Course Details

Course Information Package

Course Unit CodeAFIN101
Course Unit DetailsBA Business Administration (DL) (Compulsory courses) - BA Business Administration (Required Courses) - BSc Marketing with Digital Technologies (Technical Electives) - BA Accounting and Finance (Required Courses) - BSc Maritime Studies (Required Courses) -
Number of ECTS credits allocated5
Learning Outcomes of the course unitBy the end of the course, the students should be able to:
  1. Describe the issues involved in the finance field, the types of organization of firms and the role of the financial manager
  2. Describe the issues involved in the finance field, the types of organization of firms and the role of the financial manager
  3. Solve problems involving mutually exclusive alternatives.
  4. Apply the present value approach to alternative business finance problems including bank loans and bond valuation.
  5. Discuss the differences between alternative methods for project appraisal (Internal Rate of Return and Payback) and describe their disadvantages compared to the Net Present Value approach
  6. Solve problems with current period budget constraints
  7. Formulate and solve problems with multi-period budget constraints with linear programming
Mode of DeliveryFace-to-face
Recommended optional program componentsNONE
Course Contents

Finance and the Financial Manager: Issues analyzed in the finance field, the different forms of business organizations and their advantages-disadvantages, main functions of financial manager, agency problems between the claimholders of the firm and proposed solutions.

The opportunity cost of capital and time value of money: Definition of the concept of the opportunity cost of capital and time value of money, compounding of interest and calculation of future values, discounting and the Net Present Value (NPV), the relation of opportunity cost with project risk, the rate of return rule and investment decisions in two-periods, the role of financial markets in allocating current and future consumption

Present value, simple and compound interest and applications: Future values for multi-period problems, the Net Present Value approach with multi-period problems, simple and compound interest calculations, present value short-cuts for special cases of present value calculations, present value analysis in the presence of inflation, real and nominal rates of interest, application of the present value approach for calculating the present value of a bank loan based on instalments paid, bank effective interest rate and its connection with the compounding of interest, introduction to bond valuation and bond terminology, the present value analysis applied to valuation of bonds.

Alternative methods for investment appraisal: The payback method for investment appraisal, the book rate of return and the internal rate of return method for investment appraisal, the properties of a proper investment appraisal method, identification of the situations where the payback, the book rate of return and the internal rate of return method may be invalidated, the problem of investment under budget constraints and solutions using profitability index and linear programming.

Recommended and/or required reading:
  • Brealey, R., Myers, S. and Alan Marcus, Fundamentals of Corporate Finance, 4th Edition, McGraw Hill, 2004
  • Copeland, T., F. Weston , A. Shastri Financial Theory and Corporate Policy, 4rd Edition, Addison-Wesley, 2004
  • Besley S. and Brigham, E. Essentials of Managerial Finance, 12th edition, South Western College Publishing, 2000
Planned learning activities and teaching methodsThe taught part course is delivered to the students by means of lecturers, conducted with the help of computer presentations and the use of the board. Lecture notes and other course material like spreadsheet examples are available to students through the web.
Assessment methods and criteria
Final Exam60%
Language of instructionEnglish
Work placement(s)NO

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