25557 Corporate Finance: Theory and Practice

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Subject handbook information prior to 2024 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 ethical and sustainable practice incorporating Indigenous issue affect value creation
3.	identify the relevant parameters affecting a project; estimate their values using different approaches; and understand the implications of each approach

Course intended learning outcomes (CILOs)

This subject also contributes specifically to the following program learning objectives:

Demonstrate ability to work independently and with others as a member of a team to achieve an agreed goal (2.2)
Make judgements and business decisions consistent with the principles of social responsibility, inclusion and knowledge of Indigenous peoples (3.1)

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:

Communication and collaboration
Social responsibility and cultural awareness

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:

Weekly lectures - This provides the main vehicle for the development of course content. Each week 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.

(i)Pre-class online videos - Students are expected to watch online videos before coming to classes.

(ii) 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.

UTS Learning Management System engagement – Students will be directed to the online discussion board, where they can lodge questions and suggest solutions to other student’s questions. This forum will stimulate debate and collaborative learning in a safe environment. Feedback will be given and moderated by the subject coordinator.

Online multiple-choice question tests - To provide opportunities for students to receive feedback, various MCQ tests are available online during the session.

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 basic finance theories.

Feedback will be provided for all in class presentations as well as the quiz and assignment in a timely fashion. These will include feedback on the assessment provided as well as ways to improve their work.

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;
Reviewing business decisions in terms of sustainability principles, ethical practices and Indigenous issues.

Assessment

Assessment task 1: Practical Assignment (Group)

Objective(s):	This addresses subject learning objective(s): 1, 2 and 3 This addresses program learning objectives(s): 2.2
Weight:	30%
Length:	Students will submit a written report based on the in-class case studies/discussions. The report will not exceed 3,000 words.
Criteria:	Assignments will be marked based on: Ability to analyze the optimal capital structure of a firm/project. Ability to quantify and estimate the cost of capital associated with a firm or project. Ability to work with team members on a complex task that necessarily confronts the uncertainty associated with forecasting and subjective estimation.

Assessment task 2: Practical Assignment (Individual)

Objective(s):	This addresses subject learning objective(s): 1 and 3
Weight:	30%
Length:	Students will complete an Excel spreadsheet exercise.
Criteria:	Assignments will be marked based on: Ability to analyze the optimal capital structure of a firm/project. Ability to quantify and estimate the cost of capital associated with a firm or project. Ability to assess the merits of leasing versus owning capital assets.

Assessment task 3: Quizzes (Individual)*

Objective(s):	This addresses subject learning objective(s): 1, 2 and 3 This addresses program learning objectives(s): 3.1
Weight:	40%
Length:	60 minutes
Criteria:	Questions will be marked based on: Quantitative analysis of the factors that determines the optimal funding structures of a firm/project. Critical evaluation of the interaction (or, lack thereof) between ethics/sustainability and firm/project value. Quantitative analysis of the factors underpinning the value of a firm/project. Ability to evaluate the alignment of a firm’s operations with contemporary ethical implications, corporate social responsibility, corporate governance, and impact on indigenous peoples. *Note: Late submission of the assessment task will not be marked and awarded a mark of zero.

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.