After successful completion of the course, students are able to understand and apply the most important fundamental principles in Finance and Capital Budgeting. In particular, these includes the transformation of cash flows across time, present value calculation, application and interpretation of various types of interest rates, valuation of investment projects and determination of project cash flows, arbitrage free valuation of bonds, determination of financing costs for short and long term credit financing instruments, and valuation of stocks using classic valuation methods.

Time value of money (valuation of cash flow streams, discounting ang compounding, present value and futures value, compound interest effect, net present value, perpetuity, annuity)

Interest Rates (discount rate, effective interest rate, term structure, spot rates, forward rates, interst rates and rating, discrete and continuous rates)

Investment Decision Rules (static vs. dynamic methods, NPV, stand-alone projects, internal rate of return, payback rule, choosing between projects)

Capital Budgeting (calculation of free cash flow and NPV, sensitivity and scenario analysis, sunk costs)

Valuing Bonds (Zero Bonds, coupon bonds, yield to maturity, arbitrage free valuation, term structure, clean vs dirty price, corporate bonds)

Credit Financing (long-term bank loan, short-term financing (overdraft facilities, customer prepayments, supplier credit)

Valuing Stocks (Dividend-Discount Model, Discounted Free Cash Flow Model)

Presentation of main teaching topics;

Calculation and discussion of exercises;

Discussion of cases

The first session is scheduled for Thursday, March 7^th, 2024, 8:00, in lecture room HS 18 (Cuber).

The TUWEL course with all materials (slides, exercises, take home exams) will be available from March 1^st, 2024, onwards.

Test 1 (topics of the examination: written, short numerical tasks plus a view multiple-choice questions, achievable number of points: 40)

Test 2 (topics of the examination: written, short numerical tasks plus a view multiple-choice questions, achievable number of points: 40)

Several Take Home Exams (Solving of case examples and small exercises, in total achievable number of points: 20)

Jonathan Berk, Peter DeMarzo
Corporate Finance – Global Edition
6. Auflage, 2023
ISBN: 978-1-292-44631-8
Kapitel: 4, 5, 6, 7, 8, 9