Framingham State University COURSE SYLLABUS FINA 248 Managerial Finance Summer 2016 (Jun 27 Aug 5)

Transcription

1 Framingham State University COURSE SYLLABUS FINA 248 Managerial Finance Summer 2016 (Jun 27 Aug 5) GENERAL INFORMATION Professor: Dr. Zhe Li Address: Office: TBD Credit: 4 Teaching Hours: 60 Time: 2 hours/day, Mon-Fri Instructor s office hours: By appointment Course Web page: Framingham.blackboard.com COURSE DESCRIPTION The study of the relationship between the investment and financing decisions made by firms. Main topics include working capital and fixed asset management contained within a broad overview of the type of assets a company acquires, the reasons for acquiring them, and the sources and costs of financing the assets. Concepts are discussed primarily in accounting terms, and mathematical relationships are used as a focal point for discussion. COURSE OBJECTIVES Managerial Finance I has three main objectives: 1. To equip the students with the fundamental tools of finance: an understanding of the Time Value of Money, Discounted Cash Flow analysis, Evaluation of Bonds and Stocks, the Capital Asset Pricing Model, Capital Budgeting, Risk Analysis and Options Theory. 2. To demonstrate the role of financial management within the corporation 3. To acquaint the students with how the fundamental tools are used in practical financial management of a corporation. REQUIRED MATERIALS 1. Textbook: Fundamentals of Financial Management, Concise Edition by Brigham and Houston, 7 th Edition. (Newer editions are acceptable) 2. Financial Calculator: You must have a financial calculator to get through the course. I recommend either the HP-10BII. PREREQUISITES One (1) of the following courses: ECON 101 Principles of Macroeconomics, 1

2 ECON 102 Principles of Microeconomics, ACCT 220 Introduction to Financial Accounting, MATH 107 Business Statistics, MATH 117 Introduction to Statistics, or MATH 219 Calculus I; or permission of the instructor GRADING The course grade will be determined as follows: Midterm 1 Midterm 2 Final Examination Homework (six in total) Attendance Course Total Exams: There will be two midterms during this semester, and all of them will take place during the lecture time. Each midterm accounts for 220 of the final course grade. The final exam accounts for 220 of the total grade. The exams will all be NONcumulative. All the questions on each exam will be taken from chapters covered since the last exam. The material covered on each exam will be announced in class prior to the exam. For each exam, you have to use a calculator, but you are not allowed to share calculators during exams. Total possible : 660. Make-ups: There will be NO makeup exams. If you have a valid excuse for missing either of the first two midterm exams, your final grade will be based on your performance on the other two examinations each of these examinations will count as 330 of your final grade. If you miss the final with a valid excuse, you must make it up the following term. If you do not have a valid excuse for missing an exam, it will count as a zero. In order to be excused from an exam, the student must contact me before the exam. If you cannot reach me, send a message to me by . In most cases I will require students to provide me with additional documentation to justify why the student is unable to take the exam. Please note that a simple note indicating that you were seen at the health center the day of the exam does not, in and of itself, provide sufficient documentation. Excuses will be granted if the student is unable to take the exam because of serious illness or injury, or a significant personal or professional commitment. Excuses will not be granted for social activities such as ski trips, cruises, and trips to sporting events (unless you are participating). Homework: Homework will be assigned six times during the semester. All homework should be submitted to the instructor at the beginning of the lecture on the due date. Late submissions will be subject to 10 reduction out of the homework grade. Homework solutions will be explained in class at the due date, and no late submission 2

3 will be accepted after the solutions being presented in class. Total possible : 300. NO make-ups will be allowed for Homework. Attendance: Class participation is vital for the success of the class and for each student's learning experience. Attending the class is necessary but not sufficient; you should actively participate in class discussion whenever it is appreciate and possible. Everybody is strongly encouraged to share his/her views/experiences on the subject in class. Class participation will be graded according to the following scale: Regular attendance + Evidence of exceptional and careful advance preparation by taking a major role in pointing out new issues and new of view in case discussions with fellow students REGULARLY. Regular attendance + Evidence of careful advance preparation by contributing an analysis and interpretation of some issues on several occasions. Some discussion with fellow students. Regular attendance + Evidence of advance preparation by contributing some factual details within an ongoing line of analysis on some occasions. Regular attendance. But did not participate -- or participated only by general agreement with ongoing discussion -- or participated only when directly asked by instructor. Frequently absent (more than 3) or frequent late coming or frequent early leaving or any other behavior that disrupts or distracts from class discussions/lectures. The following would be considered distracting/disruptive behaviors: use of cell phones to text, use of laptops to access non-class related material that distracts students around you. Regrading: Claims for regrading of the exams, in case a student disagrees with his/her grade, will be accepted in writing no later than 7 days after the graded works are first available, (24 hours for the final exam). Except in the case of mistakes in addition, I reserve the right to regrade the entire piece of work if it is submitted for a regrade. STUDENT EVALUATION Grades will be allocated based on the as follows: Grade Points Range From To A A B B B

4 C C C D D D E I reserve the right to adjust the scale if necessary but will not make anyone s grade worse as a consequence of any adjustment made. If an adjustment is made, the process by which adjustments are made will be posted on the course web site. ACADEMIC HONESTY Academic honesty requires but is not limited to the following practices: appropriately citing all published and unpublished sources, whether quoted, paraphrased, or otherwise expressed, in all of the student s oral and written, technical, and artistic work; observing the policies regarding the use of technical facilities. Infractions of the Policy on Academic Honesty include, but are not limited to: 1. Plagiarism: claiming as one s own work the published or unpublished literal or paraphrased work of another. It should be recognized that plagiarism is not only academically dishonest but also illegal. 2. Cheating on exams, tests, quizzes, assignments, and papers, including the giving or acceptance of these materials and other sources of information without the permission of the instructor(s). 3. Unauthorized collaboration with other individuals in the preparation of course assignments. 4. Submitting without authorization the same assignment for credit in more than one course. I expect you to obey the rules and regulations established by Framingham State University concerning academic honesty. Visit if you are not sure what the policy is or you want a refresher. DISABILITY If you have a physical, psychological, medical or learning disability that may impact your course work, please contact LaDonna Bridges (Director of Academic Support) at lbridges@framingham.edu, or Laura Montoya (Academic Support Coord.) at lmontoya@framingham.edu. They will determine with you what accommodations, if any, are necessary and appropriate. Documentation guidelines are available on the CASA 4

5 website: All information and documentation is confidential. TENTATIVE COURSE SCHEDULE Two-hour Topics Section 1 1. Introduction to the course structure 2. Chapter 1: An Overview of Financial Management What is finance Jobs in finance Forms of business organization Stock prices and shareholder value Intrinsic values, stock prices, and executive compensation Important business trends Business ethics Conflicts between managers, stockholders, and bondholders Chapter 2: Financial Markets and Institutions The capital allocation process Financial markets Financial institutions The stock market The market for common stock Stock markets and returns Stock market efficiency Chapter 3: Financial Statements, Cash Flow, and Taxes Financial states and reports The balance sheet The income sheet Statement of cash flows Statement of stockholders equity Free cash flow Income taxes 5 Homework 1 (Chap 1-3) and Solution Chapter 4: Analysis of Financial Statements Ratio Analysis Liquidity Ratios Asset management ratios Debt management ratios Profitability ratios 5

6 Market value ratios Trend analysis The DuPont equation Ratios in different industries Summary of Allied s ratios Benchmarking Uses and limitations of ratios Potential misuses of ROE Looking beyond the numbers Study Chapter 5: Time Value of Money Time lines Future values Present values Finding the interest rate Finding the number of years Annuities Future value of an ordinary annuity Future value of an annuity due Present value of an ordinary annuity Finding annuity payments, periods, and interest rates Perpetuities Uneven cash flows Future value of an uneven cash flow stream Solving for interest rate with uneven cash flows Semiannual and other compounding periods Comparing interest rates Fractional time periods Amortized loans 11 Homework 2 (Chap 4-5) and Solution 12 Midterm Examination Chapter 6: Interest Rates The cost of money Interest rate levels The determinants of market interest rates The term structure of interest rates What determines the shape of the yield curve Using the yield curve to estimate future interest rates Macroeconomic factors that influence interest rate levels Interest rates and business decisions Chapter 7: Bonds and Their Valuation Who issues bonds Key characteristics of bonds 6

7 Bond valuation Bond yields Changes in bond values over time Bonds with semiannual coupons Assessing a bond s riskiness Default risk Bond markets 17 Homework 3 (Chap 6-7) and Solution Study Chapter 8: Risk and Rates of Return Stock prices over the last 20 years Stand alone risk Risk in a portfolio context: the CAPM The relationship between risk and rates and return Come concerns about beta and the CAPM Some concluding thoughts 20 Homework 4 (Chap 7-8) and Solution 21 Midterm Examination Study Chapter 9: Stocks and Their Valuations Legal rights and privileges of common stockholders Types of common stock Stock price versus intrinsic value The discounted dividend model Constant growth stocks Valuing nonconstant growth stocks Valuing the entire corporation Preferred stock 25 Homework 5 (Chap 9) and Solution 26 Study Chapter 10: The Cost of Capital An overview of the Weighted Average Cost of Capital (WACC) Basic definitions Cost of Debt Cost of preferred stock The cost of retained earnings Cost of new common stock Composite, or weighted average, cost of capital Factors that affect the WACC Adjusting the cost of capital for risk Some other problems with cost of capital estimates 7

8 27-28 Chapter 11: The Basics of Capital Budgeting An overview of capital budgeting Net present value (NPV) Internal rate of return (IRR) Multiple internal rates of return Reinvestment rate assumptions NPV profiles Payback period Conclusions on capital budgeting methods Decision criteria used in practice 29 Homework 6 (Chap 10 and 11) and Solution 30 Final Exam Disclaimer: Subsequent changes may be made to any aspect or detail of this Syllabus if and when necessary. Any changes will be announced in class as soon as practical. 8