FNCE90018 Corporate Financial Policy
The Complete Exam Bible · S2 2026FNCE90018 Overview
- Faculty of Business and Economics
- Semester 2, 2026
- Postgraduate coursework
- Graduate finance subject
FNCE90018 Corporate Financial Policy develops capital-budgeting, financing, payout, acquisition and risk-management decisions. It is taught within Faculty of Business and Economics. It is Postgraduate coursework.
- FNCE90018 grading Assessment weighting: 20% for in-class tests, 20% for the mid-semester test and 60% for the final examination; the best five in-class results count.
- FNCE90018 exam control The Subject Guide gives a two-hour final; the timetable and live LMS control the sitting details.
- FNCE90018 reasoning load Value the incremental cash flow first, then test financing, tax and risk consequences.
- FNCE90018 rule check Confirm any component-level pass requirement in the live LMS before relying on the aggregate mark.
How FNCE90018 is assessed
| Component | Weight | Format |
|---|---|---|
| In-class tests | 20% | The best five results from eight lecture tests contribute to the grade |
| Mid-semester test | 20% | A one-hour test covering the opening teaching period |
| Final examination | 60% | A two-hour examination covering the subject |
The current LMS assessment page and Subject Guide agree on the three weights. Live LMS instructions control the exact test and examination operation.
What FNCE90018 covers
Read Investment Decisions and NPV as the foundation, Capital Structure and Tax Shields as the main change in method, and Risk Management and Hedging as the final application of the course.
Investment Decisions and NPV
Net Present Value · Discount Rate · Mutually Exclusive Projects · compare stand-alone and mutually exclusive investments using cash-flow timing and value creationDefine Net Present Value
The course material gives this chapter a concrete anchor: The lecture begins with NPV, IRR, payback and the conflicts that can arise when projects are mutually exclusive.
- Net Present Value
- Discount Rate
- Mutually Exclusive Projects
- Applying Net Present Value
- Limits of Discount Rate and Mutually Exclusive Projects
Project Cash Flows and Capital Budgeting
Incremental Cash Flow · Opportunity Cost · Net Working Capital · construct free cash flow without mixing project consequences with sunk or financing itemsDefine Incremental Cash Flow
The course material gives this chapter a concrete anchor: The lecture moves from earnings to free cash flow and treats tax, opportunity cost, depreciation and working capital explicitly.
- Incremental Cash Flow
- Opportunity Cost
- Net Working Capital
- Applying Incremental Cash Flow
- Limits of Opportunity Cost and Net Working Capital
Equity and Debt Financing
External Equity · Initial Public Offering · Debt Contract · compare financing instruments through control, promised payment, information and flexibilityDefine External Equity
The course material gives this chapter a concrete anchor: The lecture distinguishes private and public equity routes from public, private and other debt funding.
- External Equity
- Initial Public Offering
- Debt Contract
- Applying External Equity
- Limits of Initial Public Offering and Debt Contract
Leasing and Financing Alternatives
Operating Lease · Finance Lease · Lease-Equivalent Loan · compare leasing with ownership on an after-tax present-value basisDefine Operating Lease
The course material gives this chapter a concrete anchor: The lecture covers lease forms, tax and legal consequences, the leasing decision and economic reasons for leasing.
- Operating Lease
- Finance Lease
- Lease-Equivalent Loan
- Applying Operating Lease
- Limits of Finance Lease and Lease-Equivalent Loan
Cost of Capital and Project Risk
Weighted Average Cost of Capital · Cost of Equity · Cost of Debt · match a projects risk and financing assumptions to a defensible required returnDefine Weighted Average Cost of Capital
The course material gives this chapter a concrete anchor: The lecture develops cost of equity, cost of debt and project cost of capital through WACC.
- Weighted Average Cost of Capital
- Cost of Equity
- Cost of Debt
- Applying Weighted Average Cost of Capital
- Limits of Cost of Equity and Cost of Debt
Capital Structure and Tax Shields
Levered Firm Value · Interest Tax Shield · Debt-Equity Ratio · separate operating value from the financing side effects of leverageDefine Levered Firm Value
The course material gives this chapter a concrete anchor: The lecture introduces capital structure, firm value, leverage and the value of the interest tax shield.
- Levered Firm Value
- Interest Tax Shield
- Debt-Equity Ratio
- Applying Levered Firm Value
- Limits of Interest Tax Shield and Debt-Equity Ratio
Financial Distress, Agency and Information
Financial Distress · Agency Cost · Trade-Off Theory · evaluate leverage after adding distress, incentive and information consequencesDefine Financial Distress
The course material gives this chapter a concrete anchor: The paired lectures develop financial distress, agency costs, trade-off theory and asymmetric information.
