Corporate Finance (Everything you need to know as a beginner)

It's a basic lecture for corporate finance

1. FINM542
Lecture #0
Corporate Finance-I

2. Course Code, Course Title, LTP and
credits of the course
FINM542: Corporate Finance-I
L-3, T-1, P-0,
Credit-2

3. Course Outcomes
CO1 :: assess the importance of financial management and finance function in
the corporate setup.
CO2 :: analyze short and long term sources of finance for any corporate.
CO3 :: evaluate the role of time value of money in corporate finance.
CO4 :: : interpret cost of various sources of finance in the light of wealth
maximization objective of a company.
CO5 :: choose projects using traditional capital budgeting techniques.
CO6 :: manage projects using discounted and risk adjusted techniques.

4. Programme Outcomes:
PO1 : Problem Solving : Apply knowledge of management theories and practices
to solve business problems.
PO2 : Decision Making : Foster Analytical and critical thinking abilities for data-
based decision making.
PO3 : Leadership : Ability to develop Value based Leadership ability
PO4 : Global Outlook : Ability to understand, analyze and communicate global,
economic, legal, and ethical aspects of business.
PO5 : Team Dynamics : Ability to lead themselves and others in the achievement
of organizational goals, contributing effectively to a team environment.
PO6 : Entrepreneurship : Ability to develop entrepreneurial orientation to leverage
business opportunities.

5. Programme Specific Outcomes
PSO1 : Ability to extract meaningful, actionable insights from data and leveraging
technologies for making more informed and strategic decisions.

6. Course Focus Identification
Career Prospects
•Primary Prospects: To give students the knowledge, hands on skills,
analytical and leadership abilities they need for fast track global careers in blue chip
companies.
•Secondary Prospects: Providing orientation and competencies to students to build
careers as entrepreneurs or to manage their family businesses successfully.
•Tertiary Prospects: To cultivate academic rigour along with research and application
orientation among students to build their careers as effective teachers in the global
academic arena.

7. Course Contents
Unit-wise Course Content

8. Unit 1
Financial management: an overview, evolution of finance, the
basic goal: creating shareholder value, agency issues, business
ethics and social responsibility

9. Unit 2
Sources of finance : long term and short-term sources of finance, ordinary
shares, preferences shares, redeemable irredeemable debentures.
Money market instruments : treasury bills, commercial papers, certificate
of deposits, treasury management and treasury operations in corporates,
external commercial borrowings, financing for msmes

10. Unit 3
Time value of money : compounding and discounting, future value and
present value, annuities, effective interest rates

11. Unit 4
Cost of capital : firm’s overall cost of capital, cost of debt, cost
of preference, cost of equity, using CAPM and WACC in
practice

12. Unit 5
Investment decisions-I : importance and process, classification
of investment projects, methods of capital budgeting, payback
period, post payback period, accounting rate of return, discounted
payback

13. Unit 6
Investment decisions-II : net present value, internal rate of return,
profitability index, risk analysis in projects using sensitivity and
scenario analysis

14. Assessment and Evaluation Model
Course Weightage
Attendance: 5
CA (Academic Tasks): 45
ETT (End-term Exam): 50

15. Assessment and Evaluation Model
Scheme for CA
CA Category of this Course Code is:
A0202 (2 out of 2)

16. Assessment and Evaluation Model
Details of Academic Task(s)
S.NO TYPES MARKS Allotment WeekSubmission
week
CA1 Assignment -
Situation based
problem solving
30 2 4
CA2 Assignment -
Situation based
problem solving
30 5 7

