...Corporate Finances Case Study Negative Cash Flow This is the phenomenon most common with the business when they experience several expenditures that surpass the earnings of the business thus resulting into a deficit in meeting some of the business financial obligations. This situation is most common with the business in the first and second years (Ross, Westerfield & Jordan, 2011). When the situation arises, some businesses will resort to loans and equity financing as a way of mitigating the crisis of the business. With view of the Mason Corporation, a prognosis can be done to see into it that the business will be in a financial crisis given the financial trend observed. In this case, the business has to take some precautionary measures to cushion the business form such financial meltdown. In a business, it does not matter the amount of profit your company is making in a day, a month or quarterly, the most important thing to ensure is the continuity of the cash flow of the business. In this case a cash flow forecast is important and an integral part of any business successes. Without doing the forecast, one is destined to have problems in paying suppliers as well as meeting the basic business financial obligation and this will results into failure of the business to operate (Ross, Westerfield & Jordan, 2011). In this regard based on the information of the cash flow of the business, there are several options open for the business to evade the financial crisis. There are...
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...Advanced Corporate Finance Marriott Case 1.The WACC for Marriot Corp is 10.68% if taken alone. Another way would be to use the standardized weights of all the other divisions lodging,restaurant and contract services WACC . This gives us a WACC of 10.21% for the Entire Entity. a.The risk free rate used was 4.58% (Long Term Us Government Bond Returns 1926-1987) as these represent an asset of similar risk and longevity(Lodging can be considered to be a long term business).The Market Risk used was the S&P 500 composite(1926-1987) which was 12.01% .The risk premium in this case turned out to be Market Risk-Risk Free = 7.43% 2. If they are opening a new restaurant or lodging facility one can use Mariotts WACC to decide whether to go ahead with the project proposal or not. 3.Lodging Division WACC = 9.17% , Restaurant Division WACC=11.83% a.For all the divisions the risk free rate used was 4.58% (Long Term Us Government Bond Returns 1926-1987) as these represent an asset of similar risk and longevity.The market risk and market risk premium used for all cases was the S&P index 12.01% and 7.43% respectively. b.Cost of Debt : Marriot Marriott =8.95%(Debt Equivalent 30 Yr Maturity) + 1.3% (Premium)=10.25% Lodging =8.95%(Debt Equivalent 30 Yr Maturity) + 1.1% (Premium)=10.05% Marriott and Lodging were considered to long term business with a shelf life of 30 years Lodging =8.72%(Debt Equivalent 10 Yr Maturity) + 1.4% (Premium)=10.35% Contract =8.72%(Debt Equivalent...
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...POST GRADUATE PROGRAMME IN MANAGEMENT AY 2015-16 TERM: III TITLE OF THE COURSE: FINANCE II CREDITS: 4 Name of the Faculty Arnab Bhattacharya Gaurav Singh Chauhan Kousik Guhathakurta Radha M. Ladkani Faculty Block/ Room No. J BLOCK C-102 A-106 J BLOCK Email Telephone Number arnabb@iimidr.ac.in gauravs@iimidr.ac.in kousikg@iimidr.ac.in; radhal@iimidr.ac.in; 0731-2439589 0731-2439592 0731-2439518 0731-2439698 COURSE DESCRIPTION The second core course in Finance deals with the core corporate finance functions in an applied setting. The participants are exposed to real world corporate finance decisions to be taken up by managers for creating value. Such an exposure is accomplished through a mix of theory and practice. The pedagogy employed reflects a judicious mix of case discussions, lectures and problem solving approach. COURSE OBJECTIVES The objective is to familiarize participants with the three major decision areas of Corporate Finance, viz. the investments, financing and earnings distribution decisions. Subsequently the participants are to be offered an integrated view of the decision areas by discussing the issues in corporate valuations and risk management. The course aims at sharpening the financial decision making skills of the participants. EXPECTED LEARNING OUTCOMES AND ASSOCIATED MEASURES At the end of the course student is expected to accomplish the following learning outcomes. Alignment of Course Learning Outcomes (CLOs)...
