This module is not currently running in 2024 to 2025.
This module advances the topics learnt in BUSN3750 Fundamentals of Finance and Investments. In this framework, the module considers the impact of inflation, capital rationing, and taxation in capital budgeting decisions along with the understanding and use of sensitivity analysis in the context of risk in project appraisal. It then proceeds to introduce risk free asset in portfolio formation and concludes with learning about Capital Asset Pricing Model. Students also learn about the impact of taxes on capital structure and weighted average cost of capital. The module also covers another (in addition to investment and financing decisions) major financial management decision, that is, the dividend policy of the firm. Finally, the students also learn about mergers and acquisitions in the context of corporate restructuring. In sum, this module aims to cover the following topics:
- Impact of inflation, capital rationing and taxation on investment appraisal and capital budgeting techniques
- Risk free rate, portfolio theory, and Capital Asset Pricing Model
- Impact of taxes on costs of different sources of finance
- Capital structure and weighted average cost of capital in the presence of taxes
- Dividend based valuation and factors affecting dividend decision
The module will be taught by lectures, seminars and private study.
Total contact hours: 32
Private study hours: 118
Total study hours: 150
Main assessment methods:
VLE Test – 10%
Group Report – 2000 Words: 20%
Examination – two-hour: 70%
Reassessment methods:
100% Examination
Reading list (Indicative list, current at time of publication. Reading lists will be published annually)
Arnold, G. (2019) Corporate Financial Management, 6th Edition. London: Pearson Education
Berk, J.B. and Demarzo, P.M. (2019) Corporate Finance, 5th Edition. Harlow: Pearson Education.
Clayman, M.R., Fridson, M.S., Troughton, G.H., and Scanlan, M. (2012) Corporate Finance: A Practical Approach, 2nd Edition, CFA Institute Investment Series Set, Hoboken, N.J.: Wiley.
Hillier, D., Ross, S., Westfield, R., Jaffe, J., and Jordan, B. (2021) Corporate Finance, 4th European Edition, London: McGraw-Hill
McLaney, E. (2017) Business Finance Theory and Practice, 11th Edition, Harlow: Pearson Education
See the library reading list for this module (Medway)
The intended subject specific learning outcomes.
On successfully completing the module students will be able to:
- Demonstrate knowledge and critical understanding of various practical issues related to capital budgeting techniques and the ability to apply these techniques in project appraisal under uncertainty.
- Demonstrate knowledge and critical understanding of portfolio theory and Capital Asset Pricing Model in the context of financial markets investments.
- Value debt and equity sources of finance as well as estimation of the cost of capital, all in the presence of taxes.
- Demonstrate knowledge and critical understanding of various factors that affect dividend policy decision.
The intended generic learning outcomes.
On successfully completing the module students will be able to:
- Research, plan, and work independently.
- Communicate effectively to a variety of audiences and/or using a variety of methods.
- Apply quantitative and problem solving techniques to complete or abstract data.
- Critically evaluate arguments and assumptions and make judgements to offer alternative solutions.
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