Lecture 1

1. capital budgeting

2. capital structure in perfect markets

3. Taxation and financial distress

4. Agency problems and information asymmetry

chapter 1:

• net present value

• identifying relevant cash flows

• cost of capital

chapter 2:

• corporate financing

• Modigliani Miller theorem

• M&M theorem extensions

chapter 3:

• corporate taxation

• valuation with taxations (APV & WAAC)

• financial distress and trede off theory

chapter 4:

• agency costs of debt

• information asymmetry

• pecking order theory

financial economics:

• asset pricing

  • valuation of assets

  • perspexctive of investors on financail transactions

• coporate finance

  • the choice among sources of funding

  • how these funds are used

• capital budgeting

  • what investments should the company make

• capital structure

  • should pay the company for its assets with debt or equity

• payout decision

  • should profits be distributed to its shareholders or reinvested