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...M Finance Vrije Universiteit Amsterdam - Fac. der Economische Wet. en Bedrijfsk. - M Finance - 2012-2013 Vrije Universiteit Amsterdam - Fac. der Economische Wet. en Bedrijfsk. - M Finance - 2012-2013 I Inhoudsopgave Vak: Institutional Investments and ALM Vak: Valuation and Corporate Governance Vak: Thesis Vak: Asset Pricing Vak: Derivatives and Asset Management Vak: Empirical Finance Vak: Research Project Finance Vak: Financial Markets and Institutions Vak: Private Equity and Behavioral Corporate Finance for Finance Vak: Financial Risk Management (Quantitative Finance) Vak: Real Estate Management Vak: Adv Corporate Finance 4.1 Vak: Valuation and Corporate Governance for Finance Vak: Institutional Investments and ALM for Finance 1 2 3 3 4 6 7 9 10 11 12 13 14 14 Vrije Universiteit Amsterdam - Fac. der Economische Wet. en Bedrijfsk. - M Finance - 2012-2013 II Institutional Investments and ALM Course code Credits Language of tuition Faculty Coordinator Teaching staff Teaching method(s) E_FIN_IIALM () 6.0 English Fac. der Economische Wet. en Bedrijfsk. prof. dr. C.G.E. Boender prof. dr. C.G.E. Boender, prof. dr. T.B.M. Steenkamp Lecture Course objective Achieve advanced knowledge of the investment process of institutional investors, like pension funds and insurers. The main objective is to fully understand the most important theoretical concepts in the institutional investment process and the way these concepts are used in practice. After following the...
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...Project Finance By Godfred Kwame Abledu Abstract Project financing is largely an exercise in the equitable allocation of a project’s risks between the various stakeholders of the project. Indeed, the genesis of the financing technique can be traced back to this principle. Roman and Greek merchants used project financing techniques in order to share the risks inherent to maritime trading. A loan would be advanced to a shipping merchant on the agreement that such loan would be repaid only through the sale of cargo brought back by the voyage (i.e. the financing would be repaid by the ‘internally generated cash flows of the project’, to use modern project financing terminology). The purpose of this paper therefore is to provide an overview of Project Finance. The paper touched on the Motivation for the increased reliance on project financing to fund investments, advantages that project finance has over traditional corporate finance, the major short-comings of project finance and a typical project finance transaction. Table of Contents Assignment 1 1 Abstract 2 A. Introduction 4 B. Why is project financing being increasingly relied on to fund investments? 4 C. What advantages does it have over traditional corporate finance? 6 D. What are the major short-comings of project finance? 7 E. Typical Project finance Transaction 8 References 10 A. Introduction Unlike the traditional loan arrangements, project finance is a financial structure which facilitate the arrangements...
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...SUFFOLK UNIVERSITY SCHOOL OF MANAGEMENT Graduate Programs in Finance Fall Quarter, 2011 FIN MF 820 Financial Policy Thursdays: 7:15-9:55 Instructor: Dr. Shahriar Khaksari, CFA Office: S432 Phone: 573-8366 Email: skhaksari@suffolk.edu The New Corporate Finance: Where Theory Meets Practice Mcgraw-Hill Series in Advanced Topics in Finance and Accounting Course Objective This course is designed to allow students to develop a deep understanding of financial theories, techniques, and models applied to the study of corporate financial decisions. It covers aspects of corporate strategy, industry structure, and the functioning of capital markets. The course consists of three segments. In the first segment, students do a comprehensive analysis of the assigned cases and prepare a written report that includes identification of major issues, alternative approaches, analysis of each alternative, and a concluding part in which students take a clear cut position in how they would approach the problem as a decision maker and defending their position. The Case study is done by groups (three to four students per group). The text analysis should not exceed five pages. It should be typed and double-spaced. A lengthy summary of the case is unnecessary and redundant. The space constraint should discipline students to be concise at differentiating major issues from the less important ones. All the tables, graphs and related...
