Unit convenor and teaching staff |
Unit convenor and teaching staff
Unit Convenor / Lecturer
Steven Bishop
Contact via Email
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Credit points |
Credit points
2
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Prerequisites |
Prerequisites
(Admission to MAppFin or GradDipAppFin) and ECFS866
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Corequisites |
Corequisites
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Co-badged status |
Co-badged status
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Unit description |
Unit description
This unit develops skills required in the assessment and valuation of projects, companies or divisions, and is designed for those with a role in business development, strategic planning or advising companies on investment or restructuring decisions. Students will be equipped to address a wide range of valuation situations by being able to critically evaluate and apply the variety of valuation techniques used in practice. Building on the principles from corporate finance we consider in detail the assumptions and implementation issues involved in valuation models, recent developments in cost of capital estimation, valuation methodologies and real options. Valuation in an international context will also be considered. Considerable emphasis is placed on assessing the robustness of valuations and how to incorporate risk into valuation and decision making. The unit will provide opportunities to develop financial modelling skills, will provide exposure to @Risk software (used for Monte Carlo simulation) as well as access to S&P Capital IQ.
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Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates
On successful completion of this unit, you will be able to:
To pass this unit (requires a Mark of 50 or better) the student must pass the final examination.
Name | Weighting | Hurdle | Due |
---|---|---|---|
Pre-Unit Assignment | 10% | No | First Class |
Assignment | 35% | No | Refer to iLearn |
Final Exam | 55% | Yes | Refer to Timetable |
Due: First Class
Weighting: 10%
Summary of Assessment Task
Individual / Group: Individual
Due Date: First Class
Grading Method: Refer to 'Standards Required to Complete the Unit Satisfactorily' section
Submission Method: At or before the first class. Please bring a copy to class for class use as well.
Duration: Refer to Assignment Coversheet
Extension Requests:
Due: Refer to iLearn
Weighting: 35%
Summary of Assessment Task
Individual / Group: Individual
Due Date: Refer to the Unit's iLearn site
Grading Method: Refer to 'Standards Required to Complete the Unit Satisfactorily' section
Submission Method: Online via Turnitin on iLearn site
Duration: Refer to Assignment Coversheet
Extension Requests:
Other Information:
Due: Refer to Timetable
Weighting: 55%
This is a hurdle assessment task (see assessment policy for more information on hurdle assessment tasks)
Summary of Assessment Task
Individual / Group: Individual
Due Date: Refer to Timetable.
Assessments: Different Class Groups have different deadlines. Students should find the timetable and dates relevant to their group at www.mafc.mq.edu.au
Grading Method: Refer to 'Standards Required to Complete the Unit Satisfactorily' section
Submission Method: As per MAFC Program Rules & Procedures at www.mafc.mq.edu.au
Duration: 2 hours plus 10 minutes reading time
Examination Conditions:
Extension Requests:
Face-to-Face Teaching: Generally 20 hours
Timetable: Detailed timetable for classes are on the Centre’s web site www.mafc.mq.edu.au
Consultation Times:
Students who wish to contact any of the teaching staff may do so through:
Text: Nil
Course Resources:
Lecture Notes: Available in printed form and electronically via iLearn.
Case Studies:
Pre-Unit Materials:
Useful References:
Calculators:
Assumed Knowledge: Mathematical content
Present Value = Σnt=0 ((Cash Flow t ) / (1+Kt)t )
as well as alternate expressions for calculating the present value of a series of cash flows using level and growing perpetuities and annuities.
You should review Chapter 4 of the textbook if you are not comfortable with this material.
Assumed Access:
Unit iLearn Site:
Important Notice:
1: REVIEW OF VALUATION FRAMEWORK
Taking the basic DCF model as the starting point the topic presents some extensions of the valuation models introduced in pre-requisite subjects and demonstrates how they can be used in practice to inform strategy development and decision making.
Key learning outcomes for this topic:
2: ALTERNATIVE VALUATION MODELS
The Topic examines the linkages between the various models, similarities and differences and how to determine the appropriate model for a range of valuation scenarios. Special attention is paid to the Residual Income valuation method as a forerunner to linking it with strategy development.
Key learning outcomes:
3: USING THE VALUATION MODELS
The wide ranging applications of valuation techniques used in practice will be reviewed. The material includes a critical analysis of the types of valuation issues which often arise in practice, especially around the estimate of the terminal value which generally represents the largest component of a valuation. [NOTE: this unit does NOT consider the legal or other regulatory issues involved in preparing a valuation, nor issues such as marketability or other discounts. These matters are covered in Applied Valuation].
Key learning outcomes for this topic:
4: RISK AND VALUATION
How to address risk in the different contexts of valuation is considered. Various ways to assess and measure risk and whether each risk can be assessed by a valuation adjustment (i.e. cash flows or discount rate), deal structure or decision making process (e.g. more information, decision criteria under risk) is considered. Also examined is how to assess the source of a project’s NPV, and how it can be incorporated into risk appraisal.
Key learning outcomes for this topic:
5: PREPARING A COST OF CAPITAL RECOMMENDATION
This Topic extends the discussion of cost of capital from Corporate Finance and discusses the practical application of the cost of capital concepts in the range of valuation situations.
Key learning outcomes for this topic:
5A: FINANCIAL MODELLING AND FORECASTING TOOLS
This Topic reviews financial modelling best practice, and procedures for establishing key relationships in a financial model, including multiple regression.
Key learning outcomes for this reading (time available in class to discuss questions arising from the material):
6: STRATEGIC FLEXIBILITY AND VALUE
The impact of strategic flexibility on value is reviewed to introduce the use of option valuation techniques to value this flexibility. An approach for introducing real options into a valuation is considered along with and comparing the use of decision trees and option valuation approaches. It presents a number of straightforward scenarios which demonstrate the impact of introducing real options into the traditional DCF framework.
