This is a preliminary syllabus and is subject to change
Syllabus BUFN 771: International Corporate and Project Finance R.H. Smith School of Business
University of Maryland, College Park
Professor Stephen Wallenstein
4458 Van Munching Hall
Office hours widely available (call for appointment)
International Corporate and Project Finance will meet Thursdays from January 26 – March 8, 2012 from 6:25-10:00 pm at the Ronald Reagan Building.
The principles of International Finance are the same as those of regular domestic finance. However, in practice International finance introduces unique challenges given cross boarder capital flows, political risk the importance of multilateral financial institutions. This course applies standard financial theory and tools to international problems with a particular focus on international project finance. This course is intended for students who will be involved at any stage of the investment process from corporate sponsors (as members of the corporate finance or strategic planning departments) to transaction advisors (investment or commercial bankers and management consultants) to investors (people responsible for debt/equity research or money management).
The basic objective of this course is to deepen your understanding of corporate finance while at the same time broadening your understanding of finance by venturing into the world of project finance, emerging markets, and international capital markets. Essentially, project companies provide an interesting and very effective setting in which to study core principles of finance and to test where and under what conditions the principles hold. One of the key concepts of the course is the “imperfections framework”: how do market imperfections such as transaction, agency, and financial distress costs affect financing and investment decisions. A second and related goal of the course is to enhance your ability to create value through investment and financing decisions. Towards that end, the course will analyze how to structure, both contractually and organizationally, investments; how to value projects in general and the equity contributions in particular; how to identify and manage project and sovereign risks; and how to finance projects in terms of both the amount of debt and the types of debt. The ability to understand and discuss these topics requires a solid understanding of the concepts covered in the RC course Finance.
This course assumes a solid understanding of investment theory and corporate finance including capital budgeting (Net Present Value), the Capital Asset Pricing Model (CAPM) and Modigliani-Miller theory (MM Propositions I and II with and without taxes). BUFN 770 (International Investment) is not a pre-requisite, but it is recommended since BUFN 771 is a continuation of BUFN 770.
Grading and Assignments
The course is Lecture and Case driven. A plan of topics is given on the next page along with the assigned readings. Students must solve case studies using techniques from basic finance, statistics, or the concepts introduced in this course. Students are encouraged to work in groups of up to four people.
Groups should hand in written solutions in the form of a business report to management. Four of the full case write-ups should consist of up to five typewritten pages (double spaced, not including appendices), and one of the write-ups may be in the form of a one page summary of the key issues in the case. There are also short write-ups for IndSoft and the IFS Short Case Analysis. You may choose which cases to present in long form and short form. Write-ups are due at the beginning of class on the day of discussion (see calendar), although it would be helpful to me if you can send the write-ups earlier that day, ideally by 4:00 pm. Groups will be asked to...
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