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...Australian School of Business Banking and Finance FINS3625 Applied Corporate Finance Course Outline Semester 1, 2014 Part A: Course-Specific Information Part B: Key Policies, Student Responsibilies and Support Table of Contents PART A: COURSE-‐SPECIFIC INFORMATION 1 STAFF CONTACT DETAILS 1.1 Communication with Staff 2 COURSE DETAILS 2.1 Teaching Times and Locations 2.2 Units of Credit 2.3 Summary of Course 2.4 Course Aims and Relationship to Other Courses 2.5 Student Learning Outcomes 3 LEARNING AND TEACHING ACTIVITIES 3.1 Approach to Learning and Teaching in the Course 3.2 Learning Activities and Teaching Strategies 4 ASSESSMENT 4.1 Formal Requirements 4.2 Assessment Details 4.3 Assessment Format 4.4 Assignment Submission Procedure 4.5 Late Submission 5 COURSE RESOURCES 6 COURSE EVALUATION AND DEVELOPMENT 7 COURSE SCHEDULE PART B: KEY POLICIES, STUDENT RESPONSIBILITIES AND SUPPORT 8 PROGRAM LEARNING GOALS AND OUTCOMES 9 ACADEMIC HONESTY AND PLAGIARISM 10 STUDENT RESPONSIBILITIES AND...
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...Mergers and Acquisitions Instructor: Kai Li kai.li@sauder.ubc.ca Office Hours: by appointment Teaching Assistant: Zhang Jianing zhangjianing.jenny@gmail.com Office Hours: Wednesday/Friday 4:00 – 6:00pm Course webpage: http://finance.sauder.ubc.ca/~kaili/SAIF as well as on SAIF BB system Course objectives Corporate Finance is the art and science of making important corporate decisions under the guidance of relevant financial theory, advanced quantitative methods, and careful study of previous business decisions and outcomes. Mergers and acquisitions (M&As) offer a lens into a variety of financial management practices, and are a critical time in the life of a corporation. In this course we will use M&As as a focal point in our study of corporate finance. We will draw on, and extend your knowledge of finance topics including valuation, capital structure, financial distress, financial statement analysis, working capital management, securities markets, securities issuance, agency theory, corporate governance, executive compensation, and real and financial derivatives, and apply to M&As. Our study of change of control will include the economic motivations for M&A activity, advanced valuation, transaction structuring, creative financing, risk management, tactics for friendly M&A negotiations and hostile transactions, leveraged buyouts (LBOs), due diligence, and execution. By the end of the course you should: Be able to identify motives for transactions Understand reasons for...
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...FINANCE 611: CORPORATE FINANCE FALL 2015 Prof. Jules H. van Binsbergen Office: 2453 Steinberg Hall-Dietrich Hall Email: julesv@wharton.upenn.edu Office hours: By Appointment Course Website: Available on Canvas COURSE DESCRIPTION This course is an in-depth introduction to finance with an emphasis on applications that are vital for corporate managers. We will discuss most of the major financial decisions made by corporate managers both within the firm and in their interactions with investors. Essential in most of these decisions is the process of valuation, which will be emphasized throughout the course. Topics include criteria for making investment decisions, valuation of financial assets and liabilities, relationships between risk and return, capital structure choice, payout policy, the effective use and valuation of derivative securities (futures, options), and risk management. 1 COURSE MATERIALS Textbook The textbook for the course is: Corporate Finance (plus MyFinanceLab), Jonathan Berk and Peter DeMarzo, 3rd ed., Pearson - Prentice Hall, 2014. (SBN-10: 0-13-342415-4; ISBN-13: 978-0-13342415-7) There are several options for accessing the book and MyFinanceLab. You can purchase the book with MyFinanceLab. You can purchase the e-book and MyFinanceLab. You can purchase or rent the book, and purchase MyFinanceLab separately. Please see the last page of this syllabus for details for details on registering for MyFinanceLab. Other required readings...
