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ECF2222 Corporate Finance II
Credit Points: 15
ECF1120 Finance I

Corporate finance involves the financial management of business entities. In this unit we investigate how managers make investment, financing, and dividend decisions.

Investment decisions are based on discounted cash flow techniques and their extensions. These extensions enable us to study a wide range of problems including: new investments, investments with unequal terms, optimal replacement, and project abandonment.

Corporate financing and dividend decisions are based upon the seminal works of Modigliani and Miller. In the first instance we see that simplifying assumptions about corporate taxes lead to naïve conclusions about both corporate financing (primarily debt and equity) and dividend policy. As these simplifying assumptions are removed to better align with real-world conditions, the conclusions move from naïve to controversial.

The current global business environment is complex. To best deal with this complexity, business managers have discovered that flexibility (of approach, of their products, and of their workforce) is extremely valuable. Real option theory is introduced towards the end of this unit as an emerging technique to value this flexibility.


This Unit is part of the following Courses / Unit Sets
SMFINFinance 10 Unit Supporting Major
MIFINFinance Minor
MAAAAIFinance Major
MIAAAEFinance Minor
MAAABKProject Development Major
MAACCPPublic Practice Major - Bunbury
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Last Updated - Higher Education: 30/09/2006 VET: 30/09/2006