Filippo Mezzanotti

Associate Professor of Finance

Northwestern University, Kellogg School of Management
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Finance II (FINC-431-0)


Finance II: Corporate Finance covers the financial knowledge you need to run a firm, whether the firm is a multi-billion international conglomerate or a three-person start up. You will learn how to answer the three fundamental question of corporate finance: (1) Capital structure or the funding decision: which source(s) of capital should you use to fund the firm's project? (2) Capital budgeting or the investment decision: which projects should you invest in? (3) Dividend decision: how should you deploy the capital that the project returns?

We will cover the three fundamental methods for valuing projects and firms: discounted cash flow (or net present value), real options, and multiples analysis. The class begins with a theoretical framework. The world of finance is very complex. Without a logical structure that you can use to frame and answer questions, you will rapidly become lost and will be unable to defend your position. The theoretical framework is valuable, however, only if you can use it to examine real world decisions. Thus the majority of class time will be devoted to applying the logical framework.

This course is important for anyone who plans to run a firm or a division, who hopes to be involved in the investment or funding decisions of the firm, who plans to work for a service provider who will assist the firm in analyzing these decisions (e.g., banking and consulting), or who plans to invest in firms or advise clients who will invest in firms. Even if you initially specialize in a different functional area, you want to understand how the finance function works. The most brilliant idea isn't useful if you cannot get it funded.


Teaching Material


KLA-Tencor's Leverage Decision: Cashing in the Chips (2024): I have written a new case with my colleague David Matsa (Kellogg) and Evan Meagher. In this case, students assume the role of a fictional hedge fund analyst and conduct a financial analysis of the semiconductor capital company KLA-Tencor in 2014. The analyst’s assumption is that the firm has been too conservative in managing its capital structure, particularly in light of recent changes in the semiconductor industry. As a result, students are asked to value the firm under different assumptions about capital structure. This valuation requires them to consider debt ratings and to quantify these based on qualitative and quantitative metrics. The key objective of the case is to provide students with an environment where they can critically evaluate the trade-offs a firm faces when deciding whether to issue more debt. Access to the case is available through Harvard Business Publishing (link here).