HANOI UNIVERSITY

FACULTY OF MANAGEMENT AND TOURISM

Subject Outline
CORPORATE FINANCE

HANOI, AUTUMN 2022

 HANOI UNIVERSITY
FACULTY OF MANAGEMENT AND TOURISM

CORPORATE FINANCE

Subject Details
Subject name Corporate Finance
Units of credit 3
Study length 12 weeks
Prerequisite / Corequisite Financial Management (FMA)
Suggested study
Approximately 8 hours per week
commitment
Year Autumn 2022
Course staff and contact
Mr. Nguyen Anh Tuan, Coordinator, Email: tuanna@hanu.edu.vn
details
The subject outline contains important information. Please ensure that you read it carefully. It is
also strongly recommended that you keep this copy of your subject outline for future reference.
Subject aim/rationale
This is an analytical unit that deals with the financial behaviour of firms, and examines finance theory,
practice and financial management within the context of Australian companies. The methods by which
financing and investment opportunities are evaluated by firms are discussed. Emphasis is placed on the
ways in which the financial policies of companies, such as policies concerning investment, capital
structure, cost of capital and dividend decision-making, are determined so as to maximise the value of
the firm to its owners. The effect of various tax regimes on such decision-making is evaluated in detail.
Corporate acquisitions and other specialist areas of corporate finance, such as the use of share repurchase
programs and corporate restructuring, are also considered.
Aims:
1) To develop an understanding of the theory and methodology of finance and how it is applied to
evaluate the investment, financing and dividend decisions of the firm;
2) To understand the operating and financial structures and goals of listed corporations and how they
make decisions to maximize the value of their owners’ claims;
3) To develop competency in the application of analytical and valuation techniques to a variety of
issues and problems relating to the financial management of listed corporations; and
4) To understand the implications of corporate and personal taxes, within the context of the dividend
imputation system, behavioural characteristics and market imperfections on corporate financial
policy and decision-making.
Subject objectives
The learning outcomes from completion of this unit include:
1) Achievement of sufficient knowledge of the theoretical background and underlying principles of
finance for entry-level employment in a corporate finance or related department within a listed or
unlisted corporation, a government business enterprise or a government or regulatory department.
2) Being technically competent in evaluating corporate financing decisions and applying valuation
principles to determine the effects of corporate financing decisions.
3) The ability to apply theoretical principles and knowledge to practical decision situations and be able
to rationally consider the potential decision responses and discriminate the advantages,
disadvantages and consequences of implementing these decisions on the structure, risk and valuation
of the underlying business.
4) Appreciation of the empirical evidence regarding the shareholder wealth effects of corporate
financing decisions and incorporating this evidence into the practical decision-making environment.
5) Thorough understanding of the regulatory and operating environment of the Australian capital
market, and how decision-making is facilitated or incumbered within this environment.
6) Appreciation of the unique taxation environment within Australia and comprehension of how
taxation considerations direct and influence corporate decision-making relating specifically to
financing and dividend policy decisions.
7) The ability to interpret corporate financial information, such as that provided in company annual
reports, takeover announcement documents, prospectus issues, stockbroker releases and financial
database products, and to incorporate current and new financial information into valuing corporate
enterprises and modifying corporate strategy and decision-making processes.
8) Understanding of the roles of corporate decision-makers, such as company managers and directors,
and their legal and ethical responsibilities to company stakeholders, including shareholders,
employees and regulators. In association with the above understanding, the ability to identify
situations where conflicts of interest or agency problems may exist or develop, and the means
available to companies or their stakeholders to avoid such situations.
9) Development of general analytical, mathematical and problem-solving skills applicable to a
corporate financing environment.
Subject materials
Topics to be covered in this subject will be centered around relevant textbook chapters. Lecture notes
will provide students with major issues in financial management. Additional materials may be provided
to help students understand subject matters.

Subject structure
The structure of this subject for on-campus students comprises:
• One 2.5 periods lecture per week
• One 2.5 periods tutorial per week
Reference textbook:
§ Corporate Finance, Eleventh Edition, Ross, Westerfield and Jaffe, McGraw-Hill
Australia Pty Ltd., 2016.
§ Principles of Corporate Finance, 12th Edition, Breadley, Myers, Allen, McGraw-
Hill, 2016
§ Coporate Finance, Fourth Edition, Global Edition, Jonathan Berk, Peter DeMarzo,
Pearson, 2017
§ Fundamentals of Corporate Finance, 2nd Edition, Parrino, Kidwell, Bates, Wiley,
2011

Assessment
Assessment for ALL students
Assessment for the subject will be on the basis of:

1. Participation Required assessment Yes 10%

2. Progression test Required assessment Yes 40%

3. Final exam Required assessment Yes 50%

1. Participation (10%): Students are required to attend lectures and tutorials in accordance with
the participation policy of the FMT.
2. The Progression Test (40%): 2 test will be held during the regular lecture period. It will be
held on week 8 and week 15. (50-60 minutes)
3. The final exam (50%): will be held in the exam week. The exam will cover the material in
Weeks 1-13. It will be a two-hour written examination. Final exam format will be discussed
during revision in the last week of the semester.

