Corporate Finance Review

Corporate Finance Review - MGMT 411 Fall 2009 Investment...

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Corporate Finance Review August 25, 2009 MGMT 411, Fall 2009 Investment Management
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2/30 Corporate Finance v.s. Investment Management Introduction Corporate Finance Equity MM
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3/30 Corporate Finance Perspective of the firm Decision makers: CEO, CFO, Accounts, Controllers, Financial Analysts, Entrepreneur, etc… Firm-level finance and investment decisions, control over real assets Introduction Corporate Finance Equity MM
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4/30 Investment Management Perspective of the outside investor Decision makers: Portfolio Managers, Institutions, Individuals, Financial Advisors, etc… Passive investment allocation decisions, i.e. no control of the real assets Introduction Corporate Finance Equity MM
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5/30 Key Point in Finance…. Every financial transaction has two parties, each taking the opposite position Who is on the opposite side of your personal stock investments? Who is on the opposite side of your home loan? Introduction Corporate Finance Equity MM
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6/30 Key Corporate Finance Decisions: The Investment Decision The Payout Decision The Financing Decision Introduction Corporate Finance Equity MM
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7/30 The Investment Decision What real assets to acquire? What business projects to take? Invest in research and development? Financial Valuation Time Value of Money, NPV, IRR, Payback, etc… Introduction Corporate Finance Equity MM
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8/30 The Payout Decision How does the corporation compensate the current owners (stock holders) of the firm? Dividends o Cash or Stock Share Repurchases No payment? o Pay off debt, Invest in +NPV Introduction Corporate Finance Equity MM
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The Financing Decision How will the company finance it’s new investments? How will the firm be financed residually? Internally generated funds (earnings)
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This note was uploaded on 11/03/2009 for the course MGMT 411 taught by Professor Clarke during the Spring '09 term at Purdue.

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Corporate Finance Review - MGMT 411 Fall 2009 Investment...

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