COURSE-VALUATION
This course will give students a broad and deep view of valuation concepts and practice. We will learn financial and economic theory and apply it to value different businesses. Taking this course will help students develop a framework to estimate the intrinsic worth of a firm. We will also see the implications of business and corporate finance decisions on a company’s valuations. It goes without saying that we will learn standard methods to estimate discount rates, estimate cash flows, value a firm using multiple methods like discounted cash flow methods, relative value method, asset based methods, option based valuation etc. We will also learn how to value intangible and some advanced concepts. We will use examples and a few cases to see the applicability of different valuation concepts in practice. Apart from the theoretical constructs, we will also devote a session to understand art and science of valuation as practiced by Warren Buffet.
II. Student Learning Outcomes: After completing this course, a student should learn following:
1) Learn how to estimate discount rates and cash flows, for a real world firm with all associated complexities
1) Techniques of corporate valuation viz. discounted cash flow methods, relative value method, asset based methods, option based valuation etc.
2) Value both established businesses and upcoming highly risky businesses, value both small or large businesses, domestic or foreign businesses.
3) Value private firms from the perspective of private equity and venture capital funds and for the purpose of IPO.
4) Value distressed assets and leveraged buy outs.
5) Value new age innovative internet companies with negative cash flows for years and almost no comparables.
6) Value executive stock options that companies give to employees to reduce agency conflicts.
7) Learn correct measurement of simple to understand but hard to quantify concepts like equity risk premium, discount factors etc., especially in complex real-life situations.
Pedagogy: The course uses a mix of lectures and examples and few cases to illustrate real life application of basic valuation concepts. Assignments are an integral part of the course and solving them will help you to deepen your understanding of the subject. Instead of a monologue, I encourage active participation in the class. You will find me asking a lot of questions in the class. You will derive the maximum value from the course, if you read the assigned readings before coming to the class.
III. Required Text Books and Reading Material: Damodaran on Valuation, 2nd Edition – Aswath Damodaran
Recommended Reference Material:
1) Security Analysis – Graham and Dodd
2) Warren Buffet’s annual reports
3) Aswath Damodaran website viz. http://pages.stern.nyu.edu/~adamodar/
IV.Session Plan:
1) Class Participation – 10%
2) Group Project – 25%
3) Quizzes – 10%
3) Assignments – 25%
4) End Term – 30%
Created By: Alora Kar on 12/11/2019 at 03:57 PM Category: MBA(Exe.)2019-20 T-III Doctype: Document