Finance517– TheoryofCorporateFinance
Summer 2010CourseSyllabus
INSTRUCTION
Michael Milligan
Office: SGMH 5177Phone:657-278-3864
Meetings: M,T & R.,6 – 8:50 pm in SGMH 1308
Office Hours: M,T & R 5:00 pm to 6:00pm Email:
REQUIRED/SUGGESTED MATERIALS
Financial Management, Brigham and
Ehrhardt (13th Edition) IBN# 1439078099
- Financial calculator is mandatory(Texas Instruments BAII PLUS)
DESCRIPTION
The firm’s decisions about the source and uses of funds serve as the focus of this course. Firm valuation is the central feature in this course.
OBJECTIVES
You should complete the course with a better understanding of the actual problems that real firms face when controlling their financial functions with a focus on creating value for the firm. Such functions include the decisions to: declare dividends, assign risk to and invest in a new project, plan long-term, issue stock or bonds, or manage cash-flows. Preparing and presenting a company analysis enables you to understand a company from a manager's perspective.
GRADING POLICY
Grading is based at least in part on performance relative to other class members; though there is some minimum level of knowledge of finance without which one is not qualified at the bachelor’s level. Students whose work falls below this level do not pass the course (including students who fail / to submit required work). The grading scale is
98 – 100% / A+ / 78 – 79% / C+ / Below 60% / F
94 – 97% / A / 74 – 77% / C
90 – 93% / A- / 70 – 73% / C-
88 – 89% / B+ / 68 – 69% / D+
84 – 87% / B / 64 – 67% / D
80 – 83% / B- / 60 – 63% / D-
Final grades are non-negotiable.
COURSE PREREQUISITE
The prerequisites for this class are Accounting 510 and classified MCBE status. If you have not satisfied these requirements, you are unqualified for this class; and you must drop immediately, following the usual procedure. Unqualified students may be dropped at any time by administrative audits.
REQUIREMENTS
Course grades will reflect the expectation thatstudents arrive prepared and participate actively in class. See below for details on participation. Please do not expect to continue in the course if you do not attend during the first week!A large amount of communication occurs by email, so you should check the electronic resources for the course regularly.Forwardyour student.fullerton.edu account to your personal email account.
SUBJECT TO CHANGE
We should work towards completing the course using the policies outlined herein. However, some changes in the schedule and/or policies may occur when necessary. Students remain responsible for being aware of any such change. Regular and prompt attendance will minimize miscommunication. Please feel free to suggest methods for improving your own education.
UNIVERSITY POLICIES
Students should conduct themselves in accord with all University Policies concerning, for example, withdrawals from class and academic dishonesty.
Lecture Numbers – FIN 517 / Chapters
- Introduction to the Theory of Corporate Finance
- The Time Value of Money
- Corporate Risk: A Review
- Financial Statements and Free Cash Flow
- Bond and Stock Valuation
- Long-Term Financial Planning
- Valuing Corporations
- Capital Budgeting Decision Rules
- Project Cash Flow Analysis
- Capital Structure Theory
- Dividend Theory
- Real Options
Date / Lectures/Topics/Assignments
July 12 / Intro–Lecture1
13 / Lecture2
15 / Lecture 3
19 / Lecture 4
20 / Lecture 5 EXAM 1
22 / Lecture 6
26 / Lecture 7
27 / Lecture 8
29 / Lecture 9EXAM 2
Aug 2 / Lecture 10
3 / Lecture 11
5 / Lecture 12
9 / Lecture 13
10 / Make-up day
13 / Final Exam
CALCULATORS, COMPUTER SOFTWARE, EMAIL and the WWW
Modern finance positions require a high degree of technical skills. The most important skill for many finance positions includes facility with spreadsheets. This semester many assignments require the use of spreadsheets (please use the CD-ROM included with your text or available on the text's webpage). You will have as much of an opportunity to develop these technical skills as you want in this course.
Required Work
Assignments carry the associated weight of the course grade:
Two exams / 30% each exam 30%
Final Exam 40%
miscellaneous information
You must use financial calculators on exams for calculating betas, PVs, NPVs, IRRs, Betas (use the regression function) and the standard statistical functions (variance, etc.). You may bring any of your own handwritten notes into any quiz or exam. The notes cannot be copies from a text or done on a computer. The purpose for this policy is to encourage you to practice good study habits. By taking good notes from the text and during the lectures you are better prepared for the exams.
Missed or late appointments in the corporate world lose business.Late work is not acceptable. The best policy a student can follow is to plan ahead and plan on having difficulty with computers (etc), so that you give yourself several days slack time! You should submit ALL WORK professionally and your group projects should be presented using PowerPoint. Make-up exams/quizzes are not given.
The Study Guide (available in the bookstore) includes chapter summaries and many practice problems. In addition, the Self-Test problems in the text are excellent problems. Students who prepare by doing these types of problems are often “rewarded” on quizzes and exams. That is, most exams will contain problems directly from the text or the study guide – this is done intentionally with the goal of encouraging you to study!
The Department of Finance requires that students engaging in academic dishonesty receive a grade of F. In addition, Department policy requires that all individuals engaging in academic dishonesty/plagiarism be reported to the Vice Present, Student Affairs. Academic dishonesty takes place whenever a student attempts to take credit for work that is not his/her own or violates test taking rules. Examples of academic dishonesty during tests include looking at other students’ work, passing answers among students or using unauthorized notes. When students sitting next to each other have identical answers, especially the same mistakes, this may indicate academic dishonesty. Plagiarism is using another’s words or ideas as your own, whether you are writing or speaking; you must give other people credit by referencing. Should you have any questions about academic dishonesty or plagiarism, please consult with me in advance of any potentially difficult situation.
Homework Problems:
Chapter 4
3, 7, 12 &14
Chapter 6
3, 4, 6 & 9
Chapter 9
2, 3, 5, 8, 9 & 12
Chapter 24
1 & 4
Chapter 2
5 & 12
Chapter 5
1, 3, 8 & 12
Chapter 7
1, 2, 4, 5, 9 & 12
Chapter 12
1, 5 & 7
Chapter 13
1, 2, 6 & 10
Chapter 10
1, 7 & 9
Chapter 11
1, 2, 3, 5 & 6
Chapter 15
4, 5 & 8
Chapter 14
1, 3 & 7