MGT 6504: Principles of Finance provides a rigorous foundation in modern financial decision-making, equipping students with the analytical tools used by managers, investors, and financial analysts to value assets, evaluate investment opportunities, and understand how financial markets price risk. Through a sequence of integrated modules—including the time value of money, net present value and internal rate of return, bond valuation, stock pricing, risk and return, the cost of capital, and full-firm discounted cash flow analysis—students learn how to translate real-world business decisions into quantitative financial models.
The course begins by establishing the time value of money, enabling students to analyze cash flows, compare financial alternatives, and understand the economics behind contracts and investments. Students then apply these fundamentals to evaluate projects using net present value (NPV) and internal rate of return (IRR), the core tools of capital budgeting. Building on these skills, the class progresses to the pricing of bonds and the valuation of stocks, including both constant-growth and multi-stage dividend discount models.
Students then explore the relationship between risk and return, including the estimation and interpretation of beta and the use of the Capital Asset Pricing Model (CAPM). These concepts feed directly into understanding a firm’s weighted average cost of capital (WACC)—a critical input for corporate valuation and strategic financial decisions. The course culminates in a full discounted cash flow (DCF) valuation, integrating cash-flow forecasting, terminal value estimation, sensitivity analysis, and interpretation of valuation results in a strategic context.
Throughout the course, students learn not just how to compute value, but how financial models guide corporate choices, investor behavior, and strategic decisions. Real-world examples—including firm valuations, capital budgeting cases, and applied Excel modeling—reinforce the practical relevance of the material and prepare students for careers in finance, consulting, corporate strategy, analytics, and investment management.