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...FI 8320, Spring 2005 Cases and Readings in Corporate Finance [pic] [pic] [pic] [pic] Instructor Professor David C. Nachman Office: RCB 1239 Phone: 651-1696 email: dnachman@gsu.edu Office Hours: W 10:00 am – 2:00 pm, or by appointment Prerequisites FI 8000 CSP: 1, 2, 6 Course Description This course focuses on financial policy-making through case analyses, contemporary readings from the professional literature, and problem solving. The emphasis in the course is on investment and financing decisions and their impact on firm value and on capital market imperfections and their impact on the raising of corporate capital. The course also provides an opportunity for the study of additional topics of special current significance such as capital structure and dividend policy, corporate restructuring and the market for corporate control, real options, risk management, international capital budgeting and financing, financial planning and working capital management, project financing, reorganizations and advanced equity valuation. Course Material Required text material • (BMA) R. A. Brealey, S. C. Myers and F. Allen, Principles of Corporate Finance, 8th ed., McGraw- Hill/Irwin, Inc., 2006. •(RP) Reading Packet •(CP) Case Packet The required text (BMA) and the materials that make up the Case Packet (CP) are available at the GSU Book Store. The Reading Packet (RP) is available at ERes. Contents of (CP) and (RP) (with ERes access instructions) follow...
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...obligation for the exercise ends at 5:30pm Thursday evening. COURSE DESCRIPTION First-Year Financial Management and Policies (FMP) reflects three important features of the Darden MBA Program: (1) it is a general management program; (2) the program, through its frequent use of the case method of instruction, has a practical, pragmatic bias and a decision- orientation; and (3) the first-year program provides the basic training on which students can build in the second-year. Consistent with the first-year program, FMP aims to provide: 1. An Introduction. The course provides the basic framework necessary to pursue further study in finance in the second-year of the MBA program and on his or her own thereafter. This framework is an orientation towards valuation. 2. Basic Mastery. The course emphasizes essentials, the tools and concepts that every general manager, entrepreneur, or manager in other functional fields should know. 3. A Corporate Perspective. Because we seek to understand the problems of general managers, this is a corporate finance course, rather than a course in investments, banking, or personal finance. While elements of these related subjects must be brought to bear, our ultimate focus is corporate policy and tactics. 4. An Underpinning for Addressing Broad and Challenging...
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...Cases in Healthcare Finance Case 16 Solution Case 16 - 1 CASE 16 SOLUTION (11/17/10) Copyright 2010 by FACHE SOUTHERN HOMECARE Cost of Capital Case Information Type This case is nondirected, in that it does not contain a specific list of questions that students must answer. Rather, the case contains general guidance or concerns expressed by various parties that students should consider when developing their solutions. If you, as the instructor, want to convert this case to a directed case, and hence provide your students with very specific guidance questions, you can make available the applicable questions for this case contained in the Case Questions section of the online material for instructors. Purpose This case focuses on the estimation of the cost of capital for a business. There is minimal quantitative analysis required, but there are a significant number of conceptual issues that are addressed in the case. Complexity The calculations are not complex, but many of the issues merit a great deal of discussion and require a sound understanding of cost of capital principles. Model Description The model takes much of the busywork out of the case, so it enables students to spend more time on interpretation and evaluation. Like most case models, the student and instructor versions differ only in regards to the input data. The instructor’s version contains the complete base case inputs, while these inputs are zeroed out in the student version of the model...
