ECONW4280 Corporate Finance
Fall and Spring
Corporate Finance is the first course in the Finance sequence. It is introductory only in the sense that we start with the assumption that some, if not most, students have never had any corporate finance courses previously. Otherwise, it is quite ambitious. At the end of it, you will know how to value a company. On the way the topics we shall cover include those that are important to all managers whether or not they specialize in finance: (1) procedures for analyzing companies’ financial data to determine how efficiently they have been run; (2) methods for projecting funding needs based on principles of good working capital management; (3) rules for choosing the maximal safe, or optimal, level of debt in the structure of capital used for funding company operations; (4) figuring the costs of the various types of funds that a company uses and its weighted average cost of capital; and (5) combining all the foregoing into a methodology, to wit, discounting free cash flows and adding the present value of the residual or salvage value, for establishing a company’s value or price.