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25765 Corporate Finance

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 2018 is available in the Archives.

UTS: Business: Finance
Credit points: 6 cp

Subject level:

Postgraduate

Result type: Grade and marks

Requisite(s): 25742 Financial Management OR 25746 Financial Management: Concepts and Applications
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.

Description

This subject exposes students to advanced corporate financial management by initially considering an economy with no risks and no market imperfections and then relaxing these assumptions to consider a more realistic economic environment. Topics covered include capital budgeting, cost of capital, capital structure and valuation, dividend policy and mergers and acquisition. Particular attention is paid to different tax environments and agency relationships within the firm.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. apply corporate financial theory, policy and practice in a range of firm
2. analyse the essential nature of risk and uncertainty and apply them in capital budgeting, financial structure, cost of capital and dividend policy
3. explain the critical financial decisions in a simple world of certainty, and apply asset-pricing models that incorporate risk reviewing their implications for these financial decisions
4. evaluate the behavioural assumptions embedded in the asset pricing models and examine the implications of the resulting agency relationships for corporate financial practice.

Course intended learning outcomes (CILOs)

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

  • Apply complex business concepts taking into account the broader environmental context (1.2)
  • Apply innovative problem solving processes to address complex business issues (2.1)

Contribution to the development of graduate attributes

This subject provides an up-to-date understanding of the finance functions within a large organisation under different tax regimes. It also integrates with other courses offered within the program. For example, investment decision-making requires consideration of risk/return relationships and financing costs. Corporate financial analysis requires substantial examination of debt/equity and dividend decisions. International finance requires international investment, global financing and cost of capital decisions.

Teaching and learning strategies

The subject will be taught using a combination of lectures and workshops. These classes will be supplemented with both printed and electronic learning materials and resources. UTSOnline will be used to share information and encourage interaction between staff and students. Students will also use appropriate computer software such as Excel and Word to complete assigned tasks.

Some lecture-related videos will be made available to students before class, and students should be prepared to discuss these in class. Similarly, some topical newspaper or journal articles will be included in the course notes booklet after various lectures, and students should be prepared to discuss these in class. These videos and articles will bridge the gap between academic theories and practice.

There will be a group assignment, which will involve students collaboratively analysing the capital structure of an ASX listed company and producing a written report of their analysis. This exercise will allow students to gain valuable experience in applying their subject learning in the real-world context. Students are expected to work on the group assignment collaboratively. Please consult the document “Working Arrangements for the Group Case Study” for further details on how the group assignment work should be planned and organised among the group members.

Content (topics)

  • Fisher’s Separation Theorem and the net present value approach to capital budgeting and valuation
  • Cost of capital and risk analysis, including decision trees, sensitivity analysis, and scenario analysis
  • The use of options in corporate finance
  • Capital structure and financing: taxes, bankruptcy costs, stakeholder theory, agency theory and signalling theory
  • Payout policy and the Australian imputation system
  • Valuation and capital budgeting with leverage
  • Mergers and acquisitions

Assessment

Assessment task 1: Case Study (Group)

Objective(s):

This addresses subject learning objective(s):

1, 2 and 3

Weight: 30%

Assessment task 2: Final Exam (Individual)

Intent:

This subject contributes specifically to the following program learning objectives for the courses C04048 Master of Finance and C04038 Master of Financial Analysis:

  • be able to apply business concepts taking into account the broader environmental context (1.2)
  • apply innovative problem solving processes to address business issues (2.1)
Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

This addresses program learning objectives(s):

1.2 and 2.1

Weight: 70%

Minimum requirements

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

Required texts

Primary Textbook

25765 Corporate Finance 6e

  • This is a Custom Publication from McGraw-Hill and is sold at Zookal.com (ISBN: 9781307195972):

https://www.zookal.com/25765-corporate-finance-6e-customised-9781307195972

  • Please note that the printed copy of the book is on back order, and may take some time to be delivered. So if you plan to buy a printed copy of the textbook, please order early.
  • The custom publication is also available in an eBook format (ISBN: 9781307196849)
  • Please follow the link below to purchase the eBook:

https://www.mheducation.com.au/9781307196849-aus-ebook-25765-corporate-finance-6e-customised

  • This Custim Publication includes chapters from the following textbooks:
    • Ross, Westerfield & Jaffee, Corporate Finance, 11th ed., 2016, McGraw-Hill (RWJ)
    • Brealey, Myers & Allen, Principles of Corporate Finance, 11 th ed., 2014, McGraw-Hill (BMA)
  • Copies of the Custom Publication are on reserve at UTS Library

Learning Material

PDF copies of all learning material is available on UTSOnline including:

  • The lecture slides contain only the main points of the subject matter, and allow for discussion around those points in the classroom. The slides are not a substitute for the textbook!
  • Tutorial questions and answers
  • Various supplementary material

Other Material

Chapters from Grinblatt & Titman Textbook:

  • We will use a few chapters from Grinblatt & Titman, Financial Markets and Corporate Strategy, 2nd ed., 2002, Irwin/McGraw Hill (GT)

The chapters used for the dividend lecture that are not included in the Custom Publication will be available as eReadings via the UTS Library. These include:

  • Sections of chapters from Brealey, Myers, Partington & Robinson, Principles of Corporate Finance, Australian Ed., 2000, McGraw-Hill (BMPR)
  • Two chapters from CFA program curriculum books

Additional supplementary material may be handed out in class and/or posted on UTSOnline

Faculty of Business (2014), Guide to Writing Assignments, available at http://www.uts.edu.au/sites/default/files/business-writing-guide-2014.pdf

References

UTS Online

We will use UTSOnline at level 2 for communicating information and for facilitating un-moderated discussions

  • UTSOnline will be used to make announcements about the subject
  • Students must check UTSOnline at least once a week
  • Course coordinator and lecturers will not respond to questions or comments made on the discussion boards, but you may use the discussion board facility to talk with other students, e. g., to find group members
  • Electronic copies of subject materials such as subject outline and lecture notes, and students' assessment marks will posted online