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...WESTERN KENTUCKY UNIVERSITY COLLEGE OF BUSINESS ADMINISTRATION FIN 437—Corporate Asset Management Dr. Indudeep S. Chhachhi Fall, 2014 Department of Finance E-Mail: indudeep.chhachhi@wku.edu Office & Office Hours: 327 Grise Hall, 745-2928 M/W 11:15 - 12:30 p.m. T 10:15– 12:30, and by appointment Texts and Calculators Required Stephen Ross, Randolph Westerfield, and Jeffrey Jaffe, Corporate Finance (10th ed., McGraw Hill, Irwin, 2013). Subscription to Connect (McGraw Hill) for Corporate Finance (10th edition) (Connect Plus will give you access to the eBook) Texas Instruments' BA II Plus Professional. Strongly Recommended Subscription to The Wall Street Journal. Course Objectives As the second undergraduate finance course, the purpose of Corporate Asset Management is to provide business students with a greater depth of understanding of topics that are applicable to the financial management of modern business corporation. Learning Objectives After completing this course students will be expected to have mastered topics such as: * Risk and Return * Valuation Process and Capital Budgeting * Financial Policy, Options, and Corporate Restructuring. Prerequisites FIN 330 with a grade of “C” or better and completion of, or current enrollment in, ECON 307. If you have not completed the prerequisite listed above, You should drop the class immediately. It is possible that you will be dropped from the class...
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...engaged managers since the birth of the modern commercial corporation. Surprisingly then dividend policy remains one of the most contested issues in finance. Dividend policy is concerned with financial policies regarding paying cash dividend in the present or paying an increased dividend at a later stage. Whether to issue dividends and what amount, is determined mainly on the basis of the company's unappropriated profit (excess cash) and influenced by the company's long-term earning power. When cash surplus exists and is not needed by the firm, then management is expected to Payout some or all of those surplus earnings in the form of cash dividends or to repurchase the company's stock through a share buyback program. Management must also choose the form of the dividend distribution, generally as cash dividends or via a share buyback. Various factors may be taken into consideration: where shareholders must pay tax on dividends, firms may elect to retain earnings or to perform a stock buyback, in both cases increasing the value of shares outstanding. Alternatively, some companies will pay "dividends" from stock rather than in cash. Our group have selected 3 journals related to the dividend policy in our quest to understand the factors/determinant of the latter and its relationship with investment opportunities and corporate finance. Further the chosen journals concentrated on the research dividend policy affecting firm’s in the emerging market. The following are the reviews...
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...Corporate Finance, 9/e Stephen A. Ross, Massachussetts Institute of Technology Randolph W. Westerfield, University of Southern California Jeffrey F. Jaffe, University of Pennsylvania ISBN: 0073382337 Copyright year: 2010 Table of Contents PART I: Overview 1 Introduction to Corporate Finance 1 1.1 | What Is Corporate Finance? | 1 | | The Balance Sheet Model of the Firm | 1 | | The Financial Manager | 3 | 1.2 | The Corporate Firm | 4 | | The Sole Proprietorship | 4 | | The Partnership | 4 | | The Corporation | 5 | | A Corporation by Another Name . . . | 7 | 1.3 | The Importance of Cash Flows | 7 | 1.4 | The Goal of Financial Management | 10 | | Possible Goals | 11 | | The Goal of Financial Management | 11 | | A More General Goal | 12 | 1.5 | The Agency Problem and Control of the Corporation | 13 | | Agency Relationships | 13 | | Management Goals | 14 | | Do Managers Act in the Stockholders' Interests? | 14 | | Stakeholders | 15 | 1.6 | Regulation | 16 | | The Securities Act of 1933 and the Securities Exchange Act of 1934 | 16 | | Sarbanes-Oxley | 17 | | Summary and Conclusions | 18 | | Concept Questions | 18 | | S&P Problems | 19 | 2 Financial Statements and Cash Flow 20 2.1 | The Balance Sheet | 20 | | Liquidity | 21 | | Debt versus Equity | 22 | | Value versus Cost | 22 | 2.2 | The Income Statement | 23 | | Generally Accepted Accounting Principles | 24 | | Noncash Items | 25...
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