Finance 311, Principles of Finance
Fall 2006, Section 1
Dr. Brian Maris
Office: #413 BA Phone: 523-7398
e-mail: Website: http://www.cba.nau.edu/maris-b/
Office Hours: 9:30-10:30 Monday and Friday; 3:15-4:15 Monday and Wednesday.
Also available by appointment.
COURSE PREREQUISITES: Business major status (or Mat 119, BA 201, ACC 256, ECO 284 and ECO 285 for non-business majors).
COURSE DESCRIPTION: Finance 311 provides an introduction to financial management of the firm, and personal finance. Financial management topics include time value of money, asset valuation, capital budgeting, cost of capital, financial analysis and planning, and working capital management. Personal finance topics include retirement planning, investing and insurance.
TEXTS: Principles of Managerial Finance, Brief Fourth Edition, by Lawrence Gitman and Ernst & Young’s Personal Financial Planning Guide, 5th ed.
GRADING: Grades will be based on the following:
Midterm Exams, 2 @ 100 points each 200
Homework and Problem Sets (approximate) 110
Company Analysis Project 100
Comprehensive Final 140
Total 550
EXAMS: Midterm exams will cover the material listed on the attached assignment sheet unless otherwise announced in class. Exams consist of problems, multiple choice and true-false questions. If possible, make arrangements to take the exam early if you must miss an exam. If you are sick on the day of an exam, call me and we will arrange a make-up. If you miss an exam without prior arrangements, a makeup exam will be given at my discretion if the circumstances justify. Cheating on an exam will result in a grade of zero for the exam. You will not be allowed to make up those points on the final.
END OF CHAPTER PROBLEMS AND PROBLEM SETS: Several problems are listed to be turned in for each chapter. They will not be graded, only checked to see if you turned them in. You can work on those together if you want to. A review problem set will be handed out prior to each exam. They represent problems similar to those on the exams. I will collect your answers at the beginning of class, and then go over the answers in class. Problem sets will be graded for correct answers, and they will not be accepted late. Several comprehensive problems will be assigned. They also will be graded for correctness. All graded work (except the group project) is to be done individually.
COMPANY ANALYSIS GROUP PROJECT: You will be assigned to a group of approximately 4 members after the first exam. Each group must select a company, gather information about the company, perform a financial analysis and turn in a written report. Additional information will be provided in class.
GRADE SCALE: The grade scale is as follows:
A 90% B 80% C 70% D 60%
CALCULATOR: You should own and be able to use a financial calculator. If you do not own a financial calculator, you should get one now and learn to use it. Select a calculator with NPV and IRR functions and a cash flow key. Most students have a Texas Instruments BA II Plus, which costs about $40. I will demonstrate use of the TI BA II Plus in class, making it easier to learn.
HOW TO STUDY: Prior to coming to class, read the assigned chapter. I recommend that you also work the self-test problems. Detailed solutions to Self-Test Problems are in Appendix C. You might find the Study Guide helpful. The NAU Bookstore usually orders a few copies, or you can order it on the internet.
Assignments listed below are subject to change as announced in class.
Course Outline
Date Assignment
Aug 28 Ch 1, Role and Environment of Finance.
Start Ch 2, Financial Statements and Analysis.
Aug 30 Finish Ch2.
Sept 4 Enjoy Labor Day!
Sept. 6 Turn in problems 16, 17 from Chapter 2.
Begin Ch 3, Cash Flow and Financial Planning.
Sept 11 Continue Ch 3.
Sept 13 Turn in problems 1, 2, 8, 15 from Chapter 3.
Begin Ch 4, Time Value of Money.
Sept 18 Financial Planning Problem due (15 points). Continue Ch 4.
Sept 20 Turn in problems 4, 10, 17, 18, 19, 23, 28, 33, 42, 46, 49, 53 from Ch 4.
Begin Ch 5, Risk and Return.
Sept 25 Continue Ch. 5.
Sept 27 Turn in problems 1, 9, 19 from Ch 5. Begin Ch 6, Interest Rates and Bond
Evaluation.
Oct 2 Continue Ch 6.
Oct 4 Turn in problems 14, 16, 18 from Ch 6. Ch 1 & 2, Personal Financial Planning Guide
Oct 9 Problem Set #1 Due.
Oct 11 Exam #1
Oct 16 Personal Planning Case due (15 points). Start Ch 7, Stock Valuation.
Oct 18 Continue Ch 7
Oct 23 Turn in problems 5, 8, 9, 13 from Ch 7. Start Ch 8, Capital Budgeting Cash Flows.
Oct 25 Continue Ch 8.
Oct 30 Turn in problems 8, 11, 14, 21 from Ch 8. Begin Ch 9, Capital Budgeting
Techniques.
Nov 1 Group Project is due. Continue Ch 9.
Nov 6 Turn in problems 4, 13, 20 (part (b) only, 22 from Ch 9. Ch 3-6 Personal Financial
Planning Guide.
Nov 8 Problem Set #2 due (15 points).
Nov 13 Exam #2
Nov 15 Morningstar assignment due (5 points). Start Ch 10, Cost of Capital.
Nov 20 Continue Ch 10.
Nov 22 Turn in problems 11, 13 from Ch 10. Begin Ch 11, Leverage and Capital Structure.
Nov 27 Continue Ch 11.
Nov 29 Turn in problems 7, 10, 13, 15, 18 from Ch 11.
Dec 4 Ch 7-8, Personal Financial Planning Guide
Dec 6 Problem Set #3 due (10 points).
Final Exam Section 1, Wednesday, Dec. 13, 12:30.
COURSE OBJECTIVES: At the end of this course, students should be able to:
1. Describe the institutional and tax environments in which US firms operate.
2. Assess the financial condition of a firm.
3. Adjust the values of cash flows over time.
4. Calculate returns and risk of returns for various assets.
5. Describe the source of asset value and calculate the value of various financial assets.
6. Evaluate potential investments in fixed assets and make correct decisions on whether or not
to proceed with the investment.
7. Describe the source of capital to firms and estimate the cost of various sources.
8. Estimate future financing needs.
9. Describe the importance of working capital, and its effect on a firm’s profitability and liquidity.
10. Describe sources of short-term financing and their characteristics.
11. Describe how international trade creates opportunities and risks for firms.
Academic Integrity. NAU takes an extremely serious view of violations of academic integrity. This includes cheating and plagiarizing. Students and faculty are responsible for conducting themselves honestly and for identifying cases of academic dishonesty in others. Violations can result in failure in the course and being dismissed from the University. The complete policy on academic integrity and related issues is at http://jan.ucc.nau.edu/academicadmin/policy1.html
Classroom Management. University students are expected to conduct themselves appropriately and with maturity. Behavior that is considered to be disruptive will not be tolerated and can result in your being asked to leave the classroom. Serious or repeated disruptive behavior can result in administrative withdrawal from the class. You should be familiar with and adhere to the CBA Code of Conduct that was developed with student input. It is located at www.cba.nau.edu/conduct.asp