Corporate Finance and Valuation Methods

Overview

Syllabus

Courses

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  4 weeks, 1-2 hours a week, 1-2 hours a week

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  This course begins with a look at the connection between the cost of capital to the firm and risk versus expected returns to investors for the different types of corporate securities.

  We’ll look at the trade-offs issuers are considering when assessing the relative cost of different types of capital versus risk to the firm when trying to optimize capital structure. We’ll also learn how to calculate the after-tax cost of debt capital from straight debt and convertible debt, securities based on current borrowing rates as well as calculate the cost of equity capital using both a dividend discount approach and the capital asset pricing model (CAPM).

  This course also looks at the potential issues regarding the cost of equity capital as computed via CAPM as it relates to values used for equity betas, market risk premium and choice of risk-free rate and explain the connection between common stock betas and company leverage, adjust beta for different degrees of leverage in capital structures and describe potential applications of adjusted betas.

  We’ll learn how to calculate weighted-average cost of capital (WACC) and discuss the potential impact on WACC due to changes in capital structure, dividend policy or investment policy.

  We’ll wrap up the course with a look at the rationale for use of WACC or the cost of equity capital in a discounted cash flow valuation, including what cash flow measure either would be appropriate for valuing.

  This course is part 2 of the New York Institute of Finance’s Corporate Finance & Valuation Methods Professional Certificate.

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  4 weeks, 1-2 hours a week, 1-2 hours a week

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  • In this course, we’ll look at the elemental features of basic call and put options and identify the factors which are the key determinants of option values.

  • We’ll also look at the characteristics and methodology used to estimate option values: Black-Scholes and binomial option pricing models.

  • In this course, we’ll also define the term “real option” and draw decision trees to represent alternative decisions and potential outcomes in an uncertain economy and describe three types of real options—timing, growth, and abandonment—and explain why it is important to consider those options when evaluating projects.

  • We’ll explain how an investment for which a negative NPV is projected can have a positive NPV once any embedded real options are properly included in the evaluation as well as describe other methodologies businesses sometimes use to decide among investment projects: Equivalent Annual Benefit, Profitability Index and Hurdle Rate.

  • We’ll wrap up the course with a look at the option equivalents of corporate securities and explain how any insights obtained can be used in determining optimal investing or issuance strategies.

  This course is part 4 of the New York Institute of Finance’s Corporate Finance & Valuation Methods Professional Certificate.

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  4 weeks, 1-2 hours a week, 1-2 hours a week

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  • In this course, we’ll look at the various methods for conducting DCF valuations (no growth, constant growth and variable growth), source of input values and when each is appropriate.

  • We’ll explain the rationale for using free cash flows versus other measures of net resource flows (e.g. dividends, earnings, EBITDA, etc.) when valuing a firm or its common equity. We’ll also learn how to calculate free cash flow (to the firm and to the equity holders) using information from corporate financial statements

  • Next, we’ll discuss the factors that would need to be factored into a free cash flow projection for a DCF valuation, including but not limited to issues impacting sales growth, margins (net and operating) and leverage (operating and financial).

  • We’ll also cover the macroeconomic, industry sector and company-specific factors that color the context for cash flow projections (e.g. industry/product lifecycle or competitive analysis).

  • Next, we’ll learn how to calculate a terminal value for a DCF valuation and discuss issues regarding the sensitivity of a terminal value to assumed growth and discount rates as well as a factor related to the determination of reasonable estimates for those inputs.

  • We’ll also learn how to calculate the value of a firm and the value of its equity using DCF analysis given the appropriate free cash flow projections and discount rates.

  • Next, we’ll discuss alternative methods for determining enterprise value and equity value based on either excess cash and non-operating assets or economic profit and invested capital.

  • We’ll wrap up this course with a look at the components of the widely used valuation ratios and how they are employed in assessing relative value.

  This course is part 3 of the New York Institute of Finance’s Corporate Finance & Valuation Methods Professional Certificate.

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  2 weeks, 1-2 hours a week, 1-2 hours a week

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  In this course, we’ll look at the role of venture capitalists in funding early-stage companies including their position in the capital structure and potential benefits to the early-stage company beyond obtaining capital.

  We’ll describe the different means by which corporations obtain funding in the public and private markets and the differences between offerings registered with the SEC (Securities and Exchange Commission) and transactions that are exempt from that requirement.

  We’ll identify the primary steps from the filing of a registration statement with the SEC to distribution in an initial public offering (IPO) and discuss the most common types of debt offerings by large corporations, 144A offerings and Shelf registrations (Rule 415).

  In this course, we’ll also discuss the factors that lead companies to pursue management buyouts (usually structured as leveraged buyouts and the trade-offs inherent in corporations making investments via M&A (mergers and acquisitions) or strategic partnerships versus de novo investments or organic growth of existing businesses.

  This course is part 5 of the New York Institute of Finance’s Corporate Finance & Valuation Methods Professional Certificate.

Taught by

Douglas Carroll

Tags

• united states