After successful completion of the course, students are able to understand and apply the most important fundamental principles in Finance and Capital Budgeting. In particular, these includes the transformation of cash flows across time, present value calculation, application and interpretation of various types of interest rates, valuation of investment projects and determination of project cash flows, arbitrage free valuation of bonds, determination of financing costs for short and long term credit financing instruments, and valuation of stocks using classic valuation methods.

Time value of money (valuation of cash flow streams, discounting ang compounding, present value and futures value, compound interest effect, net present value, perpetuity, annuity)

Interest Rates (discount rate, effective interest rate, term structure, spot rates, forward rates, interst rates and rating, discrete and continuous rates)

Investment Decision Rules (static vs. dynamic methods, NPV, stand-alone projects, internal rate of return, payback rule, choosing between projects)

Capital Budgeting (calculation of free cash flow and NPV, sensitivity and scenario analysis, sunk costs)

Valuing Bonds (Zero Bonds, coupon bonds, yield to maturity, arbitrage free valuation, term structure, clean vs dirty price, corporate bonds)

Credit Financing (long-term bank loan, short-term financing (overdraft facilities, customer prepayments, supplier credit)

Valuing Stocks (Dividend-Discount Model, Discounted Free Cash Flow Model)

Presentation of main teaching topics;

Calculation and discussion of exercises;

Discussion of cases

The first session is scheduled for Thursday, March 6^th, 2025, 14:00 c.t., in lecture room FH Hörsaal 1.

The TUWEL course with all materials (slides, exercises) will be available from March 1^st, 2025, onwards.

Test 1: 100 points can be reached; topics of the exam: Part 1
Test 2: 100 points can be reached; topics of the exam: Part 2
Test 3: 100 points can be reached; topics of the exam: All parts
Test N: 100 points can be reached; topics of the exam: All parts

There is no threshold score per test. Only the total number of points acquired over all tests is relevant for the overall evaluation, thus, the sum of points achieved in test 1, 2, and 3. In total a maximum of 300 points can be reached.

Evaluation scheme:

Points:                 Grade:
000.00 – 149.99       5
150.00 – 187.49       4
187.50 – 224.99       3
225.00 – 262.49       2
262.50 – 300.00       1


The minimum number of points for a positive grade (150.00) can be achieved by only taking part in a selection of tests (e.g., test 1 and 2, test 2 and 3, test 1 and 3). Of course, students can take part in all 3 tests. But a positive assessment with only 2 tests (2 partial achievements) is therefore possible.

Nevertheless, students are offered one additional test possibility (Test N).

In general, all students can take part in this additional test (test N), especially:
* Students that have missed one of the regular tests (i.e., test 1, 2, or 3);
* Students that want to increase their total number of points (to improve their grade).

Attention: Points achieved in test N replace the lowest number of points achieved in test 1, 2 or 3.

Examples how points achieved in test N are changing the overall number of points:

* Example 1:
Test 1: 0 points (missed)
Test 2: 60 points
Test 3: 70 points
Sum 1: 130 points  ->  would result in a grade of 5
Test N: 70 points (replaces test 1 (lowest number of points achieved in tests 1, 2, and 3))
Sum 2: 200 points  ->  final grade: 3

* Example 2:
Test 1: 90 points
Test 2: 30 points
Test 3: 50 points
Sum 1: 170 points  ->  would result in a grade of 4
Test N: 70 points (replaces test 2 (lowest number of points achieved in tests 1, 2, and 3))
Sum 2: 210 points  ->  final grade 3

* Example 3:
Test 1: 90 points
Test 2: 80 points
Test 3: 70 points
Sum 1: 240 points  ->  would result in a grade of 2
Test N: 50 points (replaces test 3 (lowest number of points achieved in tests 1, 2, and 3))
Sum 2: 220 points  ->  final grade 3 (!)

Thus, also a decline in the overall number of points is possible, especially when the overall number of points achieved in the regular tests (test 1, 2 and 3) is already very high.

Attention: The evaluation scheme is fixed and not variable. There are no further additional or compensational tasks. Students that want to reach more points after the regular tests (1, 2, and 3) can take part in the additional test N.

Jonathan Berk, Peter DeMarzo
Corporate Finance – Global Edition
6. Auflage, 2023
ISBN: 978-1-292-44631-8
Kapitel: 4, 5, 6, 7, 8, 9