FINC2012 Notes (HD: 99 - 3rd in course)

Description

Comprehensive FINC2012 Corporate Finance II notes covering the full 12-week course: Week 1 – NPV and Investment Decisions: Relevant cash flows, taxation, working capital, inflation, project timing and equivalent annual cost. Week 2 – Risk and Cost of Capital: WACC, debt and equity costs, beta, project risk and risk-adjusted discounting. Week 3 – Project Analysis: Sensitivity, scenario and break-even analysis, operating leverage, Monte Carlo simulation and decision trees. Week 4 – Sources of Value: Competitive advantage, economic rents, market-based valuation and avoiding forecasting errors. Week 5 – Understanding Options: Calls and puts, payoffs, profits, put-call parity, moneyness, valuation bounds and volatility strategies. Week 6 – Valuing Options: Risk-neutral valuation, binomial trees, Black–Scholes pricing and option risk. Week 7 – Real Options: Options to expand, delay, abandon or temporarily suspend projects. Week 8 – Capital Structure I: Financial leverage, Modigliani–Miller propositions, EPS, financial risk and leveraged beta. Week 9 – Capital Structure II: Tax shields, financial distress, shareholder–creditor conflicts, trade-off theory and pecking-order theory. Week 10 – Financing and Valuation: Business valuation using WACC, free cash flow, terminal value, flow to equity and adjusted present value. Week 11 – Payout Policy: Dividends, share repurchases, signalling, payout irrelevance, taxes, clienteles and agency costs. Week 12 – Financial Ratios: EVA, MVA, return measures, DuPont analysis, leverage, coverage and liquidity ratios. Includes clear explanations, key formulas, worked examples and weekly summaries—ideal for revision and exam preparation.