SyllabusCorporate Finance 7330 Prof. Nisan Langberg [email protected] DescriptionThis course offers a theoretical analysis of the decisions faced by corporate financial officers. Inparticular, both investment decisions (“capital budgeting”) and financial decisions (e.g., how to raisefunds and how much to repay investors) are explored. Several more specialized topics may be covered iftime permits, such as mergers and acquisitions, corporate governance and real options. My goal for this course is that at the end students will be able to apply state of the art techniques tosolving the types of problems faced by managers making investment and financing decisions. Studentswill evaluate investment projects while taking into account uncertainty, tax consequences, and financingeffects. Students will study the financial structure decision while taking into account taxes, bankruptcycosts, information signaling and conflicts of interest.Course Web SiteMaterial will be posted on line. Students are encouraged to visit the class web site – specific URL will beprovided in class. On the class web site students can find lecture notes beforehand – I recommend thatstudents printout the class notes before they come to class each week. Also, handouts, announcements,and other class materials will be posted throughout the semester.TextbookThe text book for the course isCorporate Finance by Jonathan Berk and Peter DeMarzo, Addison-Wesley, 1st or 2nd editionAnother excellent text book isPrinciples of Corporate Finance by Richard Brealey, Stewart Myers, and Franklin Allen, McGraw-Hill, 8thedition (or higher), 2006 Most of the material covered in class can be found in the text book. The text book also containsnumerous real life examples, exercise problems and additional topics in corporate finance that we willnot cover in this course. Students might find the book useful for better understanding the materialcovered in class but also for in-depth coverage of other related topics. The text book is a goodinvestment for all students that seek to work in the area of finance and have an interest in corporatefinance. I have asked for the text book to be reserved in the library.Academic HonestyWhile encouraged to work in groups on homework assignments, I consider it a violation of academichonesty to sign one’s name to an assignment if the assignment was completed substantially by others.HomeworkHomework assignments are designed to practice the concepts that are covered in the lectures and in thereadings. They also offer a chance for students to apply new concepts to more complicated situationsthan are appropriate for the lectures. It is recommended to work on the homework assignments ingroups (of at most four people). Remember to visit the class web page to be current on the due dates.Late homework will not be accepted. If you are unable to attend class, you may submit homework viaemail any time prior to the beginning of class or you can slide it under my office door. If you sendhomework by email remember to write the homework and section numbers in the subject line. Office HoursI will hold office hours in my office upon appointment or you can approach me at the end of the class. Iencourage you to email me any questions you may have to allow faster feedback.Grades The course grade will be based on homework assignments, discussion questions, and the casepresentation (the breakdown by percentages will be provided in class). Discussion questionsI will hand out discussion questions throughout the course. All discussion questions are answered viaemail and count as a bonus for the final grade.Course Outline A tentative time line is provided below. The actual material covered in class might change and thecourse might not eventually cover all the material intended due to time constraints.Tentative timelineWeek Monday Wednesday FridayJuly 11Topic: Introduction and Capital BudgetingReading: Ch. 7Topic: Capital structure in perfect capital markets (Modigliani Miller propositions)Reading: Ch. 14Assignment: Discussion question DQ1Topic: Practice questions (work in groups)Assignment: Homework 1&2chapters 7/14July 18Topic: Capital structure with corporate tax and valuation of the Interest tax shieldReading: Ch. 15Assignment: Discussion question DQ2Homework 1&2 dueTopic: Capital Budgeting with LeverageReading: Ch. 18Assignment: Discussion question DQ3Topic: Practice questions (work in groups)Assignment: Homework 3 chapters 15/18 July 25Topic: Financial distress and the Asset substitution problemReading: Ch. 16Homework 3 dueTopic: Capital Budgeting and Leverage an exampleReading: HBS case WhirlpoolEuropeAssignments: work in groupshomework 4 chapter 16Topic: work in groupsReading: HBS American Chemical CorporationAugust 1Topic: Stock valuation exerciseReading: Ch. 9Homework 4 dueTopic: Student PresentationsAssignment: HBS case American Chemical CorporationCase