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Michael Olafusi

MIT: Finance Theory II

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You can register on MIT Opencourseware for Finance Theory II at https://ocw.mit.edu/courses/sloan-school-of-management/15-402-finance-theory-ii-spring-2003/

About the course

The objective of the course is for you to learn the financial tools needed to make good business decisions. The emphasis will be on linking corporate finance to other aspects of corporate strategy. There are three main modules of the course.

  1. Financing Needs and Capital Structure: The course starts with analyzing the factors that determine a company’s need for external financing, be it debt or equity. We then move on to a consideration of the optimal mix of debt and equity financing.
  2. Project and Company Valuation: In the second module, we develop the tools needed for valuing investment projects, including the determination of the relevant cash flows and the appropriate discount rate. We will then use these basic tools to value companies, and to select investment projects.
  3. Selected Topics: The final module deals with selected aspects of modern corporate finance, most likely including Risk Management and Corporate Governance. The actual topics will be determined by the time available, and by the interests of students.


Part I: Financing

1 Lecture: Introduction (PDF) (PDF)
4 Lecture: Capital Structure 1 (PDF) (PDF)
5 Lecture: Capital Structure 2 (PDF) (PDF)
8 Lecture: Capital Structure: Informational and Dynamic Considerations (PDF) (PDF)
10 Review of Financing and Capital Structure (PDF) (PDF)
11 Case: Intel Corporation, 1992 (PDF)  


Part II: Valuation

12 Lecture: Valuation of Free Cash Flows (PDF) (PDF)
14 Lecture: WACC and APV (PDF) (PDF)
19 Lecture: Real Options (PDF) (PDF)
21 Lecture: Valuing a Company (PDF) (PDF)
24 Wrap-Up of Valuation (PDF) (PDF)

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