Consultation

Available for consultation by appointment.

Email is the preferred method of contact.
Assessing the learning objectives
CQs: Concept Question
Q&Ps: Question and Problem
Topic
Introduction to Corporate
Finance
Discounted Cash Flow Valuation
and Investment Appraisals
Making Capital Investment
Decisions.
Risk Analysis, Real options
Financial Statement and Cash
Flow – SELF STUDY
Capital Structure Policy (Basic
Concepts)
Topic Learning Objectives
1. What is Corporate Finance?
2. The Corporate Firm
3. The Importance of Cash Flows
4. The Goal of Financial Management
5. The Agency Problem and Control of the Corporation
Literature:
Ross et al, chapter 1
CQs: 1, 2, 10
1. Present Value and Discounting
2. Compounding
3. Simplifications
4. What is a Firm Worth? - Self-study
5. NPV – Net Present Value
6. Payback Period, Discounted Payback Period
7. IRR – Internal Rate of Return
8. Problems with the IRR Approach
9. Profitability Index, Capital Rationing
10. The Practice of Capital Budgeting
Literature:
Ross et al, chapter 4, 5
Chapter 4: CQs: 1, 2, 8, Q&Ps: 10a, 16, 18, 26, 34
Chapter 5: CQs: 1, 9. Q&Ps: 1, 5, 17, 27
1. Incremental Cash Flows: The Key to Capital Budgeting
2. The Baldwin Company: An example – Self-study
3. Inflation and Capital Budgeting
4. Alternative Definition of Operating Cash Flow
5. Expansion Projects, Replacement Projects
6. Some Special Cases of Discounted Cash Flow Analysis
7. Sensitivity Analysis, Scenario Analysis
8. Monte Carlo Simulation - Self-study
9. Real Options (Timing options, sizing options, flexibility options, Fundamental
options)
10. The Capital Asset Pricing Model (CAPM)
11. The Weighted Average Cost of Capital
12. Flotation Costs and the Weighted Average Cost of Capital
Literature:
Ross et al, chapter 6, 7
Chapter 6: CQs: 2, 3, 7 Q&Ps: 1, 2, 6, 10, 15, 21, 30
Chapter 7: Q&Ps: 6, 7, 17, 18, 19
Chapter 11, 12, 13
1. The Balance Sheet
2. The Income Statement
3. Taxes
4. Net Working Capital
5. Financial Cash Flow
6. The Accounting Statement of Cash Flows
7. Cash Flow Management
Literature:
Ross et al, chapter 2
1. The Capital Structure Question and The Pie Theory
2. Maximizing Firm Value versus Maximizing Stockholders’ Interests
3. Financial Leverage and Firm Value: An Example
4. Modigliani and Miller: Proposition II (No Taxes)
5. Costs of Financial Distress
6. IntegrationofTaxEffectsand Financial Distress Costs
7. The Pecking-Order Theory
8. Personal Taxes
9. How Firms Establish Capital Structure
Topic Topic Learning Objectives

Literature:
Ross et al, chapter 16,17
Chapter 16: CQs: 6; Q&Ps: 1, 4, 8, 18, 19, 20
Chapter 17: Q&Ps: 5, 6, 8
Short-Term Finance and 1. Net Working Capital
Planning 2. The Operating Cycle and the Cash Cycle
3. Cash Budgeting
4. The Short-Term Financial Plan
Literature:
Ross et al, chapter 26
Chapter 26: 1, 3, 4, 5, 6
Short-Term Finance and 1. Credit and Receivables
Planning (cont.) 2. Analyzing Credit Policy
3. Credit Analysis
4. Collection Policy
5. Inventory Management
Literature:
Ross et al, chapter 27, 28
Chapter 27: 10, 11
Chapter 28: 5, 7, 9
Dividends & other Payouts 1. Different Types of Payouts
2. Standard Method of Cash Dividend Payment
3. Different Types of Payouts
4. Irrelevance of Dividend Policy
5. Repurchase of Stock
6. Personal Taxes, Dividends, and Stock Repurchases
Literature:
Ross et al, chapter 19
Chapter 19: CQs 3, 18; Problems: 10, 11, 14, 17
Leasing 1. Types of Lease
2. Accounting and Leasing
3. The Cash Flows of Leasing
4. NPV Analysis of the Lease-versus-Buy Decision
5. Reason for Leasing
Literature:
Ross et al, chapter 21
Q&Ps: 7, 8, 13a, 13c, 14, 18a
Mergers, Acquisitions, and 1. The Basic Forms Acquisitons
Divestitures 2. Synergy and Source of Synergy
3. The NPV of a Merger
4. Going Private and Leverage Buyout
5. Divestitures
Literature:
Ross et al, chapter 29