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Unformatted text preview: -1-Valuation of Capital Investment (AEM 4280)Spring 2010Lecture: Tuesday/Thursday 11:40AM – 12:55PM131 Warren HallTA Section: Wednesday 7:30PM – 8:20PMRoom Warren 131Professor: Dr. Susan CabreraOffice: 302 Sage Hall/446 Warren HallPhone: (917) 922-0111E-mail: [email protected](best way to contact me)Office hours: By appointmentTA: Hans Walter ChuaOffice: Warren 49E-mail: [email protected] hours: Tuesdays 3-5pmCourse Web Page can be found at http://blackboard.cornell.eduThis course is about equity valuation – the valuation of stocks, companies, parts of companies and real assets. We will begin the class with a discussion of market efficiency to explore whether, why and when valuation is necessary or important. Second, I will introduce three methods of valuation – intrinsic valuation, relative valuation and option-based valuation. The rest of the semester will be dedicated to understanding each of these methods in detail and more importantly, applying them to the valuation of actual companies. This will involve understanding in detail discounted cash flow models and the many inputs required to build them; dividend discount models; residual income models; the determination and use of relative value multiples such as price/earnings and price/book value; and finally, how to apply option theory to specific problems in valuation. By the end of this course, I hope you will:•Know what is meant by market efficiency and whether valuation classes like this are useful or necessary•Be capable of approaching valuation from both a quantitative and qualitative perspective; in other words, be able to do the calculations but also be able to thinkabout what drives and creates value in a company•Have a solid understanding of how to value just about any company, ranging from large, healthy publicly-traded corporations to new, private or poorly performing companies.-2-•Understand and know how to utilize multiple methods of valuation, including intrinsic valuation, relative valuation and option valuation•Be comfortable in identifying the correct valuation model or method to use and then applying it effectively in your analysis•Be able to communicate your valuation ideas and analysis effectively both in person and in writingCourse FormatThe course will include interactive lectures (you provide the interaction by asking and answering questions!), valuation examples/cases, TA sections where more specific problems are covered, and a semester-long group project in which you value two companies and present your analysis to the class.PrerequisitesThe course is designed for students with career interests in corporate finance, banking and management consulting. In general, however, anyone interested in issues pertaining to valuation can take this course. The only course pre-requisites are the financial management courses, AEM 324 and the core statistics course, AEM 210 or their equivalents. However, be prepared to work hard and absorb advanced concepts and ideas in valuation.hard and absorb advanced concepts and ideas in valuation....
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This note was uploaded on 02/28/2010 for the course AEM 4280 taught by Professor Ng,d. during the Spring '08 term at Cornell University (Engineering School).
- Spring '08