FIN 540: Corporate Finance I – Lecture (Capital Structure, Cost of Capital and Valuation)

Contents
Corporate Finance studies how corporations finance their operations. The emphasis of this part of the curriculum is on shareholder value and company valuation. We will also study the cost of capital, introduce theories of capital structure, and initial public offerings. The objective of this course is to introduce the fundamental theoretical concepts of company valuation.

Learning outcomes
After completing this course, students will know and understand state-of-the-art tools such as DCF, Residual Income, EVA, and Multiples. In particular, participants will know how to determine the cost of capital for corporations and projects using real world data. Further, participants will learn how to identify value drivers by applying financial ratio analysis. Students will also be familiar with event studies in order to analyse how capital markets react to important corporate events like merger announcements or earnings announcements.

Necessary prerequisites
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Recommended prerequisites
Every student participating in this course should have completed the equivalent of the 2-semester finance module, which is part of the Mannheim Bachelor program. The lectures generally assume basic knowledge in accounting (balance sheets, income statements, financial ratios), finance (present value methods, portfolio theory, CAPM), mathematics (calculus, optimization) and statistics (mean, variance, standard deviation, univariate and multivariate regressions). The course assumes that students already manage the material in Brealey, Myers, Allen, Corporate Finance, (McGraw-Hill, 10th edition, 2010), chapters 1–19.

Examiner Performing lecturer

Prof. Ernst Maug, Ph.D. Marc Gabarro, Ph.D.