Corporate Finance


Debi Prasad Satapathy


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Course Name : Corporate Finance

Code(Credit) : CUTM1204(3-0-1)

Course Objectives

  • Developing skills for preparation and interpretation of business information apart from application of financial theory in investment decisions, with special emphasis on capital structure, Capital Budgeting and other concepts.
  • The course emphasise real-world examples and applications in Excel.

Learning Outcomes

• Appreciate the Interdisciplinary aspects of Financial Management.
• Practical applications of TVM
• Identify the Investment Decision Criteria
•  Learn the application of  Management of Cash & Marketable Securities-Concept, Need &Techniques
• Gain an understanding of some of the practical aspects of corporate finance decisions

Module I
We will address in this module the concept of financial management its scope objective and emerging role of finance manager and the application of time value of money for decision making in finance. We will also address the risk and return prospective of some Indian companies.

1. Scope of Financial Management; Objectives of Financial Management
2. Role of Finance manager
3. Time Value of Money
4. Conceptual Framework of Risk and Return

Module II

We will address in this module the how companies decide to make investment by taking both discounting and non-discounting technique. The module will address to calculate the IRR and NPV by taking some data of Projects. the Course by the discussion of criteria of choosing investment projects. Beside NPV, the internal rate of return (IRR) and other approaches are introduced. We show why the NPV criterion is the best and why the application of others may lead to wrong investment decisions. Then we focus on the main ideas to be taken into account while setting up cash flow patterns and making the choice of project on the basis of NPV. We mention some special issues – relevant costs, depreciation, inflation.

1. Nature of Capital Budgeting
2. identifying Relevant Cash Flows
3. Investment Evaluation Techniques: DCF and Non-DCF Techniques
4. NPV vs. IRR
5. Importance and concept of cost of capital
6. Cost of debt, Cost of Preference share, Cost of Equity, Overall WACC

Module III

In this module you will learn how companies decide on how much debt to take, and whether to raise capital from markets or from any other sources. Understand how companies make financing, pay-out and risk management decisions that create value. Measure the effects of leverage on profitability, risk, and valuation.

1. Capital Structure Theories concept
2. NI Approach
3. NOI approach
4. MM approach
5. Operating, Financial and Combined Leverage

Module IV

In this module how company’s dividend decision affects the firm value. We will discuss the concept of stock dividend, share repurchase, and stock split decision affecting the shareholder wealth. It will address the concept of liquidity and profitability through working capital management.

1. Concept of Dividend
2. Cash dividend and Bonus Share
3. Share repurchase and stock spilt
4. Irrelevance of Dividends; and Relevance of Dividends
5. Concept of Working Capital

Text Books:
1. Dr Prasanna Chandra – Tata Mc Graw-Hill
Reference Books:
1. I M Pandey –Tata McGraw-Hill
2. Brealey and Meyers: Principles of Corporate Finance: Tata McGraw Hill, New Delhi, 2008.
3. Keown, Martin, Petty and Scott (Jr): Financial Management: Principles and Applications; Prentice Hall of India, New Delhi, 2002.

Nature and scope of Financial Management -Role of Finance Manager Interdisciplinary aspects of Financial Management

Nature and scope of Financial Management pdf


Role of Finance Manager

adddtional reading

Video of Role of Finance Manager

Financial Management Decisions

Finance Function reading material

Video of finance function

Applications of TVM
Nominal and Effective rate of interest

Excel Application

Additional Reading

video on interest rate

video on time value of money

The Concepts of Return- Measuring the Rate of Return- Risk.

Risk Return Practical Application

Additional Reading


Video of Risk and Return

The Capital Asset Pricing Model (CAPM)


Video of capm

The Capital Asset Pricing Model (CAPM)


video of capm model

Nature of Investment Decisions-The Process of Capital Budgeting

Introduction to capital Budgeting

video of capital budgeting


Appraisal Criteria: Discounted and Non-Discounted Methods -Pay –Back Period- Average Rate of Return

Excel Application

video of Payback period


Net Present Value- Benefit Cost Ratio


video of BCR


Internal Rate of Return

Capital Budgeting

Capital Budgeting decision

video of IRR




video of NPV/IRR


Modified Internal Rate of Return (MIRR) Method


video of MIRR


The Meaning of Cost of Capital-Cost of Different Sources of Finance- Concept and Importance

cost of capital

cost of capital

video of cost of capital


Cost of Debenture – Term loans

cost of term loan

Video of cost of debt


Calculation of Cost of Preference Share Capital

cost of capital

video for preference share


Calculation of Weighted Average Cost of Capital- Weighted Marginal Cost of Capital Schedule

Case study of Cost of Capital


Theories of Capital Structure

Capital Structure

video of capital structure


Capital Structure and Firm Value ( NI)

capital structure



NOI approach



MM approach


Four Approach



MM approach


Four Approach

MM approach


EBIT-EPS Approach

Additional Reading


Capital Structure practice in India

Research article


Forms of Dividend

data base

video of dividend


Share Repurchase and Stock Spilt


video of share repurchase


Share Repurchase and Stock Spilt


video of stock spilt


Dividend Policy and Firm Value

dividend policies


Walter’s Model and Gordon’s Model

Valuation model


Overview of Working Capital Management

working capital

Video of working capital


Estimation of working capital of Working Capital Management

estimation of working capital

video on estimation of working capital

Case Studies



Sl. No. Live Project Concept
1 Visit a bank, take some cases of fixed deposit accounts, cash certificates, recurring deposits. Etc., and calculate PV and FV of cash flows. Time value of money

2 Visit the nearest Bank/Retail finance institution and find out the:
 Calculation of the EMI for products like personal loan, car loan, housing loan etc.
 Find out the implied interest rate for some of the loan accounts, where EMI has been fixed. Time Value of money and ascertaining repayment capacity

3 Visit the nearest stock broking firm/company, take out the investment portfolio of any 5 to 10 clients and find out:
a) The Expected rate of return
b) The risk associated with the portfolio. Risk and Return associated with securities

4 Visit a Financial Institution and from its portfolio of Bond/Debentures take out 5 to 10 cases and find out:
a) The YTM
b) Present value. Valuation of securities

5 An analysis of Weighted Average Cost of Capital of a firm: Use of different sources of finance and their weights, in the overall cost of capital and their implications on the value of the firm. Cost of Capital
6 A study on selection of a project using discounted cash flow technique:
Study the application of various discounted cash flow technique. Capital Expenditure Decision

Our Main Teachers

Dr. Satapathy is Assistant Professor (Finance and Accounting) at CUTM. He holds a master’s degree in finance and control from Utkal university. He also has completed doctoral level fellow programme in management from NIFM Faridabad. He has more than 11 Years of teaching, training and research experience. He has worked at VIT university Bhopal and […]