Finance 361 Auckland

Finance 361, often offered at the University of Auckland Business School, delves into the intricacies of corporate finance. This course typically builds upon introductory finance concepts, providing a more in-depth exploration of financial decision-making within businesses.

A central theme of Finance 361 is the understanding of how companies make crucial investment decisions. Students learn to evaluate potential projects using techniques like Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period. The course emphasizes the importance of discounting future cash flows to their present value, recognizing the time value of money. Understanding these tools allows students to assess the profitability and risk associated with different investment opportunities.

Another significant component focuses on capital structure decisions. This involves analyzing how companies finance their operations – the optimal mix of debt and equity. Students examine the trade-offs between using debt, which offers tax advantages but increases financial risk, and equity, which is less risky but dilutes ownership. The course usually explores theories like the Modigliani-Miller theorem (with and without taxes) to understand the impact of capital structure on firm value. Factors influencing capital structure choices, such as agency costs and signaling effects, are also commonly discussed.

Dividend policy also falls under the scope of Finance 361. Students investigate various dividend theories and policies, examining the impact of dividend payouts on shareholder value. Considerations include the signaling hypothesis, clientele effects, and the bird-in-hand fallacy. Practical aspects of dividend payment methods, such as cash dividends and stock repurchases, are often covered, as well as factors influencing a company's dividend payout ratio.

Risk management is increasingly emphasized in contemporary finance curricula. Finance 361 often introduces students to methods for identifying, measuring, and managing financial risks, including market risk, credit risk, and operational risk. Hedging techniques, using instruments like derivatives, may also be explored to mitigate specific risks.

Beyond theoretical frameworks, the course often incorporates real-world case studies and practical applications. Students may analyze the financial statements of actual companies, evaluate investment proposals, and develop financial strategies. Assignments may involve spreadsheet modeling and presentations, honing their analytical and communication skills. Successful completion of Finance 361 equips students with a solid foundation for further studies in finance and prepares them for careers in investment banking, corporate finance, and financial analysis.