The central aim of this subject is to present the different financial instruments that a firm may use to raise capital. Once these financial instruments are introduced, the concept of cost of capital is defined as a necessary parameter for defining a firm¿s value. The knowledge that the student has to achieve can be divided in the following objectives: - Compute a firm value - Compute the cost of capital of a firm. - Understand that a firm is a portfolio of financial instruments which is closely connected to a portfolio of investment projects. - Distinguish a firm's cost of capital from a project cost of capital. - Be able to value companies as well as investment projects. - Connect the different shareholders¿ compensation mechanisms with the different financial instruments that a firm uses for raising capital. Specific capacities: - Understand the concept of firm value. - Be able of using comparables as well as different ways to compute a firm value. - Define a flexible methodology for computing the cost of capital of firms and projects. - Define a criterium for distinguishing the situation in which is optimal to use dividends instead of share repurchases for compensating shareholders. General capacities: - The capacity to use reasonable approximations for achieving a financial objective - The ability to tackle uncertainty issues, while making sensibility analyses in such uncertain freameworks. - The relevance of approaching a financial objective through different ways in order to have more sound financial results. The attitudes that a student should acquire: - A flexible view in order to change a decision if new information has arrived. - A critical view of managers in order to understand that a firm value is not always what the managers pursue. - A collaborative attitude in order to obtain from the different agents the information required for achieving difficult objectives. - Understand that behind any managerial decision there is an ethical code.