Corporate Finance Syllabus and Outline: Aswath Damodaran
Corporate Finance Syllabus and Outline: Aswath Damodaran
Corporate Finance Syllabus and Outline: Aswath Damodaran
http://www.damodaran.com
This class: http://www.stern.nyu.edu/~adamodar/New_Home_Page/triumdesc.html
Aswath Damodaran
Aswath Damodaran
General Information
Ofce: Room 9-96 Phone: 998-0340 E-mail: adamodar@stern.nyu.edu Home Page: http://www.stern.nyu.edu/~adamodar
Aswath Damodaran
Every decision that a business makes has nancial implications, and any decision which affects the nances of a business is a corporate nance decision. Dened broadly, everything that a business does ts under the rubric of corporate nance.
Aswath Damodaran
Course Objectives
To give you the capacity to understand the theory and apply, in real world situations, the techniques that have been developed in corporate nance. If it cannot be applied, who cares?. To give you the big picture of corporate nance so that you can understand how things t together. You can forget the details, but dont miss the story. To show you that corporate nance is fun. It takes more work, but it is more fun
Aswath Damodaran
Liabilities
Short-term liabilities of the firm Debt obligations of firm Other long-term obligations Equity investment in firm
Aswath Damodaran
Assets
Existing Investments Generate cashflows today Includes long lived (fixed) and short-lived(working capital) assets Expected Value that will be created by future investments Assets in Place Debt
Liabilities
Fixed Claim on cash flows Little or No role in management Fixed Maturity Tax Deductible
Growth Assets
Equity
Aswath Damodaran
Liabilities
$ 7 billion
$ 3 billion
Equity
$ 11 billion
Liabilities
$ 0.12 billion
$ 71.12 billion
Equity
$ 77 billion
Aswath Damodaran
First Principles
Invest in projects that yield a return greater than the minimum acceptable hurdle rate.
The hurdle rate should be higher for riskier projects and reect the nancing mix used - owners funds (equity) or borrowed money (debt)
Returns on projects should be measured based on cash ows generated and the timing of these cash ows; they should also consider both positive and negative side effects of these projects.
Choose a nancing mix that minimizes the hurdle rate and matches the assets being nanced.
If there are not enough investments that earn the hurdle rate, return the cash to stockholders.
The form of returns - dividends and stock buybacks - will depend upon the stockholders characteristics.
Aswath Damodaran
Session 1
Session 1-2
Session 2,3
Session 4-5
Session 5
Session 5-6
Aswath Damodaran
Required Material
I. Text: Lecture Notes
II. Supplementary Text:
Applied Corporate Finance, Second Edition by Aswath Damodaran
III. Practice Problems/Exams:
Every quiz I have ever given in any corporate nance class is available on my web site, with solutions.
There are also problems in the supplementary book, and solutions.
IV. Computer Spreadsheet Programs: accessible on my home page www.stern.nyu.edu/~adamodar
V. Real World Readings
Wall Street Journal, New York Times, Financial Times
Fortune, Forbes, BusinessWeek and Barrons
Aswath Damodaran
10
Aswath Damodaran
11
Other Readings
Aswath Damodaran
12
There will be two quizzes, one at the start of session 3 and the other at the start of session 5.
Each quiz will be 30 minutes in length and cover the material from the prior day.
The quizzes are open book, open notes
Each quiz will be worth 25% of your grade.
There will also be a comprehensive project that will be due a few weeks after the class ends. This project will be worth 50% of your grade. You can get more information on what the project involves by going to the website for the class.
Aswath Damodaran
13