BA530 Financial Management Spring 2015 Professor: Wanli Zhao, Ph.D. Class Time: 4:00 ~ 6:45 PM on Wednesday in Lawson 101 Office: Rehn 124, College of Business Phone: (618) 453-7109 Email: zhaowl@business.siu.edu Required Text Book: 1) Ross/Westerfield/Jaffe, Corporate Finance, 10th edition, 2013, McGraw-Hill/Irwin; 2) Harvard Business case package: you can purchase the package via the following link: https://cb.hbsp.harvard.edu/cbmp/access/33150310 You can purchase the ebook (via Connect+) or the hardcopy of the textbook. Either is fine for the class requirement. You can have access to the ebook almost anytime anywhere so you do not need to carry the textbook. However, it expires at the end of the semester and it is a hassle if you want to download the whole book to your computer. Here are the three packages of the book: 1. Textbook hardcopy: ISBN: 9780078034770; this option only gives you the book, no ebook access. 2. Connect+: ISBN: 9780077511326; You can purchase Connect+ via the course link: http://connect.mheducation.com/class/w-zhao-spring-2015; this option gives you ebook access. 3. Connect+ and textbook: ISBN: 9780077753856; This option gives you both. 3) If you purchase Connect+, you need to register for this course, please go to http://connect.mheducation.com/class/w-zhao-spring-2015 and register for this course. After that, you will have the access to the ebook. Course Description: Provide a broad overview of basic concepts, principles, and recent innovations in financial management. Topics covered will include risk and return, basic security valuation, capital budgeting, capital structure and cost of capital, dividend policy, financial planning, international financial management and corporate restructuring. These topics are taught using a problem-oriented approach with an emphasis on conceptual understanding and the acquisition of the appropriate analytical and quantitative skills. More importantly, students are required to work as a group and apply the fundamentals to the case studies. Team-working, communication skills and presentation skills are therefore not only required, but essential to the success in performance. Prerequisites: Enrollment in College of Business and Administration graduate program or consent of the department. 510 and economics foundation requirement. Finance 330 with a grade of C or better. Students who have had Finance 361 or its equivalent or were undergraduate finance majors are not allowed in 530 and should take 531 instead. In addition, you are required to have access to a laptop 1
with Microsoft Excel as we will be using Excel in class often. Your familiarity with Excel will be helpful. Course Format: Each session will be organized around a topic or related set of topics. To complete each session, you should carefully review the materials presented in the chapter and on D2L that is posted to facilitate your learning experience. We will be learning various concepts and theories in each session from the textbook as well as other sources and require you to apply these to analyze and solve various problems. Some topics/sections of the book I will ask you to read on your own. In addition to readings from the text book I may assign readings from current newspaper/journal articles to be completed before the following session. Learning will be accomplished through readings, PowerPoint slides, lectures, and maybe more importantly, class discussions on the cases. Because it is my experience that the topics in this course are best understood through problem solving, I will assign homework problems from time to time. Some homework will be discussed in class if time permits. In addition, for class discussion purposes, we may use some of the end-of-chapter mini-cases. They can help you understand the materials and apply the knowledge to real world problems and prepare you for the group project cases. This is an MBA class so I expect professionalism and maturity in your class behavior. I expect active participation in class discussions from all of you and I will grade each class discussion accordingly. Participation is a significant portion of your final grade. Essential requirements: (a) Attend class and actively participate. I believe that your learning experience is positively related to your attendance and participation. Make sure that you read the required materials before class and ask questions. Be well-prepared with the cases before we discuss them in class. Your learning experience will be compromised if you only listen to others. Since this is a once-aweek class, missing even one week may be very serious to your progress. Every student registered for the class is responsible for arranging his or her academic, work, social and travel schedules to accommodate the scheduled exams and quizzes. Thus, if you anticipate job, family or health problems resulting in a high likelihood of your absence for more than one week during the semester, you should discuss this matter with me as soon as possible. As many of you may travel heavily, time management is critical for your success in this class. (b) If you miss a class, it is your responsibility to determine what was covered including any administrative announcements. Some of the