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25557 Corporate Finance: Theory and Practice

Warning: The information on this page is indicative. The subject outline for a 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 2019 is available in the Archives.

UTS: Business: Finance
Credit points: 6 cp

Subject level:

Undergraduate

Result type: Grade and marks

Requisite(s): 25300 Fundamentals of Business Finance
These requisites may not apply to students in certain courses.
There 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)

Upon successful completion of this subject students should be able to:
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:

  • 1.2: Demonstrate inter-relationships between differing business and related disciplines
  • 4.1: Critically analyse business decisions in terms of ethical practice and social responsibility
  • 4.2: Critically analyse sustainability principles for various stakeholders in relation to business contexts

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:

  1. Weekly lectures - This provides the main vehicle for the development of course content. Each week new material builds upon and develops earlier material.
  2. Weekly tutorials - Students are required to attempt the assigned problems prior to attending the classes. To promote self-managed and active learning experience, students will be asked to discuss their prepared answers in class.
  3. Pre-class online videos - Students are required to watch a number of online videos before coming to classes. This complies with UTS Flipped Learning approach that students access digital resources and undertake preliminary tasks prior to coming to classes.
  4. Pre-class online articles - Students are required to read the online articles before the classes, and discuss them in classes. This forms part of the Flipped Active Learning and collaborative learning activities.
  5. UTSOnline engagement - To stimulate collaborative learning, students are encouraged to use the online discussion board as a peer-support active and collaborative learning environment.
  6. Online multiple-choice question tests - To provide opportunities for students to receive feedback, various MCQ tests are available online during the session. The first test on the initial two topics is to provide early feedback to students before week 4. Other tests are to provide further self-assessment before the final examination.
  7. Weekly Self-Learning questions - To provide self-assessment and feedback, students are encouraged to attempt some basic problems chosen from the textbook. These problems help students understand the basic finance theories.

All the above teaching and learning materials are examinable.

Content (topics)

  • Estimating the cash flows and cost of capital of a project;
  • Evaluating and mitigating the risks of a project;
  • Measuring corporate performance;
  • Projects as real options;
  • The effect of industry competition on a firm’s profitability;
  • Estimating the firm’s cost of capital;
  • Determining the firm’s optimal financing and dividend policy.

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%

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

  • "Custom Corporate Finance: Theory and Practice 2/e" by Richard Brealey, 2015, McGraw-Hill. ISBN 9781308632780. This "custom book" is based on nine selected chapters from Brealey, Myers and Allen "Principles of Corporate Finance" 11th edition 2014.
  • Lecture slides are available on UTSOnline. The lecture notes contain only key points and are not a substitute for the recommended textbook.