- Financial Distress
- Agency Cost
- Trade-Off Theory
- Applying Financial Distress
- Limits of Agency Cost and Trade-Off Theory
Payout Policy
Dividend · Share Repurchase · Ex-Dividend Price · compare dividends, repurchases and retention through investor cash flow and firm valueDefine Dividend
The course material gives this chapter a concrete anchor: The lecture distinguishes dividends, repurchases and retained earnings and explains cum- and ex-dividend values.
- Dividend
- Share Repurchase
- Ex-Dividend Price
- Applying Dividend
- Limits of Share Repurchase and Ex-Dividend Price
Mergers and Acquisition Value
Synergy · Control Premium · Acquisition NPV · value an acquisition without confusing total synergy with value captured by the acquirerDefine Synergy
The course material gives this chapter a concrete anchor: The lecture introduces the market for corporate control, merger types, acquisition value and the allocation of gains.
- Synergy
- Control Premium
- Acquisition NPV
- Applying Synergy
- Limits of Control Premium and Acquisition NPV
Risk Management and Hedging
Risk Exposure · Hedge Position · Forward Contract · design a hedge that matches the direction, amount and timing of the corporate exposureDefine Risk Exposure
The course material gives this chapter a concrete anchor: The lecture covers insurance and financial risk management as methods for reducing corporate exposure.
- Risk Exposure
- Hedge Position
- Forward Contract
- Applying Risk Exposure
- Limits of Hedge Position and Forward Contract
It is positioned as Graduate finance subject.
The subject links project value to the design of claims on corporate cash flow, so the same policy must be tested from firm, debt-holder and equity-holder perspectives.
Assessment in FNCE90018 is distributed as follows: In-class tests 20%; mid-semester test 20%; final examination 60%.
The current Subject Guide states that the best five of eight in-class tests count.
The operational assessment conditions matter here.
The final assessment is a two-hour examination during the examination period and covers all subject topics; check the live LMS and timetable for its style, permitted materials and exact sitting.
What makes FNCE90018 demanding is concrete: Students must connect valuation, financing, tax, agency and risk-management consequences without allowing a familiar ratio to replace incremental cash-flow reasoning.
Hurdle status is unknown from the verified course material and must be confirmed in the live LMS.
For enrolment planning, Confirm current prerequisite and enrolment rules in the University of Melbourne Handbook or live enrolment system.
Read Investment Decisions and NPV as the foundation, Capital Structure and Tax Shields as the main change in method, and Risk Management and Hedging as the final application of the course.
Worked example · free
Integrated practice: resolve the changed evidence
- 3Fix the case-specific meaning and evidential scale of Levered Firm Value.
- 3Show the operation or inferential link carried by Interest Tax Shield.
- 3Use Debt-Equity Ratio to test the strongest plausible alternative.
- 2Report the answer within this limit: The tax benefit of debt must be weighed against assumptions about debt permanence, distress and incentive costs.
Key terms
- Net Present Value
- The present value of incremental project cash flows after subtracting the initial investment.
- Discount Rate
- The required return used to translate cash flows at different dates into a common valuation date.
- Mutually Exclusive Projects
- Projects for which accepting one prevents acceptance of another because they compete for the same opportunity.
- Incremental Cash Flow
- A cash-flow change that occurs because the project is accepted and would not otherwise occur.
- Opportunity Cost
- The value of the best feasible alternative use sacrificed by committing a resource to the project.
- Net Working Capital
- Operating current assets minus operating current liabilities committed to support the project.
- External Equity
- Ownership funding raised from investors outside the existing shareholder group.
- Initial Public Offering
- The first public sale of a private firms shares under the applicable issuance process.
- Debt Contract
- A financing agreement that specifies promised payments, priority and enforcement rights for lenders.
- Operating Lease
- A lease arrangement whose economic analysis emphasises access to the asset and operating flexibility.
- Finance Lease
- A lease arrangement that transfers a substantial financing exposure associated with the leased asset.
- Lease-Equivalent Loan
- The borrowing pattern whose payments and tax consequences replicate the relevant lease cash flows.
FNCE90018 FAQ
Where is the hardest reasoning in Corporate Financial Policy?
Students must connect valuation, financing, tax, agency and risk-management consequences without allowing a familiar ratio to replace incremental cash-flow reasoning. FNCE90018 Corporate Financial Policy develops capital-budgeting, financing, payout, acquisition and risk-management decisions.
