Lawrence D Schall
Key issues in financial management using both analytical and case study illustrations. Valuation of public and private companies; cost of capital estimation; investment complications, such as taxes, inflation, risk, project interdependencies, and financing-investment interactions; leasing; mergers; spin-offs and carve-outs. Prerequisite: FIN 350; either B. ECON 300 or ECON 300. Offered: AW.
Students will learn advanced financial analysis techniques that are widely used widely in practice. Valuation of a company (public and private), subsdiary, or division, taking into account financing, employee stock options, taxes, and other factors. Estimation of a discount rate (cost of capital). How to address common problems in capital budgeting, including inflation, investment interdependencies, capital rationing, transfer pricing, and risk analysis. Leasing versus purchasing of an asset; the key role of taxes in leasing. Business reorganizations, including merger analysis, leveraged buyouts, spin-offs, carve-outs, and split-ups.
Student learning goals
General method of instruction
For each topic, a presentation of the appropriate analytic technique, with examples and real world cases to illustrate concepts. Group valuation projects. Informal style, with questions and discussion welcomed.
At a minimum, Finance 350 and a basic financial accounting course. Preferably, at least one finance elective other than Finance 454.
Class assignments and grading
Group valuation projects. Midterm exam and final exam. Extra credit for case presentation. This course is relatively challenging, and involves a substantial time commitment.
Valuation project, midterm, final, and extra credit.