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Advance Corporate Finance :moneybag: (Chapter 8: Efficient Market (Random…
Advance Corporate Finance
:moneybag:
Chapter 1 : Introduction to Finance
Objectives
Primary and secondary objectives
Financial and non-financial objectives
Agency Conflict
Corporate Governance
Chapter 2 : Raising Capital
Venture Capital
How to Choose Venture Capitalist
Financial strength
Contacts
References
Exit Strategy
Style
Right offering
Specify number of shares that can be purchased
Specify purchase price
Specify time frame
Dilution effects
EPS and market value
Percentage of ownership
Chapter 3 : Financial Leverage and Capital Restructuring
MM Propotion I
Without tax
Value of the firm and WACC remain unchange
With tax
:arrow_up: value of firm, :arrow_up: in total debt , :arrow_down: in WACC
MM Propotion II
With tax
:arrow_up: cost of equity
Without tax
:arrow_up: debt to equity ratio, :arrow_up: leverage risk, WACC unchange
Chapter 4 : Pecking Order & Trade-Off Theory
Pecking order
Trade-Off Theory
Chapter 5 and Chapter 6:
Cash Flow Determination
Chapter 8: Efficient Market
Random Walk Thoery
Efficient Market
Types of EMH
Market Anomalies
Behavioral Finance
Lessons of Efficient Market
Chapter 10: Merger and Acquisitions
Acquisition Classifications
Horizontal Acquisition
Vertical Acquisition
Conglomerate Acquisition
Benefits of Merger
Revenue Enhancement
Lower Taxes
Cost Reduction
Reduction in capital needs
Defensive Tactics
Poison pill
Crown Jewel
Golden Parachute
White Knight
Cash Acquisition & Stock Acquisition
Chapter 7:
Project Analysis & Evaluation
Scenario Analysis
Determination of what happens to NPV estimates when we ask what-if questions
Base case, Best case & Worst case
Sensitivity Analysis
What happens to NPV when only one variable is changed
Breakeven Analysis
A tool for analyzing the relationship between sales volume and profitability
Cash Breakeven, Accounting Breakeven & Financial Breakeven
Degree of Operating Leverage
The degree to which a project or firm relies on fixed costs
Chapter 9: Dividend And Payout Policy
Factors related to dividend payout
Profitability
Stable BS & Income Statement
Investment opportunities
Dividend stability
:question: Repurchase stock
Ownership purpose
Free-up profit
Benefit from temporary undervalues stock
Types of dividend payment
Regular cash dividend
Extra cash dividend
Special cash dividend
:
Liquidating cash dividend
Stock Dividend & Stock Split
Main areas
Capital Budgeting
Capital structure
Assets management
2
Cost Cutting Proposal
Determine OCF and find NPV
Minimum Bid Price
Determine the lowest price we can profitably charge
Equivalent Annual Cost
Evaluating equipment with different useful lives
1
Top- Down Approach
Sales - Costs - Taxes
Bottom-Up Approach
Net Income + Depreciation
Tax Shield Approach
Equity Capital
Initial Public Offering
Seasonal Equity Offering
Why these phenomena happen?
Debt usage
Issue cost
Managerial information
Definition
Provide financing in stage
Agency Theory
Prepared by:
Nur Syahadah Bt Mahasan (2019361985)
Wan Nurasyifa Bt Wan Ismail (2019542315)