Key learning outcomes for this topic:
7: REAL OPTIONS: ADVANCED VALUATION ISSUES
This topic examines advanced issues in using option pricing methods in real option applications. It will examine in detail the robustness of real options methodology in practice. It will look at the impact of early exercise on option value, projects whose value declines prior to exercise, how to incorporate multiple options within one project and the impact of different project risk profiles on option value. This topic will concentrate on understanding of issues and identifying the appropriate modelling techniques available.
Key learning outcomes for this topic:
8: SPECIAL TOPICS IN VALUATION
If time is available, this topic will address emerging or interesting issues in the application of valuation techniques. It can vary from class to class, depending on interests of class, issues of the day and time available. The focus will be on using existing knowledge of finance to resolve interesting valuation problems.
Key learning outcomes for this topic:
Macquarie University policies and procedures are accessible from Policy Central. Students should be aware of the following policies in particular with regard to Learning and Teaching:
Academic Honesty Policy http://mq.edu.au/policy/docs/academic_honesty/policy.html
Assessment Policy http://mq.edu.au/policy/docs/assessment/policy_2016.html
Grade Appeal Policy http://mq.edu.au/policy/docs/gradeappeal/policy.html
Complaint Management Procedure for Students and Members of the Public http://www.mq.edu.au/policy/docs/complaint_management/procedure.html
Disruption to Studies Policy (in effect until Dec 4th, 2017): http://www.mq.edu.au/policy/docs/disruption_studies/policy.html
Special Consideration Policy (in effect from Dec 4th, 2017): https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policies/special-consideration
In addition, a number of other policies can be found in the Learning and Teaching Category of Policy Central.
Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/support/student_conduct/
Results shown in iLearn, or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au.
Students should also consult the MAFC Program Rules & Procedures found at http://www.mafc.mq.edu.au
Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/
Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.
For all student enquires, please contact studentsupport@mafc.mq.edu.au
Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.
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When using the University's IT, you must adhere to the Acceptable Use of IT Resources Policy. The policy applies to all who connect to the MQ network including students.
Our postgraduates will demonstrate a high standard of discernment and common sense in their professional and personal judgment. They will have the ability to make informed choices and decisions that reflect both the nature of their professional work and their personal perspectives.
This graduate capability is supported by:
Our postgraduates will be able to demonstrate a significantly enhanced depth and breadth of knowledge, scholarly understanding, and specific subject content knowledge in their chosen fields.
This graduate capability is supported by:
Our postgraduates will be capable of utilising and reflecting on prior knowledge and experience, of applying higher level critical thinking skills, and of integrating and synthesising learning and knowledge from a range of sources and environments. A characteristic of this form of thinking is the generation of new, professionally oriented knowledge through personal or group-based critique of practice and theory.
This graduate capability is supported by:
Our postgraduates will be capable of systematic enquiry; able to use research skills to create new knowledge that can be applied to real world issues, or contribute to a field of study or practice to enhance society. They will be capable of creative questioning, problem finding and problem solving.
This graduate capability is supported by:
Our postgraduates will be able to communicate effectively and convey their views to different social, cultural, and professional audiences. They will be able to use a variety of technologically supported media to communicate with empathy using a range of written, spoken or visual formats.
This graduate capability is supported by:
Our postgraduates will be ethically aware and capable of confident transformative action in relation to their professional responsibilities and the wider community. They will have a sense of connectedness with others and country and have a sense of mutual obligation. They will be able to appreciate the impact of their professional roles for social justice and inclusion related to national and global issues
This graduate capability is supported by:
The Academic Policies section of this Unit Guide was updated in March 2014.
The Extension Requests section of this Unit Guide was updated in June 2014.
The Unit Schedule section of this Unit Guide was updated in November 2016.
This Unit Guide may be subject to change. The latest version is on the Centre’s web site www.mafc.mq.edu.au.
Students should read the Unit Guide carefully at the start of semester. It contains important information about the unit. If anything is unclear, please consult one of the unit lecturers.
University Policy on Grading:
Specific Unit Grading:
Grade | Expectation |
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High Distinction | Provides consistent evidence of deep and critical understanding in relation to the learning outcomes. There is substantial originality and insight in identifying, generating and communicating competing arguments, perspectives or problem solving approaches; critical evaluation of problems, their solutions and their implications; creativity in application as appropriate to the discipline. |
Distinction | Provides evidence of integration and evaluation of critical ideas, principles and theories, distinctive insight and ability in applying relevant skills and concepts in relation to learning outcomes. There is demonstration of frequent originality in defining and analysing issues or problems and providing solutions; and the use of means of communication appropriate to the discipline and the audience. |
Credit | Provides evidence of learning that goes beyond replication of content knowledge or skills relevant to the learning outcomes. There is demonstration of substantial understanding of fundamental concepts in the field of study and the ability to apply these concepts in a variety of contexts; convincing argumentation with appropriate coherent justification; communication of ideas fluently and clearly in terms of the conventions of the discipline. |
Pass | Provides sufficient evidence of the achievement of learning outcomes. There is demonstration of understanding and application of fundamental concepts of the field of study; routine argumentation with acceptable justification; communication of information and ideas adequately in terms of the conventions of the discipline. The learning attainment is considered satisfactory or adequate or competent or capable in relation to the specified outcomes. |
Fail | Does not provide evidence of attainment of learning outcomes. There is missing or partial or superficial or faulty understanding and application of the fundamental concepts in the field of study; missing, undeveloped, inappropriate or confusing argumentation; incomplete, confusing or lacking communication of ideas in ways that give little attention to the conventions of the discipline. |
Review of Grade and final examination Script viewing: