This module aims to develop the student’s understanding of investment management principles and techniques relevant to the financing and investment decisions within an organisation. It aims to provide students with the knowledge and skills that can be used to value companies and to conduct financial planning in a range of business sectors.
Share and company valuations:
Nature and Purpose of the valuation of business and financial assets.Models for the valuation of shares.Share value and cash flow.Zero growth.Constant growth stocks.Non-constant or supernormal growth.Price earnings method.Valuation using the balance sheet.Valuation using free cash flow.Current examples of share / company valuations.
The cost of capital and capital structure:
Cost of different sources of finance.The Financing Decision and the link to the dividend decision and the investment decision.Cost of Equity.Cost of Debt and other capital instruments.Weighted average cost of capital.The importance of choice in Capital structure.Theories on gearing.The traditional approach to capital structure.Modigliani and Miller – The effectof Capital structure.Pecking order theory.Practical factors affecting capital structure.
Investment appraisal:
The nature of the investment decision and the approval process.Evaluation of long-term investment opportunities through the use of Net present value.Internal rate of return.Accounting rate of return.Payback period (including discounted payback).Profitability index and capital rationing.Relevant and irrelevant costs.Inflation and investment appraisal.Taxation and investment appraisal.Risk and uncertainty in project appraisal.Sensitivity analysis.Qualitative factors.Mutually exclusive and unequal life projects.Lease or buy decisions.
Introduction to Risk Management
Introduction to the nature and types of risk and approaches to the management of exchange rate risk , interest rate risk and other types of risk.Causes of exchange rate differences and interest rate fluctuations.Hedging techniques for foreign currency risk and interest rate risk. Traditional and basic methods of risk management.Review of corporate policies on risk management
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Other Assessment(s) | 30 |
| Formal Examination | 70 |