25300 Fundamentals of Business Finance
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particular session, location and mode of offering is the authoritative source
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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
The subject introduces and develops the core technical and theoretical concepts of Finance and illustrates their application to practical financial decision-making problems. Two crucial concepts are introduced: (1) the time-value of money (TVM); and (2) financial risk. TVM techniques are applied to the valuation and management of financial instruments, such as annuities, perpetuities and amortising loans, and to financial securities, such as stocks and bonds. Different ways of measuring financial risk are considered and the fundamental relationship between risk and return is demonstrated empirically and explained. TVM and risk analysis techniques are applied to investment and financing decision problems in a Corporate Finance context. In particular, students learn how firms decide which projects to invest in and how they choose to raise the capital to fund those investments.
Subject learning objectives (SLOs)
| 1. | describe the principles and objectives of financial decision-making |
|---|---|
| 2. | apply time-value of money techniques to the valuation of financial instruments and financial securities |
| 3. | demonstrate an understanding of financial risk, its measurement, and its relationship to return |
| 4. | evaluate a corporate investment proposal and provide a recommendation to accept or reject it |
| 5. | assess a firm’s financing options and propose a strategy for raising capital |
Contribution to the development of graduate attributes
The subject contributes to the Bachelor of Business by providing students with an introduction to the core technical and theoretical concepts of finance. It exposes students to the practical issues around optimally allocating resources among competing alternatives. It introduces appropriate tools, techniques and skills to make informed financial decisions. This subject will develop technical skills relevant to making investment and financing decisions, for example, whether a business should invest in a new project or issue additional equity. These technical skills are linked to the Faculty’s graduate attributes that develop intellectual rigour and creative problem-solving, as well as professional and technical competence. Students will apply technical skills during tutorial classes, online quizzes, group case study and final exam.
This subject contributes to the development of the following graduate attributes:
- Intellectual rigour and innovative problem solving
- Communication and collaboration
- Professional and technical competence
This subject also contributes specifically to introduce the learning required to deliver the following Program Learning Objectives:
- Apply evidence, creativity and critical reasoning to solve business problems (1.1)
- Demonstrate ability to work independently and with others as a member of a team to achieve an agreed goal (2.2)
- Apply technical and professional skills to operate effectively in business (4.1)
Teaching and learning strategies
The teaching and learning strategies include blended and active learning strategies. Students are required to develop their knowledge independently prior to attending class, using lecture materials, videos and textbook readings, as well as assigned homework and online multiple-choice questions. This knowledge will enable active and collaborative learning in class. In-class activities include face-to-face instruction, group collaboration and class discussion of homework problems, question sets and tutorial problems.
Students will receive extensive feedback on their performance throughout the semester. This includes automated feedback on online quizzes and written feedback on case study submissions. Students will also receive feedback on their homework and tutorial answers and verbal feedback on their in-class contributions. The learning management system (LMS) will be used to provide feedback, to disseminate relevant information about the subject, and to facilitate online collaboration via the discussion board.
Content (topics)
- Introduction to finance and the objectives of a firm
- The time-value of money
- Valuation of debt and equity securities
- The risk-return relationship
- Capital budgeting decisions: evaluation methods, cash flow analysis, incremental cash flows, issues in investment evaluation
- Financing decisions: sources of finances, financing mix, cost of capital, issues in capital structure choices
Assessment
Assessment task 1: Online quizzes (Individual)*
| Objective(s): | This addresses subject learning objective(s): 1, 2 and 3 |
|---|---|
| Weight: | 30% |
| Length: | 40 minutes |
| Criteria: |
*Note: Late submission of the assessment task will not be marked and awarded a mark of zero. |
Assessment task 2: Case Study (Group)
| Objective(s): | This addresses subject learning objective(s): 4 |
|---|---|
| Weight: | 20% |
| Criteria: |
|
Assessment task 3: Exam (Individual)
| Objective(s): | This addresses subject learning objective(s): 1, 2, 3, 4 and 5 |
|---|---|
| Weight: | 50% |
| Criteria: |
|
Minimum requirements
Students must achieve at least 50% of the subject’s total marks.
Required texts
All relevant learning material is available on Canvas.
Recommended texts
The following textbooks are optional, you may find them useful, but it is for you to decide whether you purchase them or borrow them from the library. The knowledge and skills that you need to learn and develop is covered sufficiently in the lecture/workshop/tutorial material available on Canvas. If you are the kind of learner that needs the support of the textbook to supplement your learning then use the following textbook:
Essentials of Corporate Finance by Ross, Trayler, Hambusch, Koh, Westerfield and Jordan, 5th Edition, McGraw-Hill, 2019 (referred to as Ross).
Fundamentals of Business Law UTS Custom by Barron, 1st edition, McGraw-Hill, 2015.
References
Robert Parrino, David S. Kidwell, Hue Hwa Au Yong, Michael Dempsey, Nigel Morkel-Kingsbury, Samson Ekanayake, Jennifer James, James Murray, Fundamentals of Corporate Finance, Australasian 3rd Edition, Wiley, 2018.