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Finance II

Code: 102328 ECTS Credits: 6
2024/2025
Degree Type Year
2501572 Business Administration and Management OB 3
2501573 Economics OT 3
2501573 Economics OT 4

Contact

Name:
Carlota Menendez Plans
Email:
carlota.menendez@uab.cat

Teachers

Antonio Vila Fernández-Santacruz
Ramon Sanchez Vila
Florina Raluca Silaghi
Paulino Aguilera Malagón

Teaching groups languages

You can view this information at the end of this document.


Prerequisites

Standard requirements for the third course of the undergraduate degree and ii) having followed the subject Finance I. iii) Students registered in Finance II are also expected to have the skills assigned to previous courses.


Objectives and Contextualisation

The course Finance II is aimed at providing basic knowledge necessary for capital budgeting decision making process. Departing from the concepts and the form of reasoning learned in Finance I, this course analyzes and studies some decisions that financial manager has to make on regular basis. All companies are faced with new investment projectswhich they have to analyze from both, economic and financial perspective. In this course the principal existent techniques will be studied, their application, interpretation and adaption to real world. In addition, as there is no investment without financing, the characteristics of the principal source of financing available to companies will be studied, differentianting bwtween small and big companies.

The principal concept of the course is the corporate value creation in the real economy through the selection of nwe investments that are most suited to the corporate strategy. The interaction investment-financing is very important for the company in order to be able to reach its return objectives, without overlooking the cost of capital, always established depending on risk. The important role of risk in finance, which has been already studied in Finance I, continues to be present in deciding the feasibility of new investments in economic and financial sense. In order to create value it is necessary to engage in investment projects capable to create value which depends on the return of the investment and the cost of capital or cost of financing.


Competences

    Business Administration and Management
  • Apply the basic statistics for improving capacity for work in situations of risk, understanding their origins and developing possible strategies for reducing or mitigating their effects.
  • Apply theoretical knowledge of finances to improve relations with sources of financing, identifying the different forms of financing and the advantages and disadvantages for the company and the providers.
  • Capacity for adapting to changing environments.
  • Capacity for independent learning in the future, gaining more profound knowledge of previous areas or learning new topics.
  • Capacity for oral and written communication in Catalan, Spanish and English, which enables synthesis and oral and written presentation of the work carried out.
  • Demonstrate initiative and work individually when the situation requires it.
  • Manage conflicts of interest and in particular conflicts involving proposals for the fair distribution of value generated.
  • Organise the work in terms of good time management, organisation and planning.
  • Select and generate the information necessary for each problem, analyse it and take decisions based on that information.
  • Take decisions in situations of uncertainty, demonstrating an entrepreneurial and innovative attitude.
  • Work well in a team, being able to argue proposals and validate or reject the arguments of others in a reasoned manner.
    Economics
  • Value ethical commitment in professional practice.

Learning Outcomes

  1. A capacity of oral and written communication in Catalan, Spanish and English, which allows them to summarise and present the work conducted both orally and in writing.
  2. Apply the main principles of risk management.
  3. Apply the methodology of financial economy reasoning and differentiate it from its equivalent in real economy.
  4. Assess ethical commitment in professional activity.
  5. Assess investment opportunities from a strategic perspective.
  6. Capacity to adapt to changing environments.
  7. Capacity to continue future learning independently, acquiring further knowledge and exploring new areas of knowledge.
  8. Demonstrate initiative and work independently when required.
  9. Formulate indebtedness and dividend policies.
  10. Make decisions in situations of uncertainty and show an enterprising and innovative spirit.
  11. Organise work, in terms of good time management and organisation and planning.
  12. Select and generate the information needed for each problem, analyse it and make decisions based on this information.
  13. Understand the formation of value from the perspective of shareholders.
  14. Work as part of a team and be able to argue own proposals and validate or refuse the arguments of others in a reasonable manner.

Content

 

1    Investment projects, financing projects and aggregated projects.

1.1   Structuring of investment projects

1.2   Structuring of financing projects

1.3   Structuring of aggregated projects. 

 

2   Capital budgeting techniques for new investment projectes: applictiona and decision criteria 

2.1  The Net Present Value (NPV)

2.2  Internal Rate or Return (IRR) versus màximum cost of capital

2.3  Net Final Value (NFV)

2.4  Complementary criteria: profitability index, discounted pay-bak, equivalent annual annuity

2.5 Other aspects to consider: anomalies in capital budgeting

2.6 Analysis of investment projects through the theory of options: real options

 

3 Risk and uncertainty in capital budgeting

3.1  Risk, uncertainty, forecasts and goals

3.2  Expected value,  risk premium and estimating the required rate of return in capital budgeting

3.3  Introduction to sensitivity analysis

 

 

