Finanzas II – Investment decisions (in English)

2021-02
Undergraduate

Professor: Maximiliano Gonzá lez, Ph.D.

Office: SD 973
E-mail: maxgonza@uniandes.edu.co

Office hours for students: Before or after class or any other day by appointment.
Class schedule: Tuesdays and Thursdays, 9:30am-10:45 pm.
Classroom: (Virtual) Zoom: https://uniandes-edu-co.zoom.us/j/84649341113

Monitor: Sebastiá n Saad

E-mail: s.saad@uniandes.edu.co

Description
The investment course seeks to familiarize students with different techniques of investment analysis and how to
apply these techniques to practical problems in financial decision-making. We will begin the course with a module
on basic financial mathematics and concepts, ranging from interest rate calculations and time value of money to
specific investment decision rules. We will then study in more depth the capital budgeting process and the role that
sensitivity and simulation analysis can play in this context. Finally, we will give and introduction of the pricing of
bonds and stocks.

Justification
With the tools and concepts learn in this course students will be able to make good investment decisions through
the capital budgeting process and the correct use of financial tools available.

Learning objective of the program associated with the course

Objective 3: Students will make decision based on information and knowledge.

Specific course’s learning objectives

• To construct, use, and analyze quantitative financial models based on financial information, to diagnose
and make forecast of firms’ financial situation.

• To make good financial decisions based on the concept of value creation (NPV).

• To familiarize with the capital budgeting process.

• To use several financial tools to value assets (projects, bonds, and stocks).

• To incorporate risk in their financial analysis.

Methodology
The course will combine several different methodologies. In the lectures, I will present formal results and develop
analytical examples of concepts. This material will be complemented by workshops with the monitor in which
students will work problems and resolve doubts they may have with respect to these problems. It will be the
responsibility of the student to access the SICUAPLUS system on a regular basis to download the course materials
placed there.

Evaluation
The course will be evaluated according to the following scheme:

Partial exam 1 15%

Partial exam 2 15%
Partial exam 3 15%
Final exam 20%
Case 25%
(*)
Class Participation 10%

Total 100
%

(*) The 25% grade will be distributed the following way: 5% individual participation (to be evaluated before the
end of the classes where the case is being discussed; 20% four Excel spreadsheet models to be handled as a group
before the start of the classes where the case is being discussed, and a final 1-page recommendation report (see
details below).
 Detailed Program:
Session Date Date Description Readings
1 Tuesday 08/10/2021 Overview of course, valuing decisions and ByDM: Ch.3.
valuation principles, the law of one price
See also: Gonzá lez et
al. 2020. Introduction
and Chapter 1.
2 Thursday 08/12/2021 Time value of money ByDM: Ch. 4

3 Tuesday 08/17/2021 ByDM: Ch.5

Interest rates

4 Thursday 08/19/2021 Interest rates (cont.) ByDM: Ch.3, 4, 5

5 Tuesday 08/24/2021 Review Session

6 Thursday 08/26/2021 Partial exam 1

7 Tuesday 08/31/2021 Valuing bonds ByDM: Ch. 6

8 Thursday 09/02/2021 Valuing bonds (cont.)

9 Tuesday 09/07/2021 Investment decisions rules ByDM: Ch. 7

See also: Gonzá lez et
al. 2020. Chapter 4.
10 Thursday 09/09/2021 Investment decisions rules (cont.)

11 Tuesday 09/14/2021 ByDM: Ch. 8

Capital budgeting
See also: Gonzá lez et
al. 2020. Chapter 4.
12 Thursday 09/16/2021 Capital budgeting (cont.)

