Faculty of Management Technology

Course specification

Corporate Finance (FINC 504)

A-Basic Information
Semester number 5th semester
Semester type Winter semester
Study year 3rd year
Department offering the course Accounting & Finance
Specialization Finance
Type of course Compulsory
Number of sessions/week Lecture/week, .1. Tutorial/week, .1.
Student workload 150 hrs
Credit points (ECTS) 5 CP

B- Pedagogical Information
Course Description:

This course focuses on understanding the tools of corporate finance and its applications. Topics
include net present value and other capital budgeting techniques, making investment decisions,
risk analysis, capital structure and dividend policy and some other important topics in finance
and international finance. Most of the concepts will be applied to the Egyptian market through
student assignments/projects.

Learning Outcomes:
By the end of the course, the student will be able to:
Knowledge & Understanding

 Understand the basic concept and sources of capital associated with the cost of capital.
 Explain what is meant by the marginal cost of capital.
 Discuss relevant cash flows, expansion versus replacement decisions, sunk costs and
opportunity costs, and international capital budgeting.
 Understand the key elements of the capital budgeting process
 Understand the importance of recognizing risk in the analysis of capital budgeting
projects
 Understand cash payout procedures, their tax treatment, and the role of dividend
reinvestment plans
 Describe the residual theory of dividends and the key arguments with regard to dividend
irrelevance and relevance
 Explain stock splits and the firm’s motivation for undertaking them

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Course specification

Intellectual skills

 Determine the cost of long-term debt, and explain why the after-tax cost of debt is the
relevant cost of debt.
 Calculate the weighted average cost of capital (WACC) and discuss alternative weighting
schemes.
 Calculate the initial investment associated with a proposed capital expenditure.
 Find the relevant operating cash inflows associated with a proposed capital expenditure.
 Determine the terminal cash flow associated with a proposed capital expenditure
 Calculate, interpret, and evaluate the payback period
 Calculate, interpret, and evaluate the net present value (NPV) and economic value added
(EVA)
 Calculate, interpret, and evaluate the internal rate of return (IRR)
 Discuss risk and cash inflows, scenario analysis, and simulation as behavioral approaches
for dealing with risk
 Review the unique risks that multinational companies face
 Describe the determination and use of risk-adjusted discount rates (RADRs), portfolio
effects, and the practical aspects of RADRs
 Discuss leverage, capital structure, breakeven analysis, the operating breakeven point,
and the effect of changing costs on the breakeven point
 Understand operating, financial, and total leverage and the relationships among them
 Describe the types of capital, external assessment of capital structure, the capital structure
of non-U.S. firms, and capital structure theory
 Explain the role of real options and the objective and procedures for selecting projects
under capital rationing
 Explain the optimal capital structure using a graphical view of the firm’s cost of capital
functions and a zero-growth valuation model
 Discuss the EBIT-EPS approach to capital structure
 Discuss the key factors involved in establishing a dividend policy

Professional & Practical skills

 Use net present value profiles to compare NPV and IRR techniques
 Discuss NPV and IRR in terms of conflicting rankings and the theoretical and practical
strengths of each approach
 Select the best of a group of unequal-lived, mutually exclusive projects using annualized
net present values (ANPVs)
 Review the return and risk of alternative capital structures, their linkage to market value,
and other important capital structure considerations related to capital structure
 Evaluate stock dividends from accounting, shareholder, and company points of view

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Course specification

General and Transferrable skills

 Communicate clearly by verbal means through class discussion of the assignment in the
tutorial.
 Practice independent learning needed for continuous professional development.
 Demonstrate critical thinking, problem- solving & decision- making abilities.
 Retrieve & evaluate information from different sources to improve professional
competencies.

Topics covered in the course:

No. of Teaching Hours
Topic Lecture Tutorial
1 Cost of capital (1) 2 2
2 Cost of capital (2) 2 2
3 Capital budgeting cash flows (1) 2 2
4 Capital budgeting cash flows (2) 2 2
5 Capital budgeting techniques (1) 2 2
6 Capital budgeting techniques (2) 2 2
7 Risk and refinements in capital budgeting (1) 2 2
8 Risk and refinements in capital budgeting (2) 2 2
9 Leverage and capital structure (1) 2 2
10 Leverage and capital structure (2) 2 2
11 Payout policy (1) 2 2
12 Payout policy (2) 2 2

Learning and teaching methods

Lectures, tutorials & assignments.

References
Recommended Textbook
 Gitman and Zutter, Principles of Managerial Finance, 13th edition, Pearson.

Recommended Further Reading

 Ross, Westerfield, and Jordan, Fundamentals of Corporate Finance, 9th edition,
McGraw -Hill

Relevant Websites
 V:\Faculties\Management Technology\3rd Year\5thSemester- Winter
2011\Corporate Finance FINC 504

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Course specification

Assessment
Student Assessment Methods Assessment Weighing
Class work (assignments and quizzes) 30%
Midterm exam 30%
Final exam 40%

Educational facilities & forms of media

Facilities Required for Teaching & Learning:
Lecture hall equipped with microphone, computer, beamer and white board.
Forms of Media:
Availability of lecture presentations on the GUC intranet that are used for data show and
explanation to students during lecture sessions

C- Administrative Information
Head of the Department
Prof. Dr. Ehab K. A. Mohamed

Course Instructor Contact Information

Course Instructor Dr. Mona ElBannan
E- Mail mona.elbannan@guc.edu.eg
Fax
Telephone +20-27590775
Ext +20-27589990-8, ext. 2275
Room number B5-334

Course Teaching Assistant Contact Information

Course TA Amira Tarek, Amina Sobhy, Engy Zein
E- Mail
Fax
Telephone
Ext
Room number

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