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Valuation of Firms

Valuation of Firms

 

Lecturer: Lutz Kruschwitz

 

Learning Objectives

The module conveys the ability to assess alternative methods of the valuation of firms in the tradition of discounted cashflow methods with regard to their suitability for the correct consideration of predetermined forms of debt and disbursement policy. After completing this module, the students will be able to reliably judge the usability of alternative valuation calculation schemes and apply them to exemplary cases. Moreover, the students will be able to independently create calculation schemes suitable finding novel solutions for problems regarding the valuation of firms.

Content

There are two concurrently existing approaches to appropriately take the risks of future free cash flows and tax advantages into account: (1) the capital costs concept and (2) the concept of risk neutral valuation. These concepts can be reconciled with one another assuming that the future cashflows of the unlevered firm follow an autoregressive process. Logically stringent valuation calculation schemes can be developed on these grounds, which can satisfy the most diversified forms of debt and dividend policy. To practicably apply the valuation calculation schemes, the question of how the required information can be received is to be settled.

 

 

 

 

Forms of Teaching and Learning Classrooms Presence in Hours Forms of Active Participation Workload in Hours
Lecture, Tutorial 3 hours per week Discussion of selected issues, opinions on theses, discussion of tutorial assignments on the course content, working on small case studies Lecture attendance 30

Preparation and studying of subject matter 45

Tutorial attendance 15

Preparation before and after tutorials 30

Preparation and taking of exam 30

 

Language: German or English

Total workload: 150

Module duration: One semester

Module frequency: Every spring semester

Prerequisites: A good general knowledge of economics as well as successful participation in the modules “Utility Theory and the Capital Market”, “Tax Effects and Tax Planning” and Advanced Financial Accounting” is strongly advised.

 

 

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