Aswath Damodaran – Corporate Finance (NYU MBA Course WEBCAST)
Salepage : Aswath Damodaran – Corporate Finance (NYU MBA Course WEBCAST)
What exactly is corporate finance?
Every business choice has financial repercussions, and every decision that impacts a company’s finances is a corporate finance decision.
In its broadest sense, corporate finance encompasses everything a company does.
Goals of the course
To prepare you to grasp the theory and use the skills developed in corporate finance in real-world circumstances.
Class motto: Who cares if it can’t be applied?
To provide you with a broad overview of corporate finance so that you can see how everything fits together.
Class motto: Forget the specifics, but don’t forget the tale.
To demonstrate that corporate finance can be enjoyable.
Class motto: Are we having fun yet?
First lecture:
This is corporate finance in action!
Class Overview
2nd Lecture:
The goal of Corporate Finance
Maximize stockholder wealth, value, and stock price.
Making the planet safe for stock price growth
What could possibly go wrong?
Corporate governance and acquisitions
Conflict between bondholders and stockholders
Information and Markets
The social costs
3rd Lecture:
Corporate governance and acquisitions
Conflict between bondholders and stockholders
Information and Markets
The social costs
4th Lecture:
What happens if market pricing fail?
– Alternative forms of corporate governance
– A distinct aim
– Stock price maximization with restrictions
The correct goal
Defining danger
5th Lecture:
Firm-specific and market-specific risk
The so-called “marginal investor”
All the way to the CAPM and beyond.
The riskfree rate is one of the CAPM’s inputs.
Sixth Lecture:
What, why, and how are sovereign default spreads?
Premium for Equity Risk
– Factors that influence
– Methods of Estimation
7th Lecture:
Choosing a risk premium for equity
Beta
– The conventional regression
– Jensen’s beta
– R cubed
8th Lecture:
Additional thoughts on regression betas
Betas’ Determinants
– Discretionary goods and services
– Cost structure that is fixed
– Monetary leverage
9th Lecture:
Betas from the bottom up
– Justification
– Method for calculating bottom-up betas
Lecture ten:
Betas and equity costs for private companies
11th Lecture:
Determining debt
The expense of debt
Leases are classified as debt.
Capital cost of capital weights
12th Lecture:
The Investment Theory
– Incremental cash flow returns calculated over time
– What exactly is a project?
– Returns on investment
13th Lecture:
From profits to cash flows
– Depreciation’s impact
– Expensive maintenance cap
– Capital for working capital
Cash flow versus incremental cash flow
– Sunk expenses
– Assigned expemses
The transition from incremental to time-weighted cash flows
– NPV vs. IRR
14th Lecture:
Simulations using Monte Carlo methods
Equity Evaluation
– ROE
– Cash flows to equity and net present value
determining the worth of an acquisition target
IRR vs. NPV
15th Lecture:
Reinvestment assumptions: NPV vs. IRR
Advantages and disadvantages
– The cost of opportunity
– Excess capacity costs money.
16th Lecture:
The Apple iTV case is being discussed.
Project synergies
Project alternatives
Analyzing a current project
17th Lecture:
Decisions on Financing
– What exactly is debt?
– A Financing Life Cycle Perspective
– Debt trade-off: Benefits and Drawbacks
Miller-Modigliani Theorem
18th Lecture:
The heirarchy of financing
The cost of capital approach to debt ratio optimization
19th Lecture:
More on the cost of capital strategy
The subsequent to the optimal
– Why?
– What happens if something goes wrong?
– What if, instead of buying back stock, you invest?
The increased cost of capital approach
20th Lecture:
The cost of capital approach is used to determine the optimal debt ratio.
The APV method
Analysis of Relatives
Actual vs. Optimal: Next Steps
21st Lecture:
The best debt for your company
Methods for locating the best debt
– Analytical Intuition
– Project funding
– Regressions of macroeconomic variables
22nd Lecture:
The Principle of Dividends
– Facts that are descriptive
– Three dividend schools of thought
23rd Lecture:
Three compelling reasons to pay dividends
A framework for evaluating dividend policies
24th Lecture:
FCFE and dividends
How much money is too much money?
A framework for evaluating dividend policies
Initial steps in valuation
25th Lecture:
DCF valuation inputs
– Flows of cash
– Price reductions
– Rates of growth
– Maximum value
26th Lecture:
The Big Finish
– A final examination
– Bringing it all together