4. Effect of inflation

4.1 Expected inflation and adptation rate

4.2 Investment project, financing projects and aggregated projects in nominal currency units

 

5 Capital budgeting and strategy

5.1  Market value as the core of capital budgeting

5.2  Competitive advantage and project analysis

5.3  Ethical investment decisions. Socially responsible capital budgeting: Environmental sustainability, social sustainability and financial sustainability

 

6 Financing sources

6.1  Debt versus equity

6.2  Issuing new shares

6.3  Internal financing

 

 7 Introduction to the financial structure of the company and the dividend policy

7.1 Effects of indebtedness on the company and shareholders

7.2 Effects of dividend distribution on the company and shareholders

7.3 Financial policy and value creation

 

 


Activities and Methodology

Title Hours ECTS Learning Outcomes
Type: Directed      
Lectures 32.5 1.3 2, 3, 1, 13
Solving exercises in the classroom 17 0.68 2, 3, 1, 13, 10, 12
Type: Supervised      
Tutorial 10.5 0.42 2, 3, 1, 7, 13, 11, 10, 12
Type: Autonomous      
Findig the solution of exercises and scenarios presented 30 1.2 2, 3, 6, 1, 7, 13, 8, 11, 10, 12, 14
Information search and analysis of exercises and cases 10 0.4 7, 8, 11, 12, 14
Study 45 1.8 2, 3, 6, 1, 7, 13, 8, 11, 10, 12, 14

Teaching will be offered on campus 

Direct activities consist in 49.5 hours of conventional teaching, thar are divided in 65,6% of theory lectures and 34,4% of practical sessions. Theory lectures will consist in active masterclasses where the professor covers the topics but that require an active participation of the student so to understand an learn how to aplly concepts. The professor will encourage student participation in the learning process by suggesting questions and/or samll study cases to analyze. The practical part wil consist in solving exercises and cases either in the classroom or in the computer lab. 

"The propoosed teaching methodology my undergo some modifications according to the restrictions imposed by the health authorities on on-campus courses"

Annotation: Within the schedule set by the centre or degree programme, 15 minutes of one class will be reserved for students to evaluate their lecturers and their courses or modules through questionnaires.


Assessment

Continous Assessment Activities

Title Weighting Hours ECTS Learning Outcomes
First exam of continous evaluation 25% 1.5 0.06 2, 3, 1, 13, 8, 11, 14, 4
Second exam of continous evaluation 25% 1.5 0.06 2, 3, 6, 1, 7, 13, 8, 9, 14, 4, 5
Third exam of continous evaluation 50% 2 0.08 2, 1, 8, 11, 10, 12, 14, 4, 5

 

In the course Finance II achievements of students are evaluated continuously. The evaluation includes three activities of two different types. The final exam accounts for 50% of the final grade and the partial exam weights 25%. The activities that determine the remaining 25% will be established by the responsible teacher. The final grade for the course will be the result of calculating the weighted average of the three grades according to the assigned weights. Participation in all assessment tests is mandatory in order to pass the course.
 
The responsible professor will establish the days of the tests that make up the continuous evaluation that are not the final and partial exam, whose dates are set by the faculty.
 
 
All students are required to perform the evaluation activities. If the student's grade is 5 or higher, the student passes the course and it cannot be subject to further evaluation. If the student grade is less than 3.5, the student will have to repeat the course the following year. Students who have obtained a grade that is equal to or greater than 3.5 and less than 4.9 can take a second chance exam. The lecturers will decide the type of the second chance exam. When the second exam grade is greater than 5, the final grade will be a PASS with a maximum numerical grade of 5. When the second exam grade is less than 5, the final grade will be a FAIL with a numerical grade equal to the grade achieved in the course grade (not the second chance exam grade).

If a student decides to do not take the final  exam  will be considered “unassessable”.  Plagiarism or the use of AIto solve the established tasks to help the study or to evaluate implies a 0 as the final grade of the subject.

This subject does not offer the option for comprehensive evaluation. 

 

Calendar of evaluation activities

The dates of the different evaluation tests that make up the 25% will be announced at the beginning of the semester or well in advance.

The date of the partial, final and recovery exam of the subject is scheduled in the Faculty's exam calendar.

 

"The dates of evaluation activities cannot be modified, unless there is an exceptional and duly justified reason why an evaluation activity cannot be carried out. In this case, the degree coordinator will contact both the teaching staff and the affected student, and a new date will be scheduled within the same academic period to make up for the missed evaluation activity."Section 1 of Article 115. Calendar of evaluation activities (Academic Regulations UAB). Students of the Faculty of Economics and Business, who in accordance with the previous paragraph need to change an evaluation activity date must process the request by filling out an Application for exams' reschedule <spanclass="x_xinternetlink">https://eformularis.uab.cat/group/deganat_feie/application-for-exams-reschedule

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Grade revision process

After all grading activities have ended, students will be informed of the date andway in which the course gradeswill be published. Students will be also be informed of the procedure, place, date and time of grade revision following University regulations.

