FINM3005 · Corporate Valuation
The Complete Exam Bible · S1 2026Corporate Valuation
Corporate Valuation (FINM3005/FINM6005, “Applied Valuation”) teaches you to value a company the way a junior equity analyst does — estimate the free cash flow, discount it at the cost of capital, add a terminal value, bridge enterprise value to equity, and defend the call. Nearly every problem runs the same engine: PV of free cash flow at the WACC → enterprise value → bridge to equity → per share, wrapped around one decision rule, value is created only when ROIC > WACC. The final exam is 60% in one closed-book sitting and every topic is examinable, and it is an applied paper that grades model-building integrity, not a single “right” number — so this guide teaches each method to exam standard, in the five-beat answer shape the markers reward.
What FINM3005 covers
Ten lecture topics → one exam-ready map. Each links to its free chapter guide.
How FINM3005 is assessed
| Component | Weight | Format |
|---|---|---|
| Final examination | 60% | Closed-book, individual · ANU exam period · every topic examinable |
| Group valuation assignment | 35% | Teams of 4–6 valuing an ASX company · due ~Week 11 |
| Optional quiz | 5% | Online, individual, Week 5 · redeemable — if skipped or beaten by your exam, the 5% rolls onto the final — confirm the exact rule in your class summary |
A one-page enterprise DCF — EV to value per share, mark by mark
- +1Continuing value. RONIC = WACC, so growth adds nothing → use convergence CV₃ = NOPLAT₄ ÷ WACC = 63 ÷ 0.09 = $700m, dated at end of year 3.
- +1Discount factors at 9%: 0.917, 0.842, 0.772 for years 1–3.
- +1PV of explicit FCFF: 50(0.917) + 54(0.842) + 58(0.772) = 45.9 + 45.5 + 44.8 = $136.2m.
- +1PV of the continuing value: 700 × 0.772 = $540.4m (discount the CV by the year-3 factor).
- +1Enterprise value: EV = 136.2 + 540.4 = $676.6m (the CV is ~80% of EV — normal, and why the terminal assumption dominates).
- +1Bridge and per share: equity = 676.6 − 200 = $476.6m; value per share = 476.6 ÷ 100 = $4.77.
Key terms
- Free cash flow to the firm (FCFF)
- The after-tax cash an operating business generates for all providers of capital — NOPLAT plus non-cash charges minus reinvestment in invested capital. It excludes interest (financing is in the WACC) and is discounted at the WACC, never the cost of equity.
- WACC
- Weighted-average cost of capital = (E/V)·cost of equity + (D/V)·after-tax cost of debt, using market-value weights at the firm's target structure. It is the rate that discounts FCFF, because FCFF is cash to all investors.
- ROIC vs WACC
- Return on invested capital (NOPLAT/invested capital) versus the cost of capital — the value-creation test. Value is created only when ROIC > WACC; below it, faster growth destroys value. The single comparison that threads through every week.
- Terminal / continuing value
- The value of operations after the explicit forecast ends, collapsed into one number at the horizon. Estimated by convergence (NOPLAT/WACC, the default), the Gordon/key-value-driver formula, or an exit multiple — and usually the majority of enterprise value.
- EV→equity bridge
- The step from enterprise value to equity value: subtract net debt, minority interest and other non-equity claims, then divide by shares for value per share. Keeping operating, non-operating and financing items in exactly one place each is what makes the bridge add up.
FINM3005 FAQ
Is FINM3005 hard?
It is conceptually demanding but pattern-based: nearly every problem runs the same engine — PV of free cash flow at the WACC, enterprise value, bridge to equity, per share — so once you can build a clean DCF on fresh numbers, the difficulty is precision and consistency under exam time. The exam is applied, not spreadsheet recall, and grades model-building integrity rather than a single right number.
How is FINM3005 assessed?
The final exam is 60% in one closed-book sitting over the ANU exam period, and every topic is examinable. The remaining 40% is a group valuation assignment (about 35%, teams of 4–6 valuing an ASX company, due around Week 11) and an optional, redeemable Week-5 quiz (about 5%) — if you skip it or your exam beats it, the 5% rolls onto the final. Confirm this year's exact weights and dates in your class summary.
What is on the FINM3005 final exam?
The whole valuation pipeline: enterprise DCF and the EV-to-equity bridge, reorganising statements to NOPLAT and ROIC, forecasting, WACC with CAPM and the beta unlever/relever two-step, growth and terminal value (RONIC vs WACC), trading and transaction multiples, sum-of-the-parts, M&A (synergy vs premium), and forming a Buy/Hold/Sell recommendation. Expect a company sketch with accounts and inputs, plus short concept items (why enterprise DCF, the convergence-CV rationale, ROIC vs WACC, market efficiency).
Is the exam open or closed book?
The source describes the final as a closed-book, individual written paper — you do not open a spreadsheet model in the exam. Always confirm the book status and any permitted materials in your own class summary, as details can shift between cohorts.
Is using AskSia for FINM3005 cheating?
No. AskSia is a study reference written in our own words — we host none of your lecturer's files, and Sia teaches you the method to earn the marks; it does not complete or sit your assessments.
How to study for the exam
Make the DCF engine automatic: forecast FCFF, discount at the WACC, add a terminal value, then bridge EV → equity → per share — and write that bridge every single time. Drill the five-beat answer shape the markers reward (set up assumptions and flag the fragile ones; build/compute; bridge to per share; sanity-check with ROIC > WACC and the CV share of EV; recommend). Keep the recurring traps front of mind — discount-rate mismatch (FCFF at WACC, FCFE at the cost of equity), nominal-vs-real consistency, double-counting interest, book instead of market WACC weights, and averaging levered betas. Because the 60% final is closed-book and the 5% quiz only redeems into it, nothing backstops the exam — so treat the 35% group assignment as exam practice with a longer deadline (building the model is learning the exam) and over-invest in clean, defensible, exam-style reasoning.
