Subject
Finance
Program
Bachelor’s degree (BBA)
Location
Côte-des-Neiges
Instruction mode
Credits
3
Description
Covers the basics of corporate finance: investment decisions, financing structures, and dividend policy. Builds upon concepts introduced in the FINA 10200(A) course.
This course is a continuation of the Basic Corporate Finance course (FINA 10200A) and aims to help students master the major financial decisions faced by a company. It will first address investment decisions and the calculation of the cost of capital, which are central to evaluating value creation. The course will then examine financing decisions-specifically, choosing the optimal mix of debt and equity-as well as policies for distributing wealth to shareholders, particularly through dividends and share buybacks. Finally, special attention will be given to leveraged buyouts, a financing technique that concretely illustrates the interaction between these various financial decisions. This course relies on case studies and practical applications to develop the financial judgment necessary for making strategic business decisions.
Themes covered
Investment decisions: project evaluation criteria determining cash flows and calculating NPV
Weighted average cost of capital
Risk consideration in the valuation of debt and equity securities and adjustment for project risk
Advanced applications of NPV (inflation foreign projects replacement timing) and its limitations (NPV-IRR conflicts mutually exclusive projects)
Real options and the Black-Scholes model
Optimal capital structure: Modigliani & Miller theories static trade-off theory Miller's theory and information asymmetry
Financial restructuring decisions and the choice of debt and equity types based on the firm's life cycle
Wealth distribution policy: dividend policy share buybacks and neutrality according to M&M
Leveraged buyouts
Important notes
Course in French : FINA 20205Prerequisite(s) : FINA 10200(A)