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Professor
Hugues PIROTTE SPEDER
Solvay Business School
Université Libre de Bruxelles

ULB (CP 145/1)
21, av.F.D. Roosevelt
B-1050 Bruxelles, Belgium

Tel: +32 2 650 65 17
Fax: + 32 2 650 41 88
Email: hugues.pirotte@finmetrics.com

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Finance (MBA Part Time)

Course outline 2002 (new version of November 18th - changes after Christmas!!!)

Prerequisites:
Answers to suggested Q&P (Word document)

  • Class notes (slides)
  • Excel files
  • RWJ: Recommended Q&P (updated for 6/e)
    • Financial statement analysis
      • Statement of cash flow: 27.4
      • Financial planning: 26.1, 26.2
        Additional assumptions for these last two problems:
        26.1 Cash = 0, constant, outside financing with debt
                Initial bank loan = 0 => CurLiab = Accounts payable + Accrued expenses
                Depreciaiton = 20% Net fixed assets of previous year
        26.2 Cash = 0, constant, outside financing with debt
                Initial bank loan = 0 => Short-term debt = Accounts payable + Accrued expenses
                Depreciaiton = 10% Net fixed assets of previous year
      • Solutions (Excel file)
    • Present value
      • General formula: 4.1 to 4.14
      • Simplifying formulas
        Perpetuity: 4.19, 4.22
        Growing perpetuity: 4.24, 4.25
        Annuity: 4.28, 4.29
        Growing annuity: 4.42, 4.47
      • Compounding interval: 4.15, 4.21
      • Solutions ( Excel file)
    • Bonds and Stocks valuation
      • Bond valuation: 5.1, 5.2, 5.7
      • Duration: 25.13, 25.15
      • DDM: 5.13, 5.16, 5.19, 5.24
      • Growth opportunities: 5.25, 5.26, 5.28, 5.30
      • PER: 5.31
      • Solutions (Excel file)
    • Capital budgeting
      • IRR, Payback: 6.1, 6.5, 6.6
      • PV calculation, new project, no inflation: 7.1, 7.7
      • PV calculation, new project, inflation: 7.14
      • Replacement: 7.32, 7.34
      • Decision tree: 8.1
      • Accounting Profit Break-Even: 8.6
      • NPV Break-Even: 8.7
      • Scenario: 8.10
      • Option to Abandon: 8.13, 8.14
      • Solution (Excel file)
    • Risk and return
      • Return calculation: 9.1, 9.2
      • Risk premia: 9.6, 9.9
      • Mean and standard deviation:  9.10, 9.11, 9.12
      • Normal distribution 9.19
      • Covariance and correlation: 10.2, 10.3
      • Portfolios: 10.5, 10.6
      • Capm: 10.24, 10.25, 10.26, 10.27
      • Solution (Excel file)
      • Chap 12 - solutions
  • Problem sets
    The following problem sets are based on past exams. Work them out before looking at the solution.
    Financial statement analysis: Farber.com + solution
    PV and bond valuation: MBA, Corp + solution
    Stock valuation: XYZ + solution
    Investment project: Make or Buy
    Porfolio selection: Aunt Agatha (solution included)
  • Web links: see the resources page
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Updated November 25th, 2002