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040569 KU Valuation (MA) (2019S)

4.00 ECTS (2.00 SWS), SPL 4 - Wirtschaftswissenschaften
Continuous assessment of course work



max. 50 participants
Language: English


Classes (iCal) - next class is marked with N

Tuesday 02.04. 09:45 - 13:00 Hörsaal 15 Oskar-Morgenstern-Platz 1 2.Stock
Tuesday 09.04. 09:45 - 13:00 Hörsaal 15 Oskar-Morgenstern-Platz 1 2.Stock
Tuesday 07.05. 09:45 - 13:00 Hörsaal 15 Oskar-Morgenstern-Platz 1 2.Stock
Thursday 09.05. 15:00 - 18:15 Hörsaal 16 Oskar-Morgenstern-Platz 1 2.Stock
Thursday 23.05. 15:00 - 18:15 Hörsaal 16 Oskar-Morgenstern-Platz 1 2.Stock
Thursday 06.06. 16:45 - 18:15 Hörsaal 6 Oskar-Morgenstern-Platz 1 1.Stock
Thursday 27.06. 15:00 - 18:15 Hörsaal 16 Oskar-Morgenstern-Platz 1 2.Stock


Aims, contents and method of the course

This course focuses on methods to value firms and/or individual projects. We will cover two alternative approaches to valuation: discounted cash flow valuation and relative valuation.
We start with an in-depth analysis of the discounted cash flow method and its practical implementation. More specifically we will discuss various versions of discounted cash flow models, including the discounted free cash flow model, discounted capital cash flow model, and adjusted present value model. We will also discuss how various inputs required by those valuation models can be obtained from historical data. In particular we will discuss how to forecast future cash flows, calculate residual values and derive appropriate discount rates.
The relative valuation approach estimates the value of a firm by looking at the pricing of "comparable" firms relative to a common variable such as earnings, cash flows or book equities. We will discuss pros and cons of this popular valuation method.
The contingent claim valuation approach is a more sophisticated method that tries to quantify the impact of managerial flexibility on firm/project valuation. We will cover applications of the Black-Scholes formula, binomial option pricing model and Monte Carlo simulations to evaluate firms or investment projects that have option characteristics.
The course provides you with hands-on experience in valuation. The collaboration with PwC gives a unique opportunity to share and defend your ideas in front of a top management (a skill, which is extremely valuable for your future jobs/interviews).
The course will be a mixture of lectures and case studies.
Case Studies:
(1) Harvard Business
Debt Policy at UST Inc.
(2) Harvard Business
American Chemical Corporation
N. 9-280-102
(3) PwC Case Study TBA

Assessment and permitted materials

• This course emphasizes both theoretical analysis and practical applications.
• Working language is English.
• Students are required to come to classes, read all cases and actively participate in the discussions.
• There will be 3 case preparations (one non-graded, two graded). Cases must be handed in on time. No credit will be given for late cases.
• You are encouraged to meet in groups to discuss and analyze the cases. In the past, students have found that these groups complement the class discussion well.

Minimum requirements and assessment criteria

The evaluation will be based on the following items: bonus in-class participation (10%); case studies (50%) and exam (50%). The case delivered by PwC is also part of the assessment. Attendance is COMPULSORY.
The pass grade is 50 %, but you should get at least 50% in each part in order to successfully complete the course.

Examination topics

Reading list

• Lecture Notes. A learning area will be available in the Intranet (Moodle). There, you would find instructions for the sessions, communications, bibliography, etc. Slides of the sessions will also be posted here, always BEFORE the class.
• Investment Valuation, 2nd edition, Aswath Damodaran, 2002 (book, manuscript,lecturenote).
• Valuation, 4th edition, Chapters 5-12, McKinsey & Company, Tim Koller, Marc Goedhart and David Wessels, 2005.
• Valuation: The Art and Science of Corporate Investment Decisions, Sheridan Titman and John Martin, Addison Wesley, 2007.

Association in the course directory

Last modified: Mo 07.09.2020 15:29