 

Retake Process

"To be eligible to participate in the retake process, it is required for students to have been previously been evaluated for at least two thirds of the total evaluation activities of the subject." Section 3 of Article 112 ter. The recovery (UAB Academic Regulations). Additionally, it is required that the student to have achieved an average grade of the subject between 3.5 and 4.9.

The date of the retake exam will be posted in the calendar of evaluation activities of the Faculty. Students who take this exam and pass, will get a grade of 5 for the subject. If the student does not pass the retake, the grade will remain unchanged, and hence, student will fail the course.

 

Irregularities in evaluation activities

In spite of other disciplinary measures deemed appropriate, and in accordance with current academic regulations, "in the case that the student makes any irregularity that could lead to a significant variation in the grade of an evaluation activity, it will be graded with a 0, regardless of the disciplinary process that can be instructed. In case of various irregularities occur in the evaluation of the same subject, the final grade of this subject will be 0"Section 10 of Article 116. Results of the evaluation. (UAB Academic Regulations).

 
 

Bibliography

  • BREALEY, R., S.C. MYERS i F. ALLEN. Principios de finanzas corporativas. 13 edició (2020). Madrid: McGraw-Hill, 
  •  BREALEY, R., MARCUS i MYERS. Fundamentos de Finanzas Corporativas.5ED.(2014)  Madrid: McGraw-Hill. ISBN:9788448197766
  •  BREALEY, R. S.C. MYERS and  A.J.MARCUS . Fundamentals of Corporate Finance (2019) 10ª edition. EBOOK
  •  DAMODARAN, A. Applied Corporate Finance. 4th. Edition John Wiley&Sons. 2015. ISBN-13:978-1118808931. (http://pages.stern.nyu.edu/~adamodar/)
  •  DAYANANDA,D., IRONS, R., HARRISON,S., HERBOHN,J. I P.ROWLAND. Capital Budgeting Financial Appraisal of Investment Projectsebook Cambridge University Press. Online Publication. 2010. online ISBN: 978011753701
  •  HILLIER,D.; S.ROSS, R.W.WESTERFIELD, J. JAFFE and B.D.JORDAN. Corporate Finance. 4ª edition. (2020)
  •  ROSS, S; R:W:WESTERFIELD, J.JAFFE and B.D. JORDAN. Finanzas Corporativas. 13ª edicion (2022). McGraw-Hill.
  •  SHILLER, R.J. Las finanzas en una sociedad justa. Deusto (2012)
  •  SHAPIRO,A.C. Capital Budgeting and Investment Analysis. Prentice Hall. 2005. ISBN-13: 978-0130660909
  •  VERNIMMEN,P., Y.L. FUR, M.DALLOCHIO, A.SALVI, P.QUIRY. Corporate Finance: Theory and Practice. 5ª edition. J.Wiley & Sons (2017) ISBN: 9781119424482. https://onlinelibrary-wiley-com.are.uab.cat/doi/book/10.1002/9781119424444

 

additional bibliography 

  • BIERDMAN, H. S.SMIDT. The Capital Budgeting Decision:. Economic Analysis of Investment Projects. 9ª edició. GreatBritain. Routledge. 
  • MUHAMMAD YUMUS. Las empresas socialesMadrid. Paidós. 2011 
  • ROSS, S.A.; R.W. WESTERFIELDi J. JAFFE. Modern Financial Management (9ª edició). Nova York: McGraw-Hill, 2009.

Software

The excel spreadsheet will be used to learn the concepts that are being studied in this subject 


Language list

Name Group Language Semester Turn
(PAUL) Classroom practices 2 Catalan second semester morning-mixed
(PAUL) Classroom practices 4 English second semester morning-mixed
(PAUL) Classroom practices 13 Catalan second semester morning-mixed
(PAUL) Classroom practices 52 Catalan second semester afternoon
(PAUL) Classroom practices 60 Catalan second semester morning-mixed
(PLAB) Practical laboratories 2 Catalan second semester morning-mixed
(PLAB) Practical laboratories 4 English second semester morning-mixed
(PLAB) Practical laboratories 13 Catalan second semester morning-mixed
(PLAB) Practical laboratories 52 Catalan second semester afternoon
(PLAB) Practical laboratories 60 Catalan second semester morning-mixed
(TE) Theory 2 Catalan second semester morning-mixed
(TE) Theory 4 English second semester morning-mixed
(TE) Theory 13 Catalan second semester morning-mixed
(TE) Theory 52 Catalan second semester afternoon
(TE) Theory 60 Catalan second semester morning-mixed