material covered in exams may not be in the text. Hence, you are urged to attend class regularly. If you miss the class, make sure that you catch up with the materials covered. (c) For this course, your constant access to a laptop with Microsoft Excel installed is STRONGLY RECOMMEDATED. Even though we do not use Excel in every session, it is absolutely essential for you to arrange access to a laptop with Excel in class. I expect you to have basic experience with Excel. (d) Go over slides on D2L before each class. Preparing before new lectures on textbook and slides is always a good idea! (e) Take exam and assignments AS SCHEDULED and submit them ON TIME. (f) More importantly, plan your schedule with your group members so that you can communicate with each other on a daily basis. We have more than one group based projects and teamworking effectively in an MBA class is also essential to your (and your group s) success. HBS Cases 2
We will have multiple Harvard cases during the semester. Five of them will be required, i.e., each group will submit a written report to me. Each group has multiple members who are randomly assigned by me. Each required case is worth 100 points. I would prefer to see concise and clear analysis and writing, which means length of your writing is of secondary importance. Quality/Depth is what I am looking for. For each case, I will post case questions on D2L. Remember: I do not want your report to be of Q&A format and these case questions are only meant to facilitate your thinking about some of the issues. You are encouraged to think out-of-the-box and you will be rewarded if you do so. You will also be asked to evaluate your team members performance on the projects. Such peer evaluation has no assigned points but otherwise important to your final grading on the projects (see Grading). Exam There will be only one take-home exam which is worth 100 points. Questions will be based on topics discussed in class, assigned readings from textbook, handouts, etc. The exam will be posted on D2L exactly three weeks before your final class. The exam is due by the midnight of May 13, 2015. Please send me your answer in a single Word file via email. Any late submission will not be graded. Capital Budget Simulation The capital budgeting simulation from HBS (in the case package) is a comprehensive hands-on experience for real-world capital budgeting. It is an interactive game that offers real-world scenarios and complexity of capital budgeting problem. We will debrief the simulation in the last class. The assessment will be based on the teams and each team member will get the same score. It is worth 100 points. Homework/Quiz I will assign homework/quizzes during the semester that may be in-class or take-home. The quizzes may be announced or unannounced. I will take off the worst homework/quiz and count the rest in final grading. Any assignment submitted late will get zero score. The grade of homework/quiz will be standardized to be 100 in final grading. Grading Students course grades are based on their demonstrated understanding of course materials and effectiveness in applying related techniques in and only in the graded activities above. The evaluation of student performance is necessarily somewhat subjective. Extra work to improve your grade is not possible. The maximum overall score in the course is 1000. The exam is 100 points and the required HBS case reports 500 points. The simulation is 100 points. Homework/Quiz will be standardized with a total of 100 points. The rest 200 points come from your participation in the classroom discussions, which is considered important contribution to this class. Late unexcused submission of assignments, exam or project will be recorded as 0. Your final letter grade for this course is determined by: 1. Adding up the points and using the following scale: A [900-1000); B [800-900); C [700-800); D [600-700); F [0-600). 2. My adjustment subjectively based on your class behavior and the peer evaluation. Miscellaneous 3
Refer to the following document for some other useful information such as incomplete policy and library hours: http://pvcaa.siu.edu/_common/documents/syllabus%20attachment_spring_2015.pdf 4
Course Schedule: Following is a tentative schedule of topics to be covered in the course. This list may change at the discretion of the instructor. I will notify you of changes in a timely manner. It is possible that the pace at which topics are covered during the course of the semester may deviate slightly from what is laid down here. No class day: Wednesday, 3/11. Date Topic Description Reading & HBS case Week 1 Introduction/Syllabus; Chapter 1 Week 2 & 3 Ratio Analysis Chapter 3; case: Ratios Tell A Story; Financial Detective; Week 4 & 5 DCF Chapter 4 Week 5, 6, & 7 Week 8 Capital Structure Cost of Capital Chapter 16 & 17; case: American Home Product; Blaine Kitchenware; Chapter 7; case: Marriott; Week 9 & 10 NPV and other criteria Chapter 5 Week 10, 11, & 12 Week 13, 14, & 15 Week 16 Week 17 Cashflow Projection Options Chapter 6 case: Mercury Athletic; Stryker: In-Sourcing PCBs; Stryker: Capital Budgeting; Whirlpool Europe; Chapter 22 & 23 Real option exercises case: Merck Capital Budgeting Simulation Final Exam 5