JAIPURIA INSTITUTE OF MANAGEMENT

PGDM; TRIMESTER III; ACADEMIC YEAR 2019-20

Course Code and title FIN ..: Advanced Corporate Finance

Credits 3

Term and Year III Term, 2019 -20

Course Pre-requisite(s) Student must have successfully completed the

fundamental and core finance courses

Course Requirement(s) Basics of Accounting & Corporate Finance;

Excel Spread Sheet Application

Course Schedule (day and time of class) 9:00 AM – 10: 15 AM

10:30 AM – 11:45 AM

On Monday, Wednesday and Thursday every

week

Classroom # (Location)

Course Instructor Rahul Krishna

Email [email protected]

Telephone Number (for office appointments) 9910883314

Student Consultation Hours Anytime on whatsapp or phone

Office location
Course Overview

The course has been designed keeping in mind that students have already studied the introductory
courses on accounting and corporate finance during their earlier trimesters. This course is intended
to develop the understanding of students about the advance level of financial management
decisions

.
The objective of this course is to enable students to develop a deep understanding about the
advanced topics of corporate finance which concern finance managers while taking financial
decisions for firms which are operating in today’s sophisticated and complicated market scenario.
The course will cover five important extensions of Financial Management, that is, advanced capital
budgeting; Valuation; Corporate Restructuring; Risk Management; and International Financial
Management.

Learning Outcomes

After undergoing this course, the participants will be able to:

CLO1: Compute the market value of equity and market value of firm.
CLO2: Analyze risk in capital budgeting decisions.
CLO3: Analyze financial risk management decisions.
CLO4: Analyze corporate restructuring decisions such as mergers and acquisitions. CLO5:
Analyze financial decisions in the context of multinational corporations.

Text Book:
Corporate Finance by Parrino , Kidwell, Bates

Reference Book:

Brealey, Myers ,Allen and Mohanty, Principles of Corporate

Finance, TMH, Tenth Edition
Assessment
Sl. Components Weightage (%)
01 Quizzes 15
02 Project/Assignment 20
03 Discussion Forum/Class participation 5
03 Mid-term Examination 20
04 End-term examination 40

Description of assessment component:

1. Quizzes: There shall be four quizzes, equally distributed before and after mid-term
examination. – Best 3 of 4 will be used for evaluation; value of 5 marks each for 4 quizzes.
Quizzes will be almost equally spaced as per the session plan.

2. Project/Assignment:
 a) It will be on group (group of 6 students as standard) basis.

b) Project/assignment will involve application of course content to the Indian Listed

Companies on NSE (www.nseindia.com) for 10 various sectors.

c) These 10 companies belonging to 10 different sectors will be assigned to these 10

groups having 6 students each or 5/7 students in case the number of students in the
class are not in multiple of 6.

d) Every group needs to do the following for the company assigned to them:

1) Do Sector Analysis in bullet points – 1/2 slide

2) Do Company Analysis in bullet points – 1/2 slides

3) Perform FCFF based valuation and arrive at enterprise value – 1 Slide

4) Perform FCFE based valuation and arrive at equity value and per share value of the
Company – 1 Slide

5) Perform Relative Valuation based on relevant multiples- 1 Slide

6) List out Corporate and M&A Events associated with these companies and their
implications on share prices 2-5 Slides

7) Conclusion Slide

Presentation will be of 15-20 minutes for each group. Should be crisp and analytical. No need of
stories. 2-3 sessions will be associated with presentation/project.

3. Mid-term examination: It will be based on the syllabus covered till date.

4. End-term examination: It will be based on entire syllabus.

Session Plan

Session Topic/Sub Topic Session Details

No.
1 Introduction of Text Chapter 6
Course : Course Book/
overview, Reading
Pedagogy Discussion
CLO
SLO

2. Approaches to Text Chapter 6 and Notes

Valuation. Book /
Reading
Pedagogy Class discussion
 CLO 1

SLO At the end of the session, the student will be able to

understand different approaches to valuation.

3 Valuation of Equity Text Chapter 9 and Notes

Using Dividend Book/
Discount Model. Reading
Pedagogy Class discussion; Examples and Concepts

CLO 1

SLO At the end of the session, the student will be able to

compute market value of equity of a firm using
traditional dividend discount mode1.
4 Valuation of Equity Text Chapter 11,13,18 and Notes
Using FCFE Model. Book/
Reading
Class discussion; Examples and Concepts
Pedagogy

