EDHEC Business School

MBA Program

Spring 2015

Advanced
Corporate Financial Management

Professor James K. Seward, Instructor

University of Wisconsin-Madison

EDHEC Business School, MBA Program Spring 2015

Advanced Corporate Financial Management

Course Overview:

This course examines in detail the basic decisions made by financial

decision-makers.
There is an emphasis on the formulation and
implementation of financial solutions to corporate problems and
opportunities.
Therefore, the course will consist primarily of case
discussions and analyses.
The readings and articles that I have assigned are largely meant to serve
as background material that will help you analyze the cases. They should
not necessarily be cited in the case discussion. Our classroom emphasis
will be the process of arriving at an answer, rather than arriving at correct
answers.

Course Materials:

(1)
(2)

A packet of cases
A packet of readings

TEXT Brealey and Myers, Principles of Corporate Finance (11th

Edition)
Class Participation:

For each case, I will assign study questions concerning the case. For most
of the class period, we will consider these questions and the material in the
case. You are allowed and encouraged, but not required to meet in groups
outside of class to discuss and analyze the cases. You will find that these
group discussions complement the class discussion well.
Class participation is an important component of your final grade. Your
performance will be judged on the quality and the quantity of your
comments. Because of these criteria, it is important that you attend every
class, arrive on time, and be prepared to participate.

Individual or Group
Assignments:

Each student will submit a two-to three-page memorandum of analysis and

recommendations at the beginning of three case discussions.
Memorandum should be prepared for the following three case
assignments: Pressco or Dell (March 11); DuPont (March 13); and
Southport Minerals or Interco (March 16). If you are working in a group, I
will accept one memorandum from the group and count it for all students in
the group. Since you have already been assigned to study groups, my
assumption is that these groups will hand in the assignment. No more than
five students are permitted in a group.
Each memorandum should be typed and double-spaced. Write these as if
you were writing a recommendation to the major decision-maker in the
case. The two- to three-page limit is for text only. You may attach as many
numerical calculations as you wish. Memoranda will not be accepted after
the class has met. A memorandum will be given credit if it is handed in and
no credit if it is not.
The final exam will be distributed in class during our final day. The exam is
an individual assignment (i.e., you must prepare the exam individually
without any input or consultation from any other students). The exam is a

EDHEC Business School, MBA Program Spring 2015

Advanced Corporate Financial Management

take-home assignment and will be due on a mutually agreed upon date,

subject to approval by the Dean's office. Details about the exam format
and preparation guidelines will be discussed in class.
I expect you to come to class prepared to fully discuss the reading
assignment and case during sessions when there is no written assignment.
Grading:

(1)
(2)
(3)

Class Participation (20%)

Memoranda (45%, or 15% each for the three written assignments)
Final Take-Home Exam (35%)

EDHEC Business School, MBA Program Spring 2015

Advanced Corporate Financial Management

Class Assignment Details

Sessions 1.& 2.

March 9, 2015 (morning)

Topic:

Capital Structure and the Cost of Capital

Case:

Marriott Corporation (HBS 9-289-047)

Reading
Assignment:

HBS "Do You Know Your Cost of Capital?"

HBS "Business Valuation and the Cost of Capital"
HBS "Diversification, the CAPM, and the Cost of Equity"
HBS "Leveraged Betas and the Cost of Capital"
HBS "Bond Ratings"
Note on the Theory of Optimal Capital Structure"

Sessions 3. & 4

March 9, 2015 (afternoon)

Topic:

Cost of Capital Estimation in Multi-division Firms

Case:

Marriott Corporation (HBS 9-289-047)

EDHEC Business School, MBA Program Spring 2015

Advanced Corporate Financial Management

Sessions 5. & 6.

March 10, 2015 (morning)

Topic:

Basic Valuation Methods and Models

Reading
Assignment:

HBS "Calculating Free Cash Flows"

HBS "An Introduction to Cash Flow Valuation Methods"
HBS "A Note on Adjusted Present value"
HBS "Using APV: A Better Tool for Valuing Operations"
HBS "Introduction to Valuation Multiples"
HBS "Corporate Valuation and Market Multiples"
HBS "What's It Worth? A General Manager's Guide to Valuation"

Sessions 7. & 8.

March 11, 2015 (morning)__________________

Topic:

Estimating Investment Cash Flows

Case:

Pressco, Inc. 1985 (HBS 9-292-085)

Sessions 9. & 10. March 11, 2015 (afternoon)

Topic:

Working Capital Management

Case:

Dell's Working Capital (HBS 9-291-033)

EDHEC Business School, MBA Program Spring 2015

Advanced Corporate Financial Management

Sessions 11. & 12.

March 12, 2015 (morning)

Topic:

Valuation of Information Technology Capital Expenditure Decisions

Case:

Whirlpool Europe (HBS 9-202-017)

Sessions 13. & 14.

March 12, 2015 (afternoon)

Topic:

Capital Budgeting and the Capital Expenditure Approval Process

Case:

Target Corporation (UVA-F-1563)

Sessions 15. & 16.

March 13, 2015 (morning)

Topic:

Investment Decisions as Real Options

Case:

DuPont Titanium Dioxide (HBS 9-284-066)

Reading
Assignment:

Kester, Todays Options for Tomorrows Growth

Sessions 17. & 18.

March 16, 2015 (morning)

Topic:

Adjusted Present Value Method of Valuation: Project Finance

Case:

Southport Minerals, Inc. (HBS 9-274-110)

Reading
Assignment:

HBS " An Overview of the Project Finance Market"

EDHEC Business School, MBA Program Spring 2015

Advanced Corporate Financial Management

Sessions 19. & 20. March 16, 2015 (afternoon)

Topic:

Multiples Methods of Valuation

Case:

Interco (HBS 9-291-033)