SHANGHAI UNIVERSITY OF FINANCE AND ECONOMICS

School of International Business Administration

Course 0043
CORPORATE FINANCE
COURSE SYLLABUS
Prof. Guangyu Nie

Spring 2015

Office: SIBA 402

Email: nie.guangyu@mail.shufe.edu.cn
Lecture: Mon, 2:15 5:05 p.m.
The 4th Teaching Building, Room 209
Office Hours: Wednesday, 3:00 4:00 p.m. in my office
Course Description
This course focuses on the financial management of corporations. Students are presented with a
conceptual framework for understanding and addressing problems commonly faced by corporate
decision makers and are provided opportunities to apply these concepts to contemporary business
situations. Topics covered include, but are not limited to: the relationship between risk and return
including the capital asset pricing model, the valuation and role of debt and equity, capital
budgeting/project evaluation techniques, cost of capital, cash flow estimation, project risk analysis,
company valuation, and capital structure decisions.
Prerequisites
The course makes use of mathematical and statistical manipulations at the basic level. Calculus
will not be used in this course at all. Some familiarity with Office Excel will be assumed.
Textbook
Ross, Westerfield, Jaffee: Corporate Finance, 10th. ed., ISBN 0077511387 / 9780077511388. Previous versions are also acceptable (and cheaper) since the contents are pretty
similar.
Exams and Homework
Class Participation (20%)
Class participation is evaluated based on your attendance, willingness to ask and answer
questions.
Final Exam (80%):

closed book, will cover the entire course material, cumulative. (one-sided A4 cheat sheet
is allowed)

Calculators and Computers

You will definitely need a calculator for the course (and the exam). Any calculator that has a xy
button will do. Laptop computers, tablet computers, cell phones and any email-capable device will
not be allowed for the exams.

Tentative Course Schedule

Week 1: Introduction to Corporate Finance - Chapters 1&4
Goals of Financial Management.
Conflicts between Company Stakeholders Financial Markets.
Time Value of Money
Week 2: Net Present Value and Other Investment Rules - Chapters 5
Capital budgeting decision rules
NPV versus IRR
Independent and Mutually exclusive Projects.
Week 3: Capital Investment Decisions and Risk Analysis- Chapters 6 & 7
Identifying Relevant Cash Flows.
Evaluating Capital Budgeting Projects.
Sensitivity Analysis, Scenario Analysis, and Break-Even Analysis
Week 4: Bonds valuation - Chapter 8
Terminology and characteristics of bonds
Bond valuation
Bond yields
Week 5: Stock Valuation and Market Empirics - Chapters 9 and 10
Terminology and characteristics of stocks
Stock valuation models
Growth opportunities & PVGO model.
Historical risk and returns
Week 6: The Capital Asset Pricing Model - Chapter 11
Measuring Portfolio Risk
Diversification
The Capital Asset Pricing Model (CAPM)
Week 7: Efficient Capital Markets and Behavioral Challenges - Chapter 14
A Description of Efficient Capital Markets
The Evidence of Market Efficiency
The Behavioral Challenge to Market Efficiency
Week 8: Risk, Cost of Capital, and Capital Budgeting - Chapters 13
Cost of Debt

 Cost of Equity
Weighted Average Cost of Capital
Week 9: Capital Structure Decisions - Chapters 16-17
Financial Leverage and Firm Value
Financial Distress Costs
Estimating the Optimal Capital Structure
Capital Structure Theory
Week 10: Mergers, Acquisitions, and Divestitures - Chapters 29
The Basic Forms of Acquisitions
Sources of Synergy
The NPV of a Merger
Divestitures
Week 11: Final Exam