CLO 1

SLO At the end of the session, the student will be able to

compute market value of equity of a firm using free cash
flow to equity model.
5 Valuation of Firm Text Chapter 11,13,18 and Notes
Using FCFF Model. Book/
Reading
Pedagogy Class discussion; Examples and Concepts
CLO 1
SLO At the end of the session, the student will be able to
compute market value of a firm using free cash flow to
firm model.
6 Valuation of Equity Text Notes
and Firm Using Book/
Earning Multiples. Reading
Pedagogy Class discussion; Examples and Concepts
CLO 1
SLO At the end of the session, the student will be able to
compute market value of equity and market value of a
firm using earning multiples methods.
7 Measurement of Risk Text Chapter 7
in Capital Budgeting Book/
Decisions. Reading
Pedagogy Class discussion; Case Exercise; Excel Spreadsheet
Application.
CLO 2
SLO At the end of the session, the student will be able to
measure risk of a project.
8 Risk analysis in capital Text Chapter 12

budgeting- Sensitivity Book/

analysis Reading
Pedagogy Class discussion; Case Exercise; Excel Spreadsheet
Application.
CLO 2
SLO At the end of the session, the student will be able to
analyze the impact of change in different factors (price,
variable cost, risk, quantity and fixed cost) on capital
budgeting decisions.
9 Risk Analysis in Text Chapter 11
Capital Budgeting- Book/
Scenario Analysis. Reading
Pedagogy Class discussion; Case Exercise; Excel Spreadsheet
Application.
CLO 4
SLO At the end of the session, the student will be able to
analyze risk in capital budgeting decisions under
different scenario (Base, Worst and Best).
10 Risk Analysis in Text Chapter 12
Capital Budgeting- Book/
Simulation Analysis. Reading
Pedagogy Class discussion; Case Exercise; Excel Spreadsheet
Application.
CLO 2
SLO At the end of the session, the student will be able to
analyze risk in capital budgeting decisions using
Simulation (by combining sensitivities, probability
distribution and correlation among the input variables).

11 Risk Analysis in Text Chapter 11; Handout

Capital Book/
Budgeting- Risk Reading
Adjusted Discount
Rate and Certainty
Pedagogy Class discussion; Examples and Concepts
CLO 2
 Equivalent Approach. SLO At the end of the session, the student will be able to
understand the application of risk adjusted discount rate
and certainty equivalent approach in capital budgeting
decisions.
12 Investment decisions Text Chapter 12, Handout.
with capital rationing. Book/
Reading
Pedagogy Class discussion; Examples and Concepts
CLO 2
SLO At the end of the session, the student will be able to
analyze capital budgeting decisions under the condition
of capital rationing (scarcity of capital).

13 Overview of Text Chapter 20, Handout

Financial Derivatives Book/
Reading
Pedagogy Class discussion; Examples and Concepts

CLO 3

SLO At the end of the session, the student will be able to

develop understanding of derivative products which
used to hedge different kinds of risk.
14 Managing Risk Text Chapter 20 , Handout
through Futures Book/
Reading
Pedagogy Class discussion; Examples and Concepts

CLO 3

SLO At the end of the session, the student will be able

manage price risk using futures.
15 Managing Risk Text Chapter 20, Handout
through Options Book/
Reading
Pedagogy Class discussion; Examples and Concepts

CLO 3

SLO At the end of the session, the student will be able

manage price risk using options.
16 Managing Interest Text Chapter 20, Handout
Rate Risk through Book/
Interest Rate Swap. Reading
 Pedagogy Class discussion; Examples and Concepts

CLO 3

SLO At the end of the session, the student will be able

manage interest rate risk using interest rate swap.
17 Mergers and Text Handouts and Notes
Acquisitions- Book/
Overview Reading
Pedagogy Class discussion; Examples and Concepts

CLO 4

SLO At the end of the session, the student will be able to

understand the rationale behind mergers and
acquisitions.

18 Merger Analysis Text Handouts and Notes

Book/
Reading
Pedagogy Class discussion; Examples and Concepts

CLO 4

SLO At the end of the session, the student will be able to

analyze mergers and acquisitions decisions.
19 Demerger Analysis Text Handouts and Notes
Book/
Reading
Pedagogy Class discussion; Examples and Concepts

CLO 4

SLO At the end of the session, the student will be able to

analyze demerger decisions (Spin off, split up and
divestiture).
20 Management Text
Takeover – Value of Book/ Handouts and Notes
Corporate Control Reading
Pedagogy Class discussion; Examples and Concepts

CLO 4
SLO At the end of the session, the student will be able to
analyze management takeover decisions.
21 Foreign Exchange Text Chapter 21, Handouts and Notes
Market – Exchange Book/
Rate Determination Reading
Pedagogy Class discussion; Examples and Concepts

CLO 5

SLO At the end of the session, the student will be able to

understand how the exchange rates are determined in
foreign exchange markets.
22 Managing Foreign Text Chapter 21, Handouts and Notes
Exchange Risk Book/
Reading
Pedagogy Class discussion; Examples and Concepts

CLO 5

SLO At the end of the session, the student will be able to

manage foreign exchange risk using derivative products.

23 Multinational Text
Capital Budgeting Book/ Handouts and Notes
Decisions. Reading

Pedagogy
Class discussion; Examples and Concepts

CLO 5

SLO At the end of the session the student will be able to

analyze capital budgeting decisions in the context of
multinational corporations.
22,23,24 Project Presentation , Summing up, Feedback and Learning Integration