15.402 | Spring 2003 | Graduate

Finance Theory II


Part I: Financing


The aim of this part of the course is to develop a framework to think about how firms finance their activities. We will go back and forth between developing theories and confronting them to specific practical cases.

1 Lecture: Introduction
2 Case: Wilson Lumber 1
3 Case: Wilson Lumber 2
4 Lecture: Capital Structure 1
5 Lecture: Capital Structure 2
6 Case: Debt Policy at UST Inc.
7 Case: Massey Ferguson, 1980
8 Lecture: Capital Structure: Informational and Dynamic Considerations
9 Case: MCI Communications Corp., 1983
10 Review of Financing and Capital Structure
11 Case: Intel Corporation, 1992

Midterm Exam

Part II: Valuation


The aim is to study and develop tools to evaluate real investment opportunities, such as building a new plant or acquiring another company. Again, we develop a framework of analysis and confront it to several practical cases.

12 Lecture: Valuation of Free Cash Flows
13 Case: Cost of Capital at Ameritrade
14 Lecture: WACC and APV 1
15 Lecture: WACC and APV 2
16 Case: Dixon Corporation 1
17 Case: Dixon Corporation 2
18 Case: Diamond Chemicals (A)
19 Lecture: Real Options
20 Case: MW Petroleum Corporation (A)
21 Lecture: Valuing a Company
22 Case: Cooper Industries, Inc.
23 Case: The Southland Corporation (A)
24 Wrap-Up of Valuation

Final Exam

Course Info

As Taught In
Spring 2003
Learning Resource Types
Lecture Notes
Exams with Solutions
Written Assignments