Business Administration (English)
Bachelor	TR-NQF-HE: Level 6	QF-EHEA: First Cycle	EQF-LLL: Level 6

General course introduction information

Course Code:

FNCE302

Course Name:

Corporate Finance

Course Semester:

Spring

Course Credits:

Theoretical	Practical	Credit	ECTS
3	0	3	6

Language of instruction:

Course Requisites:

Does the Course Require Work Experience?:

Type of course:

Compulsory

Course Level:

Bachelor

TR-NQF-HE:6. Master`s Degree

QF-EHEA:First Cycle

EQF-LLL:6. Master`s Degree

Mode of Delivery:

Face to face

Course Coordinator :

Prof. Dr. GÖKÇE TUNÇ

Course Lecturer(s):

Prof. Dr. GÖKÇE TUNÇ

Course Assistants:

Course Objective and Content

Course Objectives:

The objective of this course is to introduce the students to the firm theory; role of the corporation; capital structure; debt-equity mix; bond valuation; Gordon growth model and stock valuation; capital budgeting; net present value; internal rate of return; modified internal rate of return; payback rule; discounted payback rule; average accounting return; capital market history; risk and return; risk premium; systematic and unsystematic risk; diversification; security market line; cost of debt capital; cost of equity capital; weighted average cost of capital; financial leverage; dividend policy.

Course Content:

Firm theory; role of the corporation; capital structure; debt-equity mix; bond valuation; Gordon growth model and stock valuation; capital budgeting; net present value; internal rate of return; modified internal rate of return; payback rule; discounted payback rule; average accounting return; capital market history; risk and return; risk premium; systematic and unsystematic risk; diversification; security market line; cost of debt capital; cost of equity capital; weighted average cost of capital; financial leverage; dividend policy.

Learning Outcomes

The students who have succeeded in this course;

Learning Outcomes

1 - Knowledge
Theoretical - Conceptual
1) • Explain the concept of risk and return, and its implications of market efficiency
2) • Describe the concept of cost of capital and its importance in evaluating projects.
3) • Analyze the different types of cash flows in project evaluation and explain the importance, role and techniques of capital budgeting (NPV, IRR, Payback rule etc...) in a firm.
4) • Demonstrate a broad understanding of the theory of capital structure and appraise its influence on the firm’s value, risk and growth
2 - Skills
Cognitive - Practical
3 - Competences
Communication and Social Competence
Learning Competence
Field Specific Competence
Competence to Work Independently and Take Responsibility

Lesson Plan

Week	Subject	Related Preparation
1)	• Describe the course. • Quick Recap: Discuss the net present value (NPV) criterion • Quick Recap: Explain the payback rule • Quick Recap: Discuss the discounted payback rule • Quick Recap: Discuss Internal Rate of Return (IRR) criterion • Quick Recap: Discuss Modified-Internal Rate of Return (MIRR) criterion. • Quick Recap: Identify the reasons why the NPV criterion is the best way to evaluate proposed investments. • Syllabus. • Analyze NPV criterion • Recognize and analyze the payback rule. • Recognize and analyze the discounted payback rule • Calculate IRRs and MIRRs of different kind of investment plans. • Compare the capital budgeting techniques.
2)	• Determine the relevant cash flows for a proposed project. • Determine if a project is acceptable. • Identify a bid price for a project. • Evaluate the equivalent annual cost of a project. • Recognize the equivalence of various formulas, thereby removing common misunderstandings • Discuss incremental cash flow. • Discuss project cash flow. • Justify pro-forma financial statements and project cash flows. • Identify alternative cash flow definitions. • Analyze special cases of Discounted Cash Flow (DCF) analysis.	Review the Syllabus. Read, in Ross, Westerfield and Jordan (2013), chapter 10 on pages 305-342.
3)	• Perform and interpret a sensitivity analysis for a proposed investment. • Perform and interpret a scenario analysis for a proposed investment. • Determine and interpret cash, accounting, and financial break-even points. • Evaluate how the degree of operating leverage can affect the cash flows of a project. • Identify how capital rationing affects the ability of a company to accept projects. • Recognize the need to understand the economic basis for value creation in a project. • Identify sources of value. • Explain Scenario and sensitivity “what-if” analyses. • Illustrate how to actually apply and interpret these tools in a project analysis. • Recognize cash, accounting, and financial break-even levels. • Illustrate the use of sensitivity analysis in capital budgeting.	Read, in Ross, Westerfield and Jordan (2013), chapter 11 on pages 343-373. Review the Lecture Notes.
4)	• Calculate the return on an investment. • Recognize monetary and percentage returns. • Recognize the historical returns on various important types of investments. • Identify the stock market risk Premium. • Recognize the historical risks on various important types of investments. • Distinguish monetary returns and percentage returns. • Analyze historical average returns. • Recognizing the concept of risk premium. • Analyze the variability of returns. • Recognize historical returns in terms of normal distribution. • Calculate variances and standard deviations of historical returns.	Read, in Ross, Westerfield and Jordan (2013), chapter 12 on pages 374-411. Review the Lecture Notes.
5)	• Discuss calculation and interpretation of geometric returns. • Evaluate common misconceptions regarding appropriate use of arithmetic vs. geometric average returns. • Discuss Blume’s Formula to make future predictions on returns. • Identify the implications of market efficiency. • Discuss the Efficient Markets Hypothesis. • Calculate and compare arithmetic and geometric returns. • Predict future rate of returns with the help of Blume’s formula. • Discuss Efficient Markets Hypothesis along with common misconceptions. • Discuss the equity premium puzzle and latest international evidence. • Discuss the stock market turmoil of 2008.	Read, in Ross, Westerfield and Jordan (2013), chapter 12 on pages 374-411. Review the Lecture Notes.
6)	• Explain expected returns. • Explain the variance of expected returns. • Identify the portfolio of stocks and recognize its weights. • Explain the portfolio expected returns. • Explain the portfolio variance. • Calculate expected returns. • Calculate the variance of expected returns. • Calculate the portfolio expected returns. • Calculate the portfolio variance. • Compare different portfolios in terms of their expected returns and variances.	Read, in Ross, Westerfield and Jordan (2013), chapter 13 on pages 412-448. Review the Lecture Notes.

Sources

Course Notes / Textbooks:	Stephen A. Ross & Randolph W. Westerfield & Bradford D. Jordan © 2010, 2008, 2006 , 2003 by The McGraw-Hill Companies, Inc. ISBN 0-07-738868-2
References:	Stephen Ross, Bradford Jordan and Randolph Westerfield McGraw-Hill Education, 10th ed., 2013 ISBN 978-0-07-803463-3

Course-Program Learning Outcome Relationship

Learning Outcomes	1	2	3	4
Program Outcomes
1) Explain the essential body of knowledge in the area of business administration, including evolution of the discipline, the state-of-the-art concepts, scientific methodology, theories and models
2) Employ the appropriate tools and analytical techniques to collect and analyze quantitative and qualitative data in the related areas, interpret results and propose solutions
3) Recognize the importance of technological development, especially in information technologies, and utilize them in business administration
4) Evaluate the body of knowledge in the dynamic business world and business functional areas to asses needs, manage and lead change by using critical and innovative thinking
5) Discover and create entrepreneurial opportunities and expertise to successfully establish and develop their own ventures
6) Fulfill their responsibility in teamwork and projects in businesses, and act as a leader
7) Communicate in written and oral English with people from diverse backgrounds, and have the English proficiency to follow and interpret the global dynamics in the areas of business administration
8) Recognize individual and multi-cultural diversity, and can emphatically interact with individuals from diverse cultural backgrounds in social and professional settings
9) Identify standards of personal, professional, social and business ethics, evaluate the ethical implications of various practices in the related areas, and be aware the importance of ethical behavior in adding value to the society
10) Recognize interrelationship among business and other disciplines, and relate knowledge from diverse areas to formulate novel solutions in the area of business administration

Course - Learning Outcome Relationship

No Effect	1 Lowest	2 Low	3 Average	4 High	5 Highest

	Program Outcomes	Level of Contribution
1)	Explain the essential body of knowledge in the area of business administration, including evolution of the discipline, the state-of-the-art concepts, scientific methodology, theories and models
2)	Employ the appropriate tools and analytical techniques to collect and analyze quantitative and qualitative data in the related areas, interpret results and propose solutions
3)	Recognize the importance of technological development, especially in information technologies, and utilize them in business administration
4)	Evaluate the body of knowledge in the dynamic business world and business functional areas to asses needs, manage and lead change by using critical and innovative thinking
5)	Discover and create entrepreneurial opportunities and expertise to successfully establish and develop their own ventures
6)	Fulfill their responsibility in teamwork and projects in businesses, and act as a leader
7)	Communicate in written and oral English with people from diverse backgrounds, and have the English proficiency to follow and interpret the global dynamics in the areas of business administration
8)	Recognize individual and multi-cultural diversity, and can emphatically interact with individuals from diverse cultural backgrounds in social and professional settings
9)	Identify standards of personal, professional, social and business ethics, evaluate the ethical implications of various practices in the related areas, and be aware the importance of ethical behavior in adding value to the society
10)	Recognize interrelationship among business and other disciplines, and relate knowledge from diverse areas to formulate novel solutions in the area of business administration

Learning Activity and Teaching Methods

Lesson

Assessment & Grading Methods and Criteria

Written Exam (Open-ended questions, multiple choice, true-false, matching, fill in the blanks, sequencing)
Oral Examination
Homework
Individual Project

Assessment & Grading

Semester Requirements	Number of Activities	Level of Contribution
Midterms	1	% 40
Final	1	% 60
total		% 100
PERCENTAGE OF SEMESTER WORK		% 40
PERCENTAGE OF FINAL WORK		% 60
total		% 100

Workload and ECTS Credit Grading

Activities	Number of Activities	Workload
Course Hours	16	48
Study Hours Out of Class	16	48
Project	4	18
Homework Assignments	6	12
Quizzes	4	2
Midterms	1	15
Final	2	25
Total Workload		168