Finance 4050 – Fall Semester 2003
Capital Investment Analysis
Course Description:
Course description as published in the catalog: “Focuses on capital budgeting and investment issues. Emphasizes issues relating to cash flows, capital rationing, the investment versus financing decision, leasing, fluctuating rates of output, investment timing, capital budgeting under uncertainty, and investment decisions with additional information.”
The course focuses on how to use valuation tools, techniques and theory to determine the value of any capital asset.
Prerequisites: FNCE 3010 and 3020. You should not attempt this course if you have not completed FNCE 3010.
Required and Optional Materials:
Required:
- Damodaran, Aswath. Investment Valuation, 2nd Edition, John Wiley & Sons, Inc., 2002.
You should visit the author’s web site as soon as possible. You will find useful materials (data sets, spreadsheets, and other valuation materials). The URL for the site is:
- Financial Calculator: Bring to all class meetings.
- Excel skills. You need basic spreadsheet skills and the willingness (and time) to develop superior skills by building financial spreadsheet models.
Optional:
- Wall Street Journal, student subscriptions are available.
Course Materials.
All course materials (handouts, lecture notes and other materials) will be stored on the College of Business web site. You may access this with the following URL: <click on current semester, click on finance, click on FNCE4050
Grading:
Your grade will be based on three exams, graded homework, class participation and a term paper (analysis and valuation of a publicly traded corporation). The following shows the courses points assigned to each
Tests: We will have three tests (two hour exams and a comprehensive final examination). Your test points will be computed by taking the average of the best two of three test scores times 500 points. We may have one or more take home questions for each test.
Notes about the tests:
- Make up examinations will not be given.
An alternative time will be arranged if you have a valid reason for missing an examination.
- You will be allowed one page of notes for each examination.
- You should plan on using your financial calculator to answer examination problems.
- Each exam will consist of take home and in class questions.
Homework: We may have as many as 80 different graded homework exercises.
Class participation: Ten points will be based on attendance and forty points will be based on meaningful class participation. Participation points will be assigned by Rush’s subjective assessment of both the quality and quantity of the student’s contribution to class discussion. The quiet person will receive 0 points and the very active person (asking and answering questions) will receive 40 points. The median participation point score has been 20 for past classes. Bonus assignments might be used to award class participation points. You can earn up to 50 bonus points.
Term paper:
You will be valuing a public corporation.
You may make this a group effort or an individual effort.
- The maximum group size is three.
- If your group is larger than 3, pick two companies in the same industry and work as two groups that share information and work.
You need to form your group as soon as possible and identify the company that will be valued.
- Submit your selection to Rush.
- We will not have two groups valuing the same company.
Dysfunctional groups. (Getting rid of a group member or getting out of a bad group.)
- Two out three group members may vote the third member off the paper. The person that is forced to leave the island may continue to use the original company, but survivors are under no obligation to share information with the cast off.
- An individual may elect to split from the group. The person that elects to leave may continue to use the original company. The exiting member is under no obligation to share information with other group members.
- This must take place on or before Monday, October 6th.
A detailed term paper outline will be provided at a later date.
University Policies (I have inserted the contents of the e-memo with appropriate links for all to view.)
This e-memo serves to remind all faculty of some important legal and policy requirements they have in the conduct of their courses. We strongly recommend that all course syllabi specifically attend to all four items mentioned below.
Item 1: By federal law, faculty are required to make reasonable academic accommodations for persons with various disabilities. The Office of Disability Services has drafted two possible statements to place in course syllabi; please choose one and include it in all of yours.
Students with disabilities who qualify for academic accommodations must provide a letter from Disability Services (DS) and discuss specific needs with the professor, preferably during the first two weeks of class. DS determines accommodations based on documented disabilities (303-492-8671, Willard 322,
If you qualify for accommodations because of a disability, please submit to me a letter from Disability Services (DS) early in the semester so that your needs may be addressed. DS determines accommodations based on documented disabilities (303-492-8671, Willard 322,
Item 2: Faculty are expected to make reasonable and appropriate accommodations for students who have conflicts between religious observance dates and course examinations or assignments. A recently revised, somewhat more flexible, campus policy has been drafted and approved. Please consult it and write into your syllabi the procedures you will employ in your courses. The campus policy can be viewed at(
Item 3: As a result of extensive discussions with and recommendations from faculty and students, a new classroom behavior policy and associated new procedures have been adopted. You may wish to ask your students to read this information which is also at (
Item 4: The new Student Honor Code system has now been implemented in all schools and colleges and you should direct your student's attention to these new policies and procedures. Faculty should also provide very clear, explicit and detailed instructions about what constitutes plagiarism as we repeatedly see situations in which students and faculty are very much at odds over what does or does not constitute plagiarism, after the fact. You can see the honor code information at (
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