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2019/2020  BA-BHAAI1028U  Undergraduate Corporate Finance

English Title
Undergraduate Corporate Finance

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration Summer
Start time of the course Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 120
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Course instructor: Gregory Perelman, Lecturer, Graduate School of Management, University of California, Davis.
    Sven Bislev - Department of Management, Society and Communication (MSC)
For academic questions related to the course, please contact instructor Gregory Perelman at gperelman@ucdavis.edu
Other academic questions: contact academic director Sven Bislev at sb.msc@cbs.dk
Main academic disciplines
  • Finance
Teaching methods
  • Face-to-face teaching
Last updated on 12/11/2019

Relevant links

Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • Calculate the weighted average cost of capital, including the cost of debt with appropriate default risk premiums, cost of equity based on regression and/or bottom up betas and market risk premiums, and appropriate weights for debt and equity;
  • Estimate the value of company/project by building proforma financial statements and then applying correct framework to estimate free cash flows;
  • Apply the analytical tools of sensitivity and scenario analysis to make informed investment decisions;
  • Determine the optimal capital structure and understand how companies raise equity and debt;
  • Apply best practices in dividends and stock repurchase decisions;
Course prerequisites
Introductory course in accounting required
Introductory course in finance required
Undergraduate Corporate Finance:
Exam ECTS 7.5
Examination form Written sit-in exam on CBS' computers
Individual or group exam Individual exam
Assignment type Written assignment
Duration 4 hours
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Summer, Ordinary exam: 4 hour written exam in the period of 27–31 July 2020
Retake exam: 4 hour written exams in the period of 28 September–2 October 2020
3rd attempt (2nd retake) exam: 72-hour home assignment- 23-26 November 2020 – for all ISUP courses simultaneously

Exam schedules available on https:/​/​www.cbs.dk/​uddannelse/​international-summer-university-programme-isup/​courses-and-exams
Aids Open book: all written and electronic aids, including internet access
Read more here about which exam aids the students are allowed to bring and will be given access to : Exam aids and IT application package
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Retake exam: 4 hour written sit-in exam, new exam question
Exam form for 3rd attempt (2nd retake): 72-hour home project assignment, max. 10 pages.
Course content, structure and pedagogical approach

Building on introductory courses in accounting and finance, corporate finance presents a comprehensive framework for estimating the value of companies and projects; the list of topics covered in the course include, but are not limited to: estimating the appropriate cost of debt and equity; preparation of proforma financial statements for project and company valuation purposes using both fundamental (discounted cash flow) and relative approaches, determining the optimal capital structure, applying best practices in dividend and share repurchase decisions; we will also study how companies raise debt and equity to fund their operations;  case studies are used extensively in this course.


Preliminary assignment: Read: "Assessing a Company’s Future Financial Health"; a set of questions will be provided;
Class 1: Corporate governance and corporate finance objective function;
Class 2: Cost of capital for public and private companies: cost of debt, cost of equity, CAPM, levered/unlevered betas, risk premiums;
Class 3: Capital structure decisions: MM proposition, optimal capital structure; Case 1: Midland;
Class 4: Capital budgeting framework;
Class 5: Mechanics of investment analysis: detailed cash flow forecast, key assumptions, sensitivity and scenario analysis, strategic considerations; Case 2: Hansson;
Class 6: Company valuation: fundamental (DCF) and relative valuation; Case 3: SUN Brewing;
Feedback activity: Midterm exam covering the first half of the course will be posted on Canvas; solutions will be provided and discussed in class; the ordinary course examination will have a similar format, but will cover all of the material covered in the course;
Class 7: Raising capital by large companies: SEC regulations in the U.S., debt ratings, SEO (seasonal equity offerings); Case 4: Goodyear;
Class 8: Raising capital by medium and small enterprises: bank loans; Case 5: U.S. Bank;
Class 9: Corporate dividend and stock repurchase policies; Case 6: Linear Technologies;
Class 10: Investor activism and corporate restructuring: Case 7: Kerr-McGee;
Class 11: Course review: in-class company valuation (DCF/relative);
Description of the teaching methods
All teaching takes place on campus (notice that face-to-face teaching may include the use of online materials and tools.
Feedback during the teaching period
Sample midterm exam covering the cost of capital and valuation techniques will be posted after Class 5; the exam will be reviewed in Class 6; the final exam will be in similar format;

Student workload
Preliminary assignment 20 hours
Classroom attendance 33 hours
Preparation 126 hours
Feedback activity 7 hours
Examination 20 hours
Further Information

Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 1 in order to 'jump-start' the learning process.


Course timetable is available on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams


We reserve the right to cancel the course if we do not get enough applications. This will be communicated on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams end March 2020.


Expected literature

Mandatory readings:


Required reading materials to be purchases from HBS Publishing at this link: https:/​/​hbsp.harvard.edu/​import/​672229
1. Midland Energy Resources, Inc.: Cost of Capital, #4129, Rev. June 19, 2009
2. Hanson Private Label Inc.: Evaluating an Investment in Expansion, Brief Cases, #4021, Rev. March 1, 2010
3. SUN Brewing (B), #9-207-039, Rev. June 28, 2010
4. Goodyear Tire & Rubber Company: Follow on Equity Issues, #UV2555, Rev. Dec 17, 2010
5. U.S. Bank of Washington, #9-292-057, Rev. November 22, 1993
6. Dividend Policy and Linear Technology, #9-204-066, Rev. February 11, 2004
7. Kerr-McGee, #9-207-020, Rev. July 25, 2012
HBS Notes and reading:
1. Assessing a Company's Future Financial Health, #9-911-412, Rev. May 28, 2012
2. Business Valuation: Standard Approaches and Applications, UV6586; rev. Nov. 21, 2013
3. Corporate Valuation and Market Multiples, #9-206-039, Rev. January 16, 2009
4. Note on Alternative Methods for Estimating Terminal Value, #9-298-166, June 8, 1998
5. The Cost of Capital: Principles and Practice, #UV6793, Rev. Nov. 13, 2015
6. Overview of Credit Ratings, #UV0400
7. The Issue Process for Public Securities, #UV0104
8. Note on Bank Loans, #9-291-026, Rev. October 29, 1993


Additional relevant readings:


For background reading:
Ivo Welch, Corporate Finance: 4th Edition, 2017 (Free online access)

Last updated on 12/11/2019