13 Tuesday 09/21/2021 Partial exam 2

Session Date Date Description Readings
14 Thursday 09/23/2021 Valuing stocks ByDM: Ch. 9

15 Tuesday 09/28/2021 Valuing stocks (cont.)

16 Thursday 09/30/2021 ByDM, Ch. 12, sections:

12.3, 12.5, and 12.6
Weighted Average Cost of Capital (WACC)
See also: Gonzá lez et
al. 2020. Chapter 5.
INDIVIDUAL STUDY WEEK
(10/04/2021 to 10/08/2021)

17 Tuesday 10/12/2021 Weighted Average Cost of Capital (WACC)-Cont.

18 Thursday 10/14/2021 Weighted Average Cost of Capital (WACC)-Cont.

19 Tuesday 10/19/2021
Weighted Average Cost of Capital (WACC)-Cont.

20 Thursday 10/21/2021
Partial exam 3

21 Tuesday 10/26/2021 ByDM: Ch. 19

Valuation and financial modeling: A case study See also: Gonzá lez et
al. 2020. Chapter 3.
22 Thursday 10/28/2021 Valuation and financial modeling: A case study See also: Gonzá lez et
(cont.) al. 2020. Chapter 4.

23 Tuesday 11/02/2021 Valuation and financial modeling: A case study See also: Gonzá lez et
(cont.) al. 2020. Chapter 6.

24 Thursday 11/04/2021 Valuation and financial modeling: A case study See also: Gonzá lez et
(cont.) al. 2020. Chapter 7.

25 Tuesday 11/09/2021 Case discussion part 1 (*)

26 Thursday 11/11/2021 Case discussion part 2

GLOBAL BUSINES SCHOOL

(11/15/2021 to 19/11/2021)

27 Tuesday 11/23/2021 Case discussion part 3

28 Thursday 11/25/2021 Case discussion part 4

Final Exam (Exam week)

(*) Groups of 5 or maximum 6 students will do a valuation case (to-be-announced later). The case will be required
four classes to go through:
   In class 27, we will discuss the
case problem (s) and facts. Groups have to hand in (before class begins) an Excel spread sheet
with the basic financial model supported by an assumption table, Income Statement, Balance
Sheet, Statement of Cash Flow. (5%).
 In class 28, groups will adjust the Excel spreadsheet (from the issues raised in the discussion of
class 27) and hand in (before class) a new adjusted version of their model together with the
Free Cash Flow, WACC estimation and Valuation Model (5%).
 In class 29 groups will hand in a new adjusted version of its model (from the issues raised in the
discussion of class 28) together with the sensitivity, breakeven, and scenarios analysis (5%).
 Finally, in class 30, the group will hand in a final version of its Excel spreadsheet model
(adjusted with the issues raised in the discussion of class 29) together with a Montecarlo
simulation analysis and a short report (maximum 1 pages long) with their final
recommendation (5%).

Cláusula de ajustes razonables: “Los ajustes razonables  tienen el objetivo de eliminar las posibles barreras,

visibles o invisibles, que impiden el pleno goce del derecho a la educación. En las circunstancias actuales, el protocolo
de ajuste razonable se adapta para considerar las dificultades específicas que enfrentan los estudiantes, incluyendo
barreras de conectividad, de acceso a recursos tecnológicos apropiados, barreras de salud física y mental de los
estudiantes o de sus familiares, que se agudizan en el confinamiento.
Si usted lo considera necesario o importante, siéntase en libertad de informar a su profesor/a lo antes posible si existe
alguna barrera o dificultad, dentro de las señaladas anteriormente, y requiere de algún tipo de ajuste razonable para
estar en igualdad de condiciones con los y las demás estudiantes.”   
 
 
Política de momentos difíciles: “Todas las personas pueden pasar por un momento difícil que de alguna manera
pueda afectar nuestra vida en la Universidad. Pueden ser problemas en casa, con la pareja, incluso estrés por esta u
otra materia. Si usted siente que está pasando por un momento complicado, sin importar el motivo, siéntase con la
tranquilidad de hablar con la profesora para pedir tiempo o apoyo. Ningún trabajo o entrega puede sobrepasar su
salud mental y física. Su bienestar es lo más importante.” 

References

Berk, Jonathan & Peter DeMarzo (2014), Corporate Finance, Third Ed. Pearson-Addison Wesley.

Gonzá lez, Maximiliano; Guzmá n, Alexander; Trujillo, María Andrea (2020), Gerencia Basada en Valor: Hacia un
proceso sistemá tico para la toma de decisiones financieras efectivas en el contexto Latinoamericano. Editorial
CESA. (https://books.google.com.co/books?
id=43n1DwAAQBAJ&printsec=frontcover&hl=es&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false )