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15.402_Syllabus_Fall_2009

15.402_Syllabus_Fall_2009 - Sloan School of Management...

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Sloan School of Management Massachusetts Institute of Technology 15.402 – Section A – Fall 2009 T TH 10:00 a.m. to 11:30 a.m. – E51-151 Craig A. Stephenson, Ph.D. 15.402 Finance Theory II E53-305, 617-253-7125 Introduction to Corporate Finance [email protected] http://stellar.mit.edu/S/course/15/fa09/15.402 Syllabus Finance Theory II introduces corporate finance, and focuses on the role of the Chief Financial Officer (CFO) in a firm. We assume in this course that the CFO’s job is to maximize firm value, and we will study three types of decisions: how to manage the cash flows of the firm, how to finance the operations and investments of the firm, and which projects the firm should invest in. This is an applied tools course that will primarily use case studies to introduce and use financial tools to make corporate finance decisions. A. Course Structure – the course consists of three modules: 1. Cash Flow Management: The course begins with the tools of cash flow management. Cash flow management is necessary to forecast future cash flows from operations, investing activities, and financing needs. Important tools in this module include financial ratio analysis, pro forma financial statements, working capital management, and cash budgets. 2. Capital Structure and Financing: The course continues by analyzing the factors which determine a firm’s need for external financing. We will also consider the optimal mix of debt and equity financing. 3. Project and Company Valuation: In the third module we will develop the tools required for valuing investment projects, including determination of the relevant cash flows and the appropriate discount rate. We will use these tools to value investment projects and companies. B. Administrative Structure • Course assistant: Charles Wohr, [email protected] , E52-430, 617-253-8318. • Teaching Assistant: Antonio Carlos de Azevedo Sodre, [email protected] , E52-458, 617-252- 1708. Prerequisites: Finance Theory I (15.401) and Accounting (15.515/501) Readings and Books: • R. Brealey, S. Myers, and F. Allen, Principles of Corporate Finance , 9 th ed., McGraw-Hill Irwin.
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• R. Higgins, Analysis for Financial Management , 8 th ed., McGraw-Hill Irwin. • Course packet: Contains the case studies and some supplementary readings for the course. Get it from the Copy Tech Center in the basement of the Sloan Building (E52). • Additional readings may be distributed in class and posted on Stellar. • Make sure you monitor our Stellar site. • Optional: Barron’s Dictionary of Finance and Investment Terms . C. Class Procedures This course is a combination of lectures and case studies, and is designed to be time-consuming and challenging. Unless you have the time to thoroughly prepare for each class and case, I strongly recommend you not take the course at this time. Each case will come with study questions for you to work on before class.
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