Formation/Cours

Students are definitely expected to have background in Finance

Introduction to Financial Markets
Corporate Finance Fundamentals (basics of corporate capial budgeting and capital structure)
Portfolio Management and Analysis
Statistics and Probability in Finance.

1. Identify the steps involved in estimating the cash flows from investment projects,
2. Estimate the required rates of return from a project,
3. Understand the interactions between investment and financing decisions,
4. Analyze a project’s risks and opportunities
5. Assess the various managerial flexibilities involved in the project.
6. Able to value the dynamics of the projects using lattice-based models (binomial trees)

This course is an in-depth exploration of methods used in corporate investment appraisal, with a focus on practical applications of managerial flexibility.

Course outline:
Part I: Estimating Incremental cash flows

1. Stand-alone principle
2. Operating cash flows, capital spending and changes in net working capital
3. Pitfalls: Sunk costs, opportunity costs, interest expenses and other financing costs
4. Sensitivity and scenario analysis
5. Company strategy, Supply Chain strategy and financial impacts

Part II: Estimating a project’s cost of capital

1. Unlevered vs. levered cost of equity
2. Risk-free vs. risky debt
3. The weighted average cost of capital (WACC)
4. Financing side effects
5. The pecking-order theory

Part III: Managerial Flexibility and Project Appraisal

1. The use of (real) options to refine the valuation of investment projects
2. European-style real options: R&D
3. European-style real options: Growth
4. American-style real options: Wait
5. American-style real options: Abandonment