BFC2140: pass the exams, not just read the notes
Your complete guide to Monash University's corporate finance unit. See where the marks are, work real practice questions, and study with an AI tutor that knows BFC2140.
Sia generates BFC2140 practice questions, walks through share valuation and capital budgeting i: investment decision rules step by step, and quizzes you on the material the exam weights most heavily.
Worked example
A share has just paid an annual dividend of D0 = $3.00. Dividends are expected to grow at a constant 5% per year forever, and the required return on equity is rE = 12%. Using the constant-growth (Gordon) dividend-discount model, what is the intrinsic value of the share today?
The Gordon model discounts next year's dividend, not the one just paid, so first grow D0 to D1: D1 = D0(1 + g) = 3.00 × 1.05 = 3.15.
Substitute: P0 = 3.15/(0.12 − 0.05) = 3.15/0.07 = 45.00.
So the intrinsic value today is P0 = 45.00 (option index 3).
The trap: Using D0 in the numerator instead of D1 gives 3.00/0.07 = 42.86, which understates the value. The Gordon model uses next year's expected dividend D1 = D0(1 + g), so you must grow the dividend forward by one period first. A second common slip is forgetting to subtract g and treating it as a zero-growth perpetuity (3.15/0.12 = 26.25), which ignores the value of future dividend growth. classic slip!
One exam decides 50% of your grade. Covers Weeks 1 to 12, with more emphasis on Weeks 5 to 12; all Moodle materials are potentially examinable. This whole page is built around that.
Overview
What BFC2140 is, and where it sits
BFC2140 is Monash Business School's second-year corporate finance core, run by the Department of Banking and Finance. It builds the standard valuation and decision toolkit of the discipline: the time value of money, pricing bonds and shares, choosing investment projects, measuring risk and return, estimating the cost of capital, and the firm-level questions of capital structure and payout policy. The framing is the financial manager's three decisions throughout (investment, financing and working capital), with the objective of maximising shareholder wealth.
The unit runs in a clear arc across twelve teaching weeks. Weeks 1 and 2 are financial mathematics (future and present value, perpetuities and annuities, loan amortisation, compounding frequency, APR against EAR and continuous compounding). Week 3 prices bonds and shares (yield to maturity, the four bond-price laws and the dividend-discount model). Weeks 4, 5 and 7 are capital budgeting in three passes (the decision rules, incremental cash-flow analysis, then risk analysis and decision trees). Week 8 covers short-term financing and working capital, Week 9 risk and return with the CAPM, Week 10 the cost of capital and WACC, Week 11 capital structure (Modigliani-Miller), and Week 12 market efficiency and payout policy. A mid-semester test in Week 6 caps the first block.
It is a quantitative unit with a high-stakes assessment shape: five online exercises worth 25%, a 25% mid-semester test on Weeks 1 to 5, and a 50% closed-book final covering all twelve weeks with more emphasis on Weeks 5 to 12. The final is deliberately applied, rewarding students who can identify which valuation or capital-budgeting model fits a scenario rather than only recall a formula, and a formula sheet is provided within the exam platform.
Difficulty & time commitment
Is BFC2140 hard, and how much time does it take?
BFC2140 is manageable if you keep a weekly rhythm and treat the back half as the main event. Across student reviews the pattern is consistent: it starts gently and steepens, and the heaviest assessment is the part that separates grades.
The difficulty curve and the assessment weighting point the same way: the back half is harder and worth more. Front-loading effort there is the highest-return decision in the unit.
Is this unit for you
Who tends to do well, and who tends to struggle
You will likely do well if
- You are comfortable with algebra and a financial calculator: rearranging the time-value-of-money formulas, solving for a rate or a yield to maturity, and discounting mixed cash-flow streams cleanly.
- You build the core templates from blank (the FCF table from EBIT, the bond price formula, the Gordon model, the NPV profile, the WACC stack and the MM propositions) until each one is automatic.
- You do the weekly Pearson MyLab exercises and tutorial problems by hand and self-mark, keeping at least five decimals in your working and rounding only the final answer to two places.
- You practise choosing the right model for a worded scenario, because the closed-book final rewards identifying the correct valuation or capital-budgeting technique, not just executing a formula you were handed.
You may struggle if
- You treat the unit as formula memorisation; the applied final asks you to pick and justify a model under exam pressure, which exposes shallow recall.
- You leave the heavier back half (risk and return, cost of capital, capital structure, payout policy) to cram, even though the final puts more emphasis on Weeks 5 to 12.
- You round inputs mid-calculation; the two-decimal Section B rule punishes early rounding, and a single rounded input can push a bond price or WACC outside the accepted answer.
- You let the 25% online exercises slide because each is only worth 5%; together they are a quarter of the grade and they are also your best low-stakes practice for the exams.
- Master the Weeks 1 to 5 toolkit early (time value of money, bond and share valuation, NPV/IRR and the FCF build) so the MST is a checkpoint, not a scramble, and the back half has a foundation.
- Re-derive rather than memorise: the Gordon model from the perpetuity, MR-style YTM by interpolation, the two-asset variance with its covariance term, the CAPM, the WACC weights and MM Proposition II.
- Drill past-style Section B numeric questions to exactly two decimal places with five-decimal intermediate working, and practise the Section C ASCII-notation written workings (a., b., c. in one box).
- Keep one page of formulas and signature diagrams (TVM timeline, NPV profile, SML, WACC stack, the MM value-and-cost panels) and rehearse reproducing each calculation and reading each diagram from scratch.
Syllabus
The 12 topics, week by week
The exam-weight marker on each topic shows where the marks concentrate. The amber topics carry the highest exam weight.
T1 · Financial Mathematics: Time Value of Money
Berk Ch 1, 3 and 4Future and present value of single sums and mixed streams, perpetuities and annuities (ordinary and due), loan amortisation, compounding frequency, APR against EAR and continuous compounding.
T2 · Bond Valuation
Berk Ch 6Pricing coupon and zero-coupon bonds, yield to maturity, semi-annual coupons, the premium, discount and par logic, the four bond-price laws, and interest-rate and credit risk.
T3 · Share Valuation and the Dividend-Discount Model
Berk Ch 7Intrinsic value as the present value of future dividends, the zero-growth, constant-growth (Gordon) and multi-stage models, the implied return, preference shares as a perpetuity, and the limits of the DDM.
T4 · Capital Budgeting I: Investment Decision Rules
Berk Ch 8NPV, IRR and its pitfalls, payback and the profitability index, the NPV profile, independent against mutually exclusive projects, capital rationing, and unequal-life projects (equivalent annual annuity).
T5 · Capital Budgeting II: Cash Flow Analysis
Berk Ch 9Incremental after-tax free cash flow (initial, operating and terminal), the EBIT-to-FCF build, sunk against opportunity costs, net working capital and its recovery, the depreciation tax shield, and why interest is excluded.
MST · Mid-Semester Test (no new content)
covers Weeks 1 to 5Invigilated e-Assessment on the first block (financial maths, bond and share valuation, capital budgeting I and II). No new material is taught in this week.
T6 · Capital Budgeting III: Risk Analysis and Decision Trees
Berk Ch 9Sensitivity, scenario and break-even analysis, then decision-tree (real-option) analysis with roll-back NPV across sequential decision and chance nodes.
T7 · Short-Term Financing and Working Capital Management
working-capital chapterNet working capital and the cash conversion cycle, managing receivables, payables and inventory, credit-extension decisions, and the cost of trade-credit terms.
T8 · Risk and Return
risk-return chapterHolding-period return, expected return, variance and standard deviation, two-asset portfolio risk and the covariance term, diversification, systematic against unsystematic risk, beta and the CAPM or Security Market Line.
T9 · Cost of Capital
Berk Ch 13After-tax cost of debt (YTM-based), cost of preference shares, cost of equity via the DDM and the CAPM, WACC with market-value weights, divisional and project cost of capital and SML mispricing, and flotation costs.
T10 · Capital Structure
Berk Ch 16 and Brigham and Ehrhardt Ch 17Leverage and equity risk, business against financial risk, Modigliani-Miller Propositions I and II (no tax), MM with corporate tax and the interest tax shield, trade-off theory, and agency and signalling.
T11 · Market Efficiency and Payout Policy
EMH and payout chaptersThe Efficient Market Hypothesis (weak, semi-strong and strong), dividend-policy theories, dividends against share repurchases, and classical against imputation (franking-credit) tax systems with dividend tax calculations.
How it's assessed
Assessment structure
| Component | Weight | Format & timing |
|---|---|---|
| Post-class online exercises (5) | 25% | Five individual online exercises on Pearson MyLab Finance, maximum 5% each, with a 2-day automatic grace period. Due Friday 11:55pm of teaching Weeks 3, 4, 7, 10 and 12 (dates subject to change). Individual work; generative AI tools are not permitted on any assessment in this unit. |
| Mid-semester test | 25% | Individual invigilated e-Assessment, 20 MCQ in two parts: Part A is 10 questions at 0.5 marks each (5 marks) and Part B is 10 questions at 2 marks each (20 marks), 25 marks total. Tentatively Week 6 (a make-up test in Week 8 if special consideration is approved); date subject to confirmation. Covers Weeks 1 to 5 (financial maths, valuation, capital budgeting and cash flow). |
| Comprehensive final exam | 50% | Closed-book, fully invigilated on-campus download and upload e-Exam, 2 hours 10 minutes, 50 marks: Section A is 5 MCQ at 2 marks, Section B is 5 numerical-answer questions at 2 marks, Section C is 5 written-response questions for 30 marks (some parts require an Excel download and upload). A formula sheet is provided within the platform. Formal exam period (date to be advised on the official timetable). Covers Weeks 1 to 12, with more emphasis on Weeks 5 to 12; all Moodle materials are potentially examinable. |
- Pass on a weighted average of at least 50%. The unit FAQ explicitly states there is no hurdle requirement for the BFC2140 final exam.
- The final is applied rather than plug-and-chug: the unit FAQ warns students to apply theory with critical judgement rather than only plugging inputs into a given formula, so a large part of the skill is identifying which model fits the scenario. Section B answers are pure numeric to exactly two decimal places (no % or $ signs, commas or spaces), and Section C workings are typed with ASCII notation (* for multiply, / for divide, ^ for power, exp() for exponential) with multi-part answers in one text box.
- Calculator policy: A non-programmable financial calculator (for example HP 10bII+ or a Casio FX) is used throughout the unit. In the final exam a physical calculator (any type) and/or an approved virtual financial calculator is permitted, along with up to five blank working sheets and a blank Excel that is provided but not marked.
This is an exam-cram unit. With the exams at 75% of the grade and the comprehensive final exam alone at 50%, your result is overwhelmingly decided by how well you perform under time pressure. Covers Weeks 1 to 12, with more emphasis on Weeks 5 to 12; all Moodle materials are potentially examinable.
Final exam timing: approx Nov 2026 (S2 offering, confirm against the official exam timetable). Confirm the exact date and venue on the official exam timetable.
How to actually pass it
A weekly rhythm, two checklists, and the traps to avoid
The unit rewards consistency over cramming, and practice over re-reading. Here is the loop that works, then what to have nailed before each exam.
The weekly loop
Before the mid-semester checklist
- Drill the Weeks 1 to 5 toolkit under invigilated conditions: time value of money, bond and share valuation, the NPV/IRR rules and the incremental FCF build.
- Practise yield to maturity by interpolation and the premium, discount and par logic until the direction of the price move is instant.
- Rehearse the Gordon and multi-stage dividend-discount models, including growing D0 to D1 before discounting.
- Sit a timed MCQ set in the two-part 0.5-mark and 2-mark style before the Week 6 test, with clean two-decimal answers.
Before the final heaviest topics
- Prioritise Weeks 5 to 12, because the final puts more emphasis there: cash-flow analysis, risk analysis and decision trees, risk and return, cost of capital, capital structure and payout policy.
- Practise full computational set-pieces timed: the incremental FCF table and NPV, decision-tree roll-back NPV, the two-asset portfolio variance and CAPM, and the full multi-component WACC build with market-value weights.
- Rehearse the Section C written workings in ASCII notation (*, /, ^, exp()) with multiple sub-parts in one text box, and practise explaining MM, trade-off and SML-mispricing intuition in words.
- Re-derive the Modigliani-Miller results fast: Proposition I and II with no tax, then the V_L = V_U + T*D tax-shield result and the trade-off optimum against distress costs.
- Lock in the two-decimal numeric discipline: keep five decimals in your working and round only the final answer, so a bond price, YTM or WACC lands inside the accepted range.
The mistakes that cost marks
Using D0 instead of D1 in the dividend-discount model. The Gordon model is P0 = D1/(rE − g) where D1 = D0(1 + g). Dropping the next-year dividend in for the just-paid one understates the price and cascades into a wrong implied return. Always grow the dividend forward one period first.
Rounding inputs mid-calculation. Section B is marked to exactly two decimal places, but the rule is to round only the final answer. Rounding a YTM, a discount factor or a weight early can push a bond price or WACC outside the accepted range. Keep at least five decimals in your working.
Treating IRR as the tie-breaker on mutually exclusive projects. When two mutually exclusive projects differ in cash-flow timing, IRR and NPV can disagree. NPV is the wealth-maximising rule; the project with the higher IRR is not automatically better. Trust NPV and use the crossover rate on the NPV profile to explain the conflict.
Memorising formulas instead of choosing the right model. The closed-book final is applied: the FAQ warns to apply theory with critical judgement rather than plug inputs into a given formula. Marks come from recognising which valuation or capital-budgeting technique fits the scenario, so practise model selection, not just execution.
Teaching team
Who teaches BFC2140
The bios below are factual. The star ratings are not ours: they are impressions from students who have taken the unit, so you can hear from people who sat in the lectures.
Dr Simon Yap
Chief Examiner and lecturer for BFC2140 Corporate Finance at Monash University, appearing as the named lecturer on the weekly lecture slides.
Teaching team as listed in the unit materials reviewed. AskSia does not rate lecturers; star ratings are submitted by students who have taken BFC2140.
Where it fits
Prerequisites, related units & why it matters
BFC2140 is a second-year unit and assumes the first-year business and finance core (the financial manager's role and basic financial mathematics). Confirm the exact enrolment prerequisites and any prohibited combinations against the current Monash handbook, as these are set by the faculty and can change.
Your BFC2140 study toolkit
Study the unit with Sia, not just read about it
Each tool already knows BFC2140: your syllabus, your texts, and where the marks are. Grouped by how you study, from first contact to exam week.
FAQ
Frequently asked questions
Is BFC2140 hard?
It is moderate-to-hard for a second-year unit. The content is quantitative from start to finish (time value of money, bond and share valuation, NPV and IRR, free cash flow, risk and return, WACC and Modigliani-Miller), and 75% of the grade sits in two invigilated exams. The 50% final is closed-book and applied, so it rewards picking the right model under pressure rather than memorising formulas. It is very manageable with consistent weekly practice and clean two-decimal computation.
How is BFC2140 assessed?
Five post-class online exercises on Pearson MyLab worth 25% combined (maximum 5% each), a 25% invigilated mid-semester test covering Weeks 1 to 5, and a 50% closed-book final covering Weeks 1 to 12 with more emphasis on Weeks 5 to 12. You pass on a weighted average of at least 50%, and the unit FAQ confirms there is no hurdle requirement.
What is the final exam format?
A closed-book, fully invigilated on-campus download and upload e-Exam of 2 hours 10 minutes for 50 marks, in three sections: Section A is 5 multiple-choice questions (2 marks each), Section B is 5 numerical-answer questions (2 marks each), and Section C is 5 written-response questions worth 30 marks, with some parts requiring an Excel download and upload. A formula sheet is provided within the platform; no hard-copy notes are allowed.
How much maths is involved?
A lot, at a clean second-year level. Expect time-value-of-money and bond pricing, the dividend-discount model, NPV and IRR, incremental free-cash-flow tables, decision-tree roll-back, two-asset portfolio variance, the CAPM, WACC and Modigliani-Miller propositions. The arithmetic is calculator-and-formula based rather than heavy proofs, and Section B answers must be given to exactly two decimal places.
Can I use a calculator in the exam?
Yes. The unit uses a non-programmable financial calculator (such as an HP 10bII+ or a Casio FX) throughout, and the final exam permits a physical calculator (any type) and/or an approved virtual financial calculator, plus up to five blank working sheets and a blank Excel that is provided but not marked. Generative AI tools are not permitted on any assessment.
Is the final plug-and-chug or applied?
Applied. The unit FAQ explicitly warns students to apply theories using critical skills rather than purely plugging inputs into a given formula, so a large share of the marks comes from identifying which valuation or capital-budgeting model fits the scenario, interpreting NPV profiles and SML position, and explaining MM and trade-off intuition in words in Section C.
What text does BFC2140 use?
The primary text is Berk, DeMarzo and Harford, Fundamentals of Corporate Finance, 3rd Australian edition (Pearson), delivered through Pearson MyLab Finance, which also hosts the post-class online exercises and a study plan. Capital structure (Week 11) draws on additional Moodle readings from Brigham and Ehrhardt, Financial Management.
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