Financial Management 1

Credits: 1.5


The main objective of this course is to gain understanding of the theory and practice of financial decision making. This course develops the tools and framework necessary to address the central question in corporate finance: What investment projects should be undertaken to maximize shareholder wealth? To examine this question, we will learn how to value an uncertain stream of cash flows and apply the concept of the time value of money in valuing bonds 11 and equity. The course covers a number of market-based investment criteria and develops an entity valuation model, based on discounted cash flows (DCF) used for standard capital budgeting decisions. We will conclude with a short introduction to the concept of risk and return, resulting in the cost of capital. We will cover a case discussion on capital budgeting to put our framework in a more realistic environment. Financial Management 1 is a prerequisite for taking Financial Management 2. Prerequisites: BACC 2401 Financial Accounting and BQOM 2401 Statistical Analysis. These courses can be taken as co-requisites during the same term. Participating in the Financial Management 1: Workshop on Time Value of Money is required prior to enrollment.