This course, designed for finance students, introduces basic principles of financial management in business. It provides students with a scientific framework for valuing assets, evaluating investment opportunities, and choosing proper financing methods. The course is divided into three parts. The first part focuses on capital budgeting. Here, different types of investment evaluation techniques will be discussed and compared. The second part discusses the determinants of the cost of capital – a key variable of capital budgeting. The last part overviews corporate financing decision including capital structure decision and dividend policy.

CILO-1: Describe the agency problem encountered by a corporation, and identify possible mechanisms to alleviate the agency problem. CILO-2: Explain the concept of the time value of money, and calculate values of various financial securities using the discounted cash flow method. CILO-3: Identify and estimate cash flows that are relevant to a project, including its operating activities, net working capital and capital spending. CILO-4: Measure risk and return, and explain the trade-off between risk and return in financial markets. CILO-5: List the primary sources of capital, explain the methods of calculating the costs of various sources of capital and incorporate the costs in capital budgeting analysis. CILO-6: Discuss and evaluate alternative financing choices and their impacts on firm value. CILO-7: Provide theoretical framework and discussion on evaluating different financing choices related to the use of debt and dividend.