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| FINA0050-1 | Valuation and Capital Budgeting
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| Duration : | 30h Th |
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| Number of credits : |
| Master in Management Sciences, in-depth approach, 1st year | | 5 |
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| Master degree in Management, didactic approach, 1st year | | 5 |
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| Master degree in Management, professional focus in Banking and Asset Management, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Performance Management and Control, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Performance Management and Control, 1st year | | 5 |
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| Master degree in Management, professional focus in Law, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Financial Engineering, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Financial Engineering, 1st year | | 5 |
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| Master degree in Management, professional focus in Entrepreneurship, 1st year | | 5 |
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| Master degree in Management, professional focus in Financial Analysis and Audit, 1st year | | 5 |
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| Master in Management Sciences, professional Focus, 1st year | | 5 |
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| Master degree in Management, professional focus in Human Management and Organization, 1st year | | 5 |
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| Master in Management Engineering, professional Focus, 1st year | | 5 |
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| Master in Management Engineering, professional Focus, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Intrapreneurship, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Intrapreneurship, 1st year | | 5 |
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| Master degree in Management, professional focus in Management, 1st year | | 5 |
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| Master en sciences de gestion, à finalité spécialisée en marketing and strategic intelligence, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Modelisation and Technologies, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Modelisation and Technologies, 1st year | | 5 |
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| Master degree in Management, professional focus in Social Entreprise Management, 1st year | | 5 |
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| Master degree in Management, professional focus in Strategic Intelligence and Marketing, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Supply Chain Management, 1st year | | 5 |
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| Master degree in Business Engineering, professional focus in Supply Chain Management, 1st year | | 5 |
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| Master degree in Business Engineering, professional focusin Performance Management Systems, 1st year | | 5 |
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| Master degree in Business Engineering, professional focusin Performance Management Systems, 1st year | | 5 |
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| Master degree in Management | | 5 |
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| Lecturer : | Marie Lambert, Alain Schockert |
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| Coordinator : | Marie Lambert |
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Language(s) of instruction :
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| English language |
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Organisation and examination :
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| Teaching in the first semester, review in January |
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Course contents :
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| The Valuation and Capital Budgeting course contains two distinct but related modules: Capital Budgeting and Firm Valuation.
In the first module "Capital Budgeting", students will acquire theoretical knowledge and practical skills for valuing corporate investment projects. Different capital budgeting techniques will be compared: tracking portfolio approach, NPV rule criterion and arbitrage, discounted cash flow method (risk-adjusted discount rate method and the certainty equivalent method). The superiority of these methods over the Internal Rate of Returns, the Payback or the Accounting Rate of Return criterions will be demonstrated. The module will finally cover the following techniques to capture the impact of financing on project valuation: the Adjusted Present Value, the Weighted Average Cost of Capital and the Flow to Equity methods.
The second module will present guidelines for firm valuation. Students will study in which circumstances we need to value a company and how to proceed. Special attention will be given to corporate events like Initial Public Offering and Merger and Acquisition.
In both modules, illustrative cases will be developed in groups and discussed in class.
Outline
Part I: Capital Budgeting
Basics of discounting and valuation
Valuing real assets
- Tracking portfolio approach: Net Present Value criterion and Discounted Cash Flow methods (risk-adjusted discount rate method and the certainty equivalent method)
- Alternative investment rules
Valuing real assets with corporate taxes
- Adjusted Present Value method
- Weighted Average Cost of Capital
- Flow-to-Equity
Case study analysis
Part II: Firm Valuation
- Economic cycle, interest rates and financial assets
- Valuation methods
- Initial Public Offering (IPO)
- Merger and acquisitions
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Learning outcomes of the course :
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| Tools for project valuation (how to value investment projects, what are good investment decisions?)
Tools for firm valuation (in which circumstances do we need to value a company? how to proceed?)
Intended Learning Outcomes addressed by the courses :
- Strengthening knowledge and understanding of basic management disciplines in order to use them to perform a rigorous analysis of a management situation and provide pertinent solutions
- Ability to speak 2 foreign languages: C1 in English and B2 in one other language
- Capacity to research autonomously and methodically the information needed to solve a complex, transversal management problem, to perform a rigorous analysis of it and to suggest pertinent solutions
- Being capable of professional team work
- Developing leadership
- Developing a critical sense (arguing)
- Developing a transversal, global vision
- Creative conception of solutions
- Professional capacity for oral communication
- Professional capacity for written communication
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Prerequisites and co-requisites/ Recommended optional programme components :
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| Basics of financial mathematics and financial markets |
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Planned learning activities and teaching methods :
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| Lectures, exercise sessions, case studies |
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Mode of delivery (face-to-face ; distance-learning) :
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Recommended or required readings :
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| - Hillier, Grinblatt and Titman, Financial Markets and Corporate Strategy, McGraw-Hill, Second European Edition
- Valuation, A. Schockert - Managing Director at Banque Degroof, 2010-2011, HEC-ULg, 52 pages |
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Assessment methods and criteria :
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| - Class participation (5% of the final mark)
- Final exam (95%)
Relative weighting of individual assessment : 100% |
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Training(s) :
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Organizational remarks :
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Contacts :
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| Marie Lambert - marie.lambert@ulg.ac.be
Alain Schockert - alain.schockert@degroof.be
Tutor: Tarik Bazgour - tarik.bazgour@ulg.ac.be |
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