How does assessment work in Corporate Financial Policy?
In-class tests 20%; mid-semester test 20%; final examination 60%. The current Subject Guide states that the best five of eight in-class tests count. The final assessment is a two-hour examination during the examination period and covers all subject topics; check the live LMS and timetable for its style, permitted materials and exact sitting.
What form does the exam or final task take in Corporate Financial Policy?
The final assessment is a two-hour examination during the examination period and covers all subject topics; check the live LMS and timetable for its style, permitted materials and exact sitting.
Which pass conditions apply in Corporate Financial Policy?
Hurdle status is unknown from the verified course material and must be confirmed in the live LMS. In-class tests 20%; mid-semester test 20%; final examination 60%. The current Subject Guide states that the best five of eight in-class tests count.
Which teaching period does this Corporate Financial Policy resource cover?
It is aligned to Semester 2, 2026; confirm your enrolled class and timetable in the current institutional system. FNCE90018 Corporate Financial Policy develops capital-budgeting, financing, payout, acquisition and risk-management decisions.
Who controls the official rules for Corporate Financial Policy?
The university does. This is an independent FNCE90018 study resource; current institutional instructions remain authoritative for assessment operation. FNCE90018 Corporate Financial Policy develops capital-budgeting, financing, payout, acquisition and risk-management decisions.
Questions students ask in each FNCE90018 chapter
- Which common basis lets a student compare stand-alone and mutually exclusive investments using cash-flow timing and value creation?
- Compare stand-alone and mutually exclusive investments using cash-flow timing and value creation. The lecture begins with NPV, IRR, payback and the conflicts that can arise when projects are mutually exclusive. Chapter 01 · Investment Decisions and NPV
- Which constraints shape the work needed to construct free cash flow without mixing project consequences with sunk or financing items?
- Construct free cash flow without mixing project consequences with sunk or financing items. The lecture moves from earnings to free cash flow and treats tax, opportunity cost, depreciation and working capital explicitly. Chapter 02 · Project Cash Flows and Capital Budgeting
- Which common basis lets a student compare financing instruments through control, promised payment, information and flexibility?
- Compare financing instruments through control, promised payment, information and flexibility. The lecture distinguishes private and public equity routes from public, private and other debt funding. Chapter 03 · Equity and Debt Financing
- Which common basis lets a student compare leasing with ownership on an after-tax present-value basis?
- Compare leasing with ownership on an after-tax present-value basis. The lecture covers lease forms, tax and legal consequences, the leasing decision and economic reasons for leasing. Chapter 04 · Leasing and Financing Alternatives
- What has to line up before students can match a projects risk and financing assumptions to a defensible required return?
- Match a projects risk and financing assumptions to a defensible required return. The lecture develops cost of equity, cost of debt and project cost of capital through WACC. Chapter 05 · Cost of Capital and Project Risk
- Why is it important to separate operating value from the financing side effects of leverage?
- Separate operating value from the financing side effects of leverage. The lecture introduces capital structure, firm value, leverage and the value of the interest tax shield. Chapter 06 · Capital Structure and Tax Shields
- What evidence would allow a student to evaluate leverage after adding distress, incentive and information consequences?
- Evaluate leverage after adding distress, incentive and information consequences. The paired lectures develop financial distress, agency costs, trade-off theory and asymmetric information. The loss of value and constraint associated with difficulty meeting promised financial obligations. Chapter 07 · Financial Distress, Agency and Information
- Which common basis lets a student compare dividends, repurchases and retention through investor cash flow and firm value?
- Compare dividends, repurchases and retention through investor cash flow and firm value. The lecture distinguishes dividends, repurchases and retained earnings and explains cum- and ex-dividend values. Chapter 08 · Payout Policy
- How does Synergy help a student value an acquisition without confusing total synergy with value captured by the acquirer?
- Value an acquisition without confusing total synergy with value captured by the acquirer. The lecture introduces the market for corporate control, merger types, acquisition value and the allocation of gains. Chapter 09 · Mergers and Acquisition Value
- Which constraints shape the work needed to design a hedge that matches the direction, amount and timing of the corporate exposure?
- Design a hedge that matches the direction, amount and timing of the corporate exposure. The lecture covers insurance and financial risk management as methods for reducing corporate exposure. Chapter 10 · Risk Management and Hedging
How to study for the exam
Rebuild each finance model from its cash-flow logic, solve a changed scenario, and interpret the result for the relevant claim holder before checking the live assessment instructions.
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