548-Week 1 MBA-PM Spring 2010

548-Week 1 MBA-PM Spring 2010 - Introduction: Valuation and...

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J. K. Dietrich - GSBA 548 – Corporate Finance -- MBA.PM Spring 2010 Introduction: Valuation and Course Goals Week 1: February 22 and 24 (LA) and February 23 and 25 (OCC)
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J. K. Dietrich - GSBA 548 – Corporate Finance -- MBA.PM Spring 2010 Studying Finance Today Uncertain recovery after enormous financial strains in 2008 and 2009 Risk spreads have come downand liquidity back Market up in 2009, but lately flat Major policy initiatives impacting firms Corporate taxes, Federal reserve policy Bailouts, pay policy, SEC, EPA, FTC, etc. Not the most upbeat time to study finance, but it is more relevant than ever
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J. K. Dietrich - GSBA 548 – Corporate Finance -- MBA.PM Spring 2010 Overview of Sessions Finance and impact of decisions of financial management on firms’ balance sheets Appropriate goal of financial managers and corporate governance in making decisions Corporate governance structure in real life The investor community and investment analysts Accounting and finance Book and market values, market value added
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J. K. Dietrich - GSBA 548 – Corporate Finance -- MBA.PM Spring 2010 Finance in the MBA Program Finance is a branch of economics, specifically micro-economics applied to the management of the firm and function of markets Finance is one perspective on the role of the firm, assessing the performance of firms, managers, and assets Finance is relatively rigorous, consistent, and structured in its analysis of firms and financial markets
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J. K. Dietrich - GSBA 548 – Corporate Finance -- MBA.PM Spring 2010 Rigor implies Mathematics: Types? Solving equations with multi-period expressions with factors raised to powers (present value calculations in Chapter 4) » Polynomial functions mean non-linear relations » Always more than one way to solve a problem Arithmetic, but in large doses (projections in Chapter 6) » Addition and subtraction, ratios (division) and multiplication, » Many calculations, not difficult calculations Statistical concepts like correlation (analysis of risk in Chapters 10 and 11) Equations and unknowns using algebra (theory of capital structure in Chapters 16 and 17)
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J. K. Dietrich - GSBA 548 – Corporate Finance -- MBA.PM Spring 2010 Common Sense and Rigor Finance is mainly common sense applied to well-structured problems You can personalize the problems we attack You are like a corporation You save and borrow and invest Your decisions are similar to corporate finance issues Credit rating, taxes, cash requirements, risk Your net worth is key
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J. K. Dietrich - GSBA 548 – Corporate Finance -- MBA.PM Spring 2010 Balance Sheet Model of the Firm Current Assets Fixed Assets 1 Tangible 2 Intangible Total Value of Assets: Shareholders’ Equity Current Liabilities Long-Term Debt Total Firm Value to Investors:
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J. K. Dietrich - GSBA 548 – Corporate Finance -- MBA.PM Spring 2010 The Capital Budgeting Decision Current Assets Fixed Assets 1 Tangible 2 Intangible Shareholders’ Equity Current Liabilities Long-Term Debt What long-term investments should the firm choose?
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J. K. Dietrich - GSBA 548 – Corporate Finance --
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This note was uploaded on 02/11/2012 for the course FBE 443 taught by Professor Imrohoroglu during the Spring '07 term at USC.

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548-Week 1 MBA-PM Spring 2010 - Introduction: Valuation and...

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