Finance 311, Principles of Finance Spring 2010
Dr. Brian Maris
Office: #413 FCB Phone: 523-7398
e-mail: Website: http://www.franke.nau.edu/facstaff/maris-b/
Office Hours: 10:30-12:00 Monday and Wednesday. Also available by appointment.
PREREQUISITES: Business major status (or Mat 119, BA 201, ACC 256, ECO 284 and ECO 285 for non-business majors).
COURSE DESCRIPTION: Survey of the major areas of financial operations in business and their relationship to other business functions; internal financial activities, sources of funds, and the firm’s involvement with money and capital markets; basic techniques of financial analysis and their application to financial decision making; development of an understanding of the financial system.
TEXTS: Principles of Managerial Finance, Brief Fifth Edition, by Lawrence Gitman and Ernst & Young’s Personal Financial Planning Guide, 5th ed.
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.
GRADING: Grades will be based on the following:
Midterm Exams, 2 @ 100 points each 200
Homework and Problem Sets (approximate) 135
Company Analysis Project 100
Professional Conduct 30
Final 60
Total 525
Grade scale: 90% = A, 80% = B, 70% = C, 60% = D.
EXAMS: Midterm exams will cover the material listed on the attached assignment sheet unless announced otherwise 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 or send me an e-mail and we will arrange a make-up. Cheating on an exam will result in a grade of zero for the exam. You will not be allowed to drop the course or make up those points on the final.
HOMEWORK: Several problems are listed to be turned in for each chapter. Unless indicated otherwise, they will not be graded, only checked to see if you turned them in. You may work on those together if you wish. In addition, 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 and selected other assignments, will be graded for correct answers and they will not be accepted late. All graded work (except the group project) is to be done individually.
GROUP PROJECT: You will be assigned to a group of three or four members. Each group will select a company, gather information about it, perform a financial analysis and turn in a written report. Additional information will be provided in class.
PROFESSIONAL CONDUCT. 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. Each student begins the semester with 30 points for professional conduct. Five points will be deducted, without limit, for each of the following:
absent (more than twice)
late (more than once)
leave classroom
disrupting class
I see or hear your cellphone
sleep during class
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. The publisher's website (www.aw-bc.com/gitman) has additional student resources, including practice quizzes.
Assignments listed below are subject to change as announced in class.
Course Outline
Date Assignment
1/12 Ch 1, Role and Environment of Finance.
1/14 Start Ch 2, Financial Statements and Analysis.
1/19 Continue Ch 2.
1/21 Turn in problems 20, 21 from Chapter 2. Start Ch 3, Cash Flