Introduction to Corporate Finance

Learn key financial concepts for evaluating and valuing investment opportunities, including how to value stocks and bonds.

 

In this course, you will gain an understanding of time-honored financial concepts and rules, and how these can be applied to value firms, bonds, and stocks.

We will cover the time value of money, cost of capital and capital budgeting. You will be using Excel for many process including valuing bonds and stocks, computing NPV and finding IRR.

An introductory finance course that is required for all first-year MBA students at Columbia Business School, the course is taught by a world-class instructor, actively training the next generation of market leaders on Wall Street.

Participants from all backgrounds will be prepared to participate on the ever-evolving financial playing field.

The total learning hours for this Module amount to 50. These are distributed across the following categories:

  • Total Contact Hours: 20
  • Self-Study Hours: 5
  • Supervised Placement and Practice Hours: 0
  • Assessment Hours: 25

This Module carries a value of 2 ECTS.

 

  • Institution: ColumbiaX
  • Subject: Business & Management
  • Level: Introductory
  • Prerequisites: Students must be familiar with basic concepts of Accounting and possess basic skills in Microsoft Excel (or equivalent.)
  • Language: English
  • Video Transcript: English
  • Associated programs:
  • Professional Certificate in Corporate Finance
  • Associated skills: Master Of Business Administration (MBA), Time Value Of Money, Finance, Investments, Capital Budgeting, Stocks (Finance), Cost Of Capital,
  • Corporate Finance

 

Module-Specific Learner Skills:

At the end of the module/unit the learner will be able to

Integrate theory, research findings and practice for real-world problem solving.

  • How to value any asset
  • Decide which projects to take out of the many a corporation might be considering
  • Compute the return on any project
  • Compute the value that a project adds
  • Value a bond and compute its yield
  • Value a stock using a simple model (i.e., determine the fair price of a stock)

Competences:

At the end of the module/unit the learner will have acquired the responsibility and autonomy to:

Manages people and projects and demonstrates the ability to respond to the fast-changing business environment.

  • Act responsibly in evaluating investment opportunities.

Demonstrates autonomy in the direction of learning and a high level of understanding of learning processes.

  • Demonstrate accountability for understanding financial markets and instruments.
  • Exhibit autonomy in capital budgeting and financial decision-making.

 

Knowledge:

At the end of the module/unit the learner will have been exposed to the following:

Integrate forward-thinking concepts, standards, and managerial decision-making tools in the functional areas of management.

  • Sequence a stock valuation using a simple model (i.e., determine the fair price of a stock).
  • Critically analyze the NPV Rule and the Internal Rate of Return (IRR) Rule, and their implications for financial decision-making.
  • Evaluate methods for reconciling differences when different financial rules provide conflicting guidance.
  • Assess and apply various measures to evaluate the attractiveness of investment opportunities.
  • Develop an understanding of common corporate rules and their limitations.
  • Evaluate the various types of bonds issued by the Treasury Department.
  • Analyze methods for determining discount rates based on varying risk levels.
  • Critically ssess the concepts of stocks, shares, and related financial terminology.
  • Evaluate the process of selling and trading shares and synthesize strategies for effective trading practices.

 

Skills:

At the end of the module/unit the learner will have acquired the following skills:

  • Corporate financial management skills
  • Capital budgeting and financial decision-making
  • Understanding of financial markets and instruments
  • Evaluation of investment opportunities

 

Module 1

Basic Finance Concepts

  • Understand the concepts Rate of Return, Future Value, and Compounding, and how these build to the concept of Present Value.
  • Apply these concepts to conduct a Simple Firm Valuation.
  • Understand the concept of of Net Present Value.
  • Compute using simple formulas the value of a growing perpetuity and an annuity.
  • Mini-Case: IntelAir.

 

Module 2

Capital Budgeting

  • Understand the NPV Rule and IRR Rule, and how they should be followed.
  • Learn what to do when different rules tell you different things.
  • Apply these concepts to conduct a real-world case.
  • Learn different measures to assess how attractive an opportunity may be.
  • Develop an understanding of common rules adhered to by corporations and the limitations that may exist within them.
  • Mini-Case: Real Estate.

 

Module 3

Bonds

  • Understand the different types of bonds backed by the Treasury Department.
  • Calculate the price and yield of a bond.
  • Calculate the yield of a STRIP, and be familiar with how this information is often displayed.
  • Start thinking about how to determine discount rates based on risk level.
  • Mini-Case: Hedge Fund.
  • Case Study Solution.

 

Module 4

Stocks

  • Define stocks, shares, and related terminology.
  • Describe the process of selling and trading shares.
  • Apply the formula to calculate the price of a stock.
  • Apply the Gordon Growth Model.
  • Mini-Case: Appscale, Bitwise, and Carbivore.

 

Courses are generally made up of weekly modules with pre-recorded videos that you can watch on a schedule or at your own pace. There are supplemental readings and student discussion forums, as well as homework assignments and quizzes.

 

Assessment Type Weight
Module 1 Mini-Case Questions 10%
Module 2 Mini-Case Questions 20%
Module 3 Mini-Case Questions 15%
Module 4 Mini-Case Questions 15%
Final Exam 40%
Total 100%

Passing grade                                                                                                                               60%

 

Week 1: The Time Value of Money & Present Value
Week 2: Net Present Value & The Internal Rate of Return Rule
Week 3: Capital Budgeting
Week 4: Valuation of Bonds and Stocks

 


Daniel Wolfenzon
Stefan H. Robock Professor of Finance and Economics, Columbia Business School - Columbia University