Graduate Corporate Finance

This course covers firms' financial decisions, as in most cases they are at least as important as the operational decisions for the success of these firms.
The first part of the course focuses on evaluating projects and estimating the value of firms using the DCF method, along with understanding the differences between economic (or incremental) value and accounting value.

In the second part we explore the discount rate used in the evaluation of firms: how it is calculated and its link to firms' risk.

The third part deals with capital structure, the tension between equity and debt. Specifically, we learn about raising money, payout policy, bankruptcy, and agency problems such as under-investing and risk-shifting.

Preliminary assignment:
1. Read PCF part 1 chapters 2,3 (or any other review and practice of NPV and discounting);
2. Read the short article, "Apple to return $130bn to shareholders", Apr 23 2014, The Telegraph, and a follow–up, “Apple hikes its dividend and boosts its buyback program”, Apr 30 2019, the Motley Fool, to be discussed in class.

Class 1:Firm structure, objectives and historical overview. The value calculation: discounting and timing; PCF part 1.

Class 2&3: Valuating: firm's value using the DCF method. The incremental value. Theory verses reality, analysts recommendations; PCF part 1.

Class 4&5:Interest, Risk and Return. Expected versus realized. The CAPM model and market efficiency; PCF part 2,4.

Class 6. Capital structure without taxes; PCF part 5.

Feedback activity: an optional "take home mini exam"

Class 7. The different holders: raising money; PCF part 5,6,7.

Class 8&9. Bankruptcy, payout policy, agency problems and CEO's objective; PCF part 3,5,8.

Class 10. Capital structure with taxes, the advantage of issuing debt; PCF part 5.

Class 11. Performance based compensation: an overview, fundamentals, advantages and disadvantages; PCF part 6.

Course leader

Carsten Sørensen - Department of Finance

Target group

This is a graduate level course. CBS Summer University courses at Copenhagen Business School is open to all and welcomes domestic and international students as well as professionals.

Course aim

Evaluate a firm/project, distinguish between accounting value, economic value and incremental value.

Using the theory related to risk and return, explain and show how risk affects the cost of capital.

Calculate the WACC by analyzing the risks involved in each component of the firm.

Know the different objectives of equity holders and debt holders, as well as the agency problems they imply.

Analyze the effect of leverage on bankruptcy risk, required return, yield spread and firms' choices.

Show the impact of performance-based compensation and its influence on firms and employees.

Credits info

7.5 EC
This is a 6-week course. You can combine up to two 6-week courses making 15 ECTS in total.
Find more information on our website.

Fee info

DKK 6000: Tuition fee for Open University students (EU/EEA/Swiss citizenship)
DKK 15000: Tuition fee for non-European students.