Finance and financial markets are the mechanism that the economy uses to allocate resources across time and shape and share risks. Much of this activity takes place through corporations. The Finance I class will look at finance primarily through the lens of corporations and corporate financial management. The central problem in financial management is the creation of ``value.’’ Specifically, how can managers create value through decisions and actions. The main tool we will develop in the course is measuring value using financial markets. Here, specifically, we will calculate “Net Present Value” (NPV) with the technique of “discounted expected cash flows” (DCF). By the end of the course, you should be able to take a large and complex corporate decision, along with some assumptions, structure the cash-flows in a spreadsheet, calculate the value and make a recommendation. As we work to that goal, we will also discuss:
- How does accounting and basic financial tools used in analysis?
- How does the corporation interact with broader financial markets. Here, we will take a look at how corporations get funding in debt and equity markets?
- How do financial markets work? (There is much more on this topic in the Finance II class). 6/13-BR)
Lecture: 100min/wk and Recitation: 50min/wk