CORPORATE FINANCE

The Corporate Finance course is a core component of the Bachelor's degree program in Business Administration. Its aim is to provide students with a solid theoretical and practical foundation for managing the "productive factor of money," with a focus on transforming raised capital into value for the company. Financial management is explored not only as a technical function but also as a strategic lever for corporate competitiveness. The primary goal is to understand how generating sustainable cash flows, aligned with stakeholder expectations, is essential for the long-term success of the business.

Attendance and active participation in the course activities are essential for success. Through lectures, practical exercises, case study analysis, and individual study, students will have the opportunity to achieve the following learning objectives:

1. Knowledge and Understanding
Acquire a solid understanding of the fundamental models of corporate finance.
Comprehend the key mechanisms driving business decisions in areas such as the analysis and planning of cash flows (historical and short-term), investment decisions, and capital raising.
2. Ability to Apply Knowledge and Understanding
Analyze and evaluate the financial equilibrium of a company.
Assess investment and financing decisions.
Identify the appropriate balance between risk and return.
Estimate the correct cost of capital for the company.
3. Judgment Skills
Critically evaluate business investment decisions by selecting the most reliable assessment method.
Analyze the financial sustainability of investment projects.
Determine the financial solidity of the company and its ability to maintain economic-financial equilibrium in the short and medium term.
4. Communication Skills
The course will help students develop communication skills, enabling them to use appropriate technical language in a financial context.

5. Learning Skills
The course will enhance students’ ability to integrate theoretical study with practical applications, both in the classroom and online.

Important Note: Regular attendance and active participation are crucial for effective learning and for maximizing the benefits of the proposed activities. This approach will ensure that students gain not only a theoretical understanding but also the practical ability to apply what they have learned.

To enroll in the course, students must have achieved the required learning objectives and passed the "Business Administration" prerequisite exam. Specifically, students should be proficient in the main financial statements, such as the balance sheet and income statement, as well as their reclassifications. Additionally, a solid understanding of fundamental mathematical concepts, including "present value" and "future value," along with the rules of interest capitalization (both simple and compound), is required. Students should also be familiar with statistical concepts such as mean, variance, and standard deviation.

1. Course Introduction and Overview of Corporate Finance
The concept of corporate finance and its strategic importance.
The role of capital in companies: raising, managing, and deploying funds.
Introduction to financial flows: the circuit between sources and uses of capital.
2. Building Historical Cash Flows and Analyzing Financial Balances
The difference between income and cash flows.
How to construct a cash flow statement using the indirect method.
Analysis of financial, economic, and equity balances.
3. Building Forecasted Cash Flows: The Cash Budget
Objectives and purposes of the cash budget.
Techniques for forecasting future cash flows.
Analyzing discrepancies between forecasts and actual results.
4. Investment Decisions: The Net Present Value (NPV) Method
Definition and significance of NPV.
Application of NPV in evaluating investment projects.
How NPV drives value creation for the company.
5. Alternative Investment Evaluation Criteria to NPV and Other Applications (Equivalent Annual Cost)
NPV limitations and alternative criteria: IRR, Payback Period.
Application of the Equivalent Annual Cost (EAC) method.
Comparing projects with different durations or structures.
6. Bond Valuation
Fundamental characteristics of bonds: price, coupon, maturity.
Calculating bond prices and yields.
Bond risk: duration and convexity.
7. Equity Valuation
Valuation of common and preferred stocks.
Valuation methods: dividend discount model (DDM) and market multiples.
Risk analysis in equity investments.
8. The Risk-Return Tradeoff: The Capital Asset Pricing Model (CAPM)
The concept of systematic and specific risk.
Using CAPM to estimate the expected return of a security.
Limitations and practical applications of CAPM in corporate decision-making.
9. The Risk-Return Tradeoff in Investment Decisions
How risk influences corporate investment decisions.
Tools to mitigate risk: diversification and financial hedging.
Evaluating projects in uncertain contexts.
10. Capital Structure Choices
a. Fundamental Principles
How to decide the optimal mix between equity and debt.
Advantages and disadvantages of debt.
b. The Modigliani-Miller Theorem with Taxes
Theoretical and practical implications of the theorem.
Effects of financial leverage on company value.

Corporate Finance, McGraw-Hill Education, 2023, ISBN 9781307923599.
Additional materials uploaded to Moodle.

Midterm Exams (up to 30%):

Four exams with:
15 multiple-choice questions.
One problem-solving exercise or a short case study.
The top three scores will count toward the final grade (10% each).
Final Exam (up to 70%):

Consists of:
10 multiple-choice questions.
One open-ended question.
One practical exercise.
Duration: 1 hour.
Bonus for Active Participation:

Up to 3 additional points for significant contributions during exercises and classroom discussions.

written

Lectures: To introduce fundamental theoretical concepts.
Practical Exercises: Involving real data analysis and problem-solving.
Case Study Discussions: To understand the practical applications of theory.
Learning Materials: Slides, articles, and case studies provided through Moodle.