17. Assessment and Evaluation Model
Details of Academic Task(s)
Acade
mic
Task
ObjectiveDetail of Academic Task Natur
e of
Acade
mic
Task
(group
/indivi
duals)
A
ca
d
e
m
ic
T
as
k
M
o
d
e
M
ar
ks
CA1 The objective
of this task is
to analyze
and
determine
the cost of
capital for a
selected
company.
This includes
calculating
the Weighted
Average Cost
of Capital
(WACC) and
discussing its
implications
for the
company's
financial
decisions.
Assignment Structure:
Select a Company: Choose a publicly traded company for analysis. Ensure that
sufficient financial data is available for the company.
Data Collection: Gather the following data for the selected company:
Current stock price
Market value of equity
Market value of debt
Cost of equity (using the Capital Asset Pricing Model - CAPM)
Cost of debt
Tax rate
Calculations:
a. Cost of Equity (using CAPM):
b. Cost of Debt: Calculate the company's cost of debt by using the yield to maturity
(YTM) on existing debt or the interest expense on debt.
c. Weighted Average Cost of Capital (WACC):
Analysis: Provide a detailed analysis of the calculated WACC. Discuss:
The significance of WACC for the company's investment decisions.
How the cost of equity and cost of debt contribute to the overall cost of
capital.
The impact of changes in the market environment on the company's WACC.
Recommendations for the company to optimize its cost of capital.
Report: Prepare a comprehensive report that includes the following sections:
Introduction
Methodology
Data Collection
Calculations
Analysis
Conclusion
References
IndividualO
ffli
ne
30

18. Assessment and Evaluation Model
Details of Academic Task(s)
Acad
emic
Task
Objective Detail of Academic Task Natur
e of
Acad
emic
Task
(grou
p/ind
ividu
als)
Acade
mic
Task
Mode
Mark
s
CA2
The objective of this
task is to evaluate a
potential investment
project using capital
budgeting techniques.
Students will perform a
comprehensive
analysis using various
capital budgeting
methods to determine
the feasibility and
profitability of the
project.
Instructions:
Project Selection: Select a potential investment project for a
hypothetical or real company. Ensure the project has
sufficient data for analysis, including projected cash flows,
initial investment, and other relevant financial information.
Data Collection: Gather the following data for the selected
project:
Initial investment cost
Projected annual cash flows for the project's life
Discount rate (cost of capital)
Project life (number of years)
Capital Budgeting Techniques: Use the following capital
budgeting techniques to evaluate the project:
a. Net Present Value
b. Internal Rate of Return (IRR)
c. Payback Period:
d. Profitability Index (PI):
Analysis: Provide a detailed analysis of the results obtained
from the capital budgeting techniques. Discuss:
The feasibility and profitability of the project based
on the NPV, IRR, Payback Period, and PI.
The advantages and limitations of each capital
budgeting method used.
The impact of changes in the discount rate and cash
flow projections on the project's evaluation.
Recommendations for the company's decision-making
process.
Report: Prepare a comprehensive report that includes the
following sections:
Introduction
Methodology
Data Collection
Calculations
Analysis
Conclusion
References
Grou
p
Offline30

19. Assessment and Evaluation Model
Criteria Excellent (90-100)Good (75-89) Satisfactory (60-74)
Needs Improvement
(below 60)
Introduction
Clear, concise
introduction with strong
context and objectives.
Clear introduction with
context and objectives.
Basic introduction, lacks
depth and clarity in
context and objectives.
Incomplete or unclear
introduction with
missing context and
objectives.
Data Collection
Comprehensive and
accurate data collection.
Sources well-
documented.
Accurate data collection
with minor omissions.
Sources documented.
Data collection with
some inaccuracies or
missing data.
Inaccurate or incomplete
data collection. Sources
poorly documented.
Cost of Equity
Calculation
Accurate calculation with
clear explanation and
correct use of CAPM.
Accurate calculation with
minor errors in
explanation or CAPM
use.
Calculation with some
errors or unclear
explanation.
Inaccurate calculation or
incorrect use of CAPM.
Cost of Debt Calculation
Accurate calculation with
clear explanation and
correct use of methods.
Accurate calculation with
minor errors in
explanation or methods.
Calculation with some
errors or unclear
explanation.
Inaccurate calculation or
incorrect use of
methods.
WACC Calculation
Accurate and detailed
calculation with clear
explanation.
Accurate calculation with
minor errors or unclear
explanation.
Calculation with some
errors or unclear
explanation.
Inaccurate calculation or
incomplete explanation.
Analysis
In-depth analysis with
insightful discussion and
recommendations.
Good analysis with
relevant discussion and
some recommendations.
Basic analysis with
limited discussion and
recommendations.
Incomplete or unclear
analysis with weak
discussion and
recommendations.
Report Presentation
Well-organized, clear,
and professional
presentation.
Organized and clear
presentation with minor
issues.
Basic organization and
clarity with some issues.
Poorly organized or
unclear presentation.
References
All sources are
accurately cited and
well-documented.
Most sources are
accurately cited and
documented.
Some sources are cited
and documented, but
with errors.
Few or no sources are
cited or poorly
documented.

20. Assessment and Evaluation Model
Criteria Excellent (90-100)Good (75-89) Satisfactory (60-74)
Needs Improvement
(below 60)
Introduction
Clear, concise
introduction with strong
context and objectives.
Clear introduction with
context and objectives.
Basic introduction, lacks
depth and clarity in
context and objectives.
Incomplete or unclear
introduction with
missing context and
objectives.
Data Collection
Comprehensive and
accurate data
collection. Sources well-
documented.
Accurate data collection
with minor omissions.
Sources documented.
Data collection with
some inaccuracies or
missing data.
Inaccurate or
incomplete data
collection. Sources
poorly documented.
NPV Calculation
Accurate calculation
with clear explanation
and correct use of
formula.
Accurate calculation
with minor errors in
explanation or formula
use.
Calculation with some
errors or unclear
explanation.
Inaccurate calculation
or incorrect use of
formula.
IRR Calculation
Accurate calculation
with clear explanation
and correct use of
formula.
Accurate calculation
with minor errors in
explanation or formula
use.
Calculation with some
errors or unclear
explanation.
Inaccurate calculation
or incorrect use of
formula.
Payback Period
Calculation
Accurate calculation
with clear explanation
and correct method.
Accurate calculation
with minor errors in
explanation or method.
Calculation with some
errors or unclear
explanation.
Inaccurate calculation
or incorrect method.
Profitability Index
Calculation
Accurate calculation
with clear explanation
and correct use of
formula.
Accurate calculation
with minor errors in
explanation or formula
use.
Calculation with some
errors or unclear
explanation.
Inaccurate calculation
or incorrect use of
formula.
Analysis
In-depth analysis with
insightful discussion and
recommendations.
Good analysis with
relevant discussion and
some
recommendations.
Basic analysis with
limited discussion and
recommendations.
Incomplete or unclear
analysis with weak
discussion and
recommendations.
Report Presentation
Well-organized, clear,
and professional
presentation.
Organized and clear
presentation with minor
issues.
Basic organization and
clarity with some issues.
Poorly organized or
unclear presentation.
References
All sources are
accurately cited and
well-documented.
Most sources are
accurately cited and
documented.
Some sources are cited
and documented, but
with errors.
Few or no sources are
cited or poorly
documented.

21. Books
Text Book
•CORPORATE FINANCE by ROBERT PARRINO; DAVID KIDWELL, WILEY
Reference Books
•FINANCIAL MANAGEMENT by I M PANDEY, PEARSON
•FUNDAMENTALS OF CORPORATE FINANCE by JONATHAN BERK, PETER
DEMARZO & JARRED HARDFORD, PEARSON.
•CORPORATE FINANCE by STEPHEN A. ROSS, RANDOLPH W. WESTERFIELD
& JEFFREY JAFFE, Tata McGraw Hill, India.
•FUNDAMENTALS OF FINANCIAL MANAGEMENT by BHABATOSH BANERJEE,
PHI LEARNING DELHI

22. Mapped MOOCs/Competitions/Hackathons
MOOCS: SWAYAM- Financial Management by Prof. Abhijeet Chandra
  |   IIT
Kharagpur
https://onlinecourses.nptel.ac.in/noc24_mg132/preview
Competition: NA
Hackathons: NA

23. OER
Unit
Mapped
Broad TopicSub Topic Source
Type
S
o
u
r
c
e
T
i
t
l
e
%age
Mapping
(Approx)
 
Source URL
 
Unit 1
 
Financial
Management-
 
 
 
 
an overview, evolution of
finance, the basic goal:
creating shareholder value,
agency issues, business
ethics and social
responsibility
Online
link
reposit
ories
A
s
s
u
b

t
o
p
i
c
100% https://www.netsuite.com/portal/resource/articles/
financial-management/financial-management.shtml
https://www.shiksha.com/online-courses/articles/differen
ce-between-profit-maximization-and-wealth-maximization
/
https://unacademy.com/store/batch/full-syllabus-2024-20
25-batch-pcmb-562/9JIEGI1X
https://corporatefinanceinstitute.com/resources/valuatio
n/time-value-of-money/
 
https://www.investopedia.com/ask/answers/070915/wha
t-difference-between-present-value-annuity-and-future-va
lue-annuity.asp
 
Unit 2Source of
Finance
 
 
 
 
Money
market
Instruments
long term and short-term
sources of finance, ordinary
shares, preferences shares,
redeemable irredeemable
debentures, treasury bills,
commercial papers,
certificate of deposits,
treasury management and
treasury operations in
corporates, external
commercial borrowings,
financing for msmes
Online
link
reposit
ories
A
s
s
u
b

t
o
p
i
c
95% https://www.geeksforgeeks.org/what-are-the-different-so
urces-of-finance/
 
 
https://happay.com/blog/cost-of-capital/
https://www.toppr.com/guides/business-studies/financial
-markets/money-market/
 
 

24. Unit 3Time value
of money :
 
compounding and
discounting, future value
and present value,
annuities,
effective interest rates
Online link
repositories
As sub topic95% https://www.investopedia.com
/articles/03/082703.asp
 
 
Unit 4 
Cost of
capital
firm’s overall cost of
capital, cost of debt, cost
of preference, cost of
equity, using
CAPM and WACC in
practice
 
Online link
repositories
As sub topic95% https://happay.com/blog/cost-
of-capital/
 
Unit 5Investment
decisions-I
importance and process,
classification of
investment projects,
methods of
capital budgeting,
payback period, post
payback period,
accounting rate of return,
discounted
payback
Online link
repositories
As sub topic95% https://
atimysore.karnataka.gov.in/
uploads/
media_to_upload1686224358.
pdf
 
Unit 6Investment
decisions-II
:
 
net present value,
internal rate of return,
profitability index, risk
analysis
in projects using
sensitivity and scenario
analysis
Online link
repositories
As sub topic100% https://
atimysore.karnataka.gov.in/
uploads/
media_to_upload1686224358.
pdf
 
https://
corporatefinanceinstitute.com/
resources/financial-modeling/
scenario-analysis-vs-sensitivity-
analysis/
 

25. OER, benefits, and availability on the LMS
interface of students
•Benefits: Students can have the access to online
resources for the coverage of course content to
develop the additional skills that can help them in the
better learning of the course.
•Availability: For availability, either the OER file be
shared via LPU Live or links may be shared in the
form of UMS announcements

26. Innovative pedagogies like Flipped
classroom/Blended Learning
Innovative pedagogies:
Discussing financial management examples, quizzes games

27. Cohorts
•Equity Analytics
•Risk Analytics
•Financial Analytics

28. Skill Attainment

29. Feedback
•Zero lecture
•Course outcome
•Syllabus coverage
•Teacher feedback
•Or any other feedback

30. Department of Academic Affairs’ Social Media QR Code