Finance Department

Subject: Financing Direct Investments

Academic Year: 2017-2018

SYLLABUS

Topic 1. Direct Investments and Corporate Valuation

1.1.Financial versus direct investments

1.2. The process and elements of investment projects

1.3. Corporate valuation

1.4. Impact of investments on corporate value maximization

Topic 2.Financial Decisions Making

2.1. Projects’ financing resources

2.2. The opportunity cost of capital

2.3. Financing decisions under uncertainty

2.4. Classification of investment projects according to their financial risk

Topic 3. Estimating the cost of equity

3.1. Estimating the cost of equity based on the dividend discount model

3.2. Earnings based model in cost of equity estimation

3.3. The Capital Assets Pricing Model

3.4. Relative techniques in cost of equity estimation

Topic 4. Estimating the cost of debts

4.1. Estimating the cost of bank borrowing

4.2. Estimating the cost of bond borrowing

4.3. Estimating the cost of lease

4.4. Raising debts for projects’ financing

Topic 5. Projects Financing and Corporate Capital Structure

5.1. WACC under fiscal conditions

5.2. Optimal capital structure and new risky projects

5.3. WACC adjustment

5.4. Dividend policy and investment opportunities

Topic 6. Estimating and forecasting cash-flows

6.1. Total cash-flow and its elements

6.2. Cash-flow and net profit

6.3. Methods of cash-flow forecasting

6.4. Choosing the right cash-flows discount rate

Topic 7.Investment Decision Making

7.1. Investment decision under certainty

7.2. Investment decision under uncertainty

7.3. Capital budgeting process

7.4. Capital budgeting techniques

Topic 8. Discount based capital budgeting techniques

8.1. The net present value of an investment project

8.2. The discounted payback period

8.3. The internal rate of return and its traps

8.4. The profitability index

Topic 9. Critical approach of capital budgeting techniques

9.1. Superiority of NPV on other capital budgeting techniques

9.2. Investment strategies under financial constraints

9.3. Limits of capital budgeting techniques

Topic 10.Double rate investment criteria

10.1. Cash-flow reinvesting approach

10.2. The modified net present value

10.3. The modified internal rate of return

10.4. The modified profitability index

References:

1. Bodie Z., Kane A., Marcus A.(2007), Essential of Investments, McGraw-Hill

2. Ehrhardt M., Brigham E.F. (2002), Corporate finance, South Western College Pub

3.Eiteman D.K., Stonehil A.I., Moffett M.H. (2009), Multinational Business Finance, Hardcover

4. Galesne A. (1996), „Choix d’investissements dans l’entreprise”, Rennes: CEREFIA

5.Gaughan P.A. (2007), Mergers, Acquisitions and Corporate Restructuring, Hardcover

6.Hirschey M., Kose J., Makhija A. (2003), Corporate Governance and Finance, Advances in Financial Economics, JAI Press

7.Renneboog L. (2006), Advances in Corporate Finance and Asset Pricing, Emerald Group Publishing

8.Ross S. A., Westerfield R.W., Jaffe J. (2002), Corporate Finance, McGraw-Hill

Head of DepartmentResponsible of Subject

Professor Ciumaș Cristina PhDAssociate Professor Filip Angela-Maria PhD

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NOTE: This document represents an informal translation performed by the faculty member.