between differing business disciplines (1.2)
- Critically analyse the core professional obligations, values and operations of organisations, including sustainability in teams in an inclusive manner (4.3)
Teaching and learning strategies
Lectures present and analyse relevant theories of financial decision making and practical exercises and applications are examined in tutorials as well as in the subject’s case study. Appropriate use is made of learning.futures practices, such as the use of on-line and off-line learning opportunities and flipped learning. The teaching and learning activities consist of:
Lectures -This provides the main vehicle for the development of course content. Each new material builds upon and develops earlier material.
Weekly tutorials - Students are required to attempt the assigned problems prior to attending the classes. To promote a self-managed and active learning experience, students will be asked to discuss their prepared answers in class.
In-class activities – students will be allocated problems to prepare answers for which they will present to the class in the following week. These will provide information to the other students and will be followed by class discussion.
Students will be allocated a presentation to provide a mark and feedback on to the lecturer and will be required to ask a question or make a comment after the presentation.
- Pre-class online videos - Students are expected to watch online videos before coming to classes.
- Pre-class online articles - Students are expected to read online articles before the classes and discuss them in classes.
The videos and readings will be made up of technical knowledge and real-world examples to stimulate understanding of how the subject/topics relate to and impact corporate finance in practice.
Content (topics)
- Corporate Objectives: Stakeholder vs. Stockholder capitalism and their implications for business objectives.
- Corporate Governance: Systems and processes for directing and controlling companies
- Capital Budgeting: Evaluating and prioritizing investment opportunities
- Capital Structure: Balancing equity and debt to maximize value
- Payout Policies: Determining dividend distributions and share repurchases
- Raising Equity and Debt: Procedures and considerations for issuing equity and debt
- Leasing: Analysing the financial benefits and implications of leasing vs. buying
Assessment
Assessment task 1: Assignment (Group)
| Objective(s): | This addresses subject learning objective(s): 1, 2 and 3 |
|---|---|
| Weight: | 20% |
Assessment task 2: In-class quizzes (Individual)*
| Objective(s): | This addresses subject learning objective(s): 1 and 2 |
|---|---|
| Weight: | 30% |
| Criteria: | *Note: Late submission of the assessment task will not be marked and awarded a mark of zero. Students who fail to attend the quiz will have the weighting of that assessment task added to the final examination conditional on the students submitting, receiving approval and complying with the requirements of special consideration in accordance with the UTS rules. If the composite mark for the final exam is more than 50%, the UTS rules on borderline result (range of 45-49, inclusive) shall apply whereby students will be allowed to undertake a supplementary final examination. Where a student completes and passes a supplementary examination, the maximum mark awarded for the subject will be 50 Pass. |
Assessment task 3: Final Examination (Individual)
| Objective(s): | This addresses subject learning objective(s): 1 and 2 |
|---|---|
| Weight: | 50% |
Minimum requirements
Students must achieve at least 50% of the subject’s total marks.
Required texts
"Principles of Corporate Finance, 14th Edition" by Brealey, Myers, Allen, and Edmans, 2021.
"Corporate Finance, 5th Edition" by Berk and DeMarzo, 2020.
Lecture slides can be accessed on Canvas. Note that these slides highlight key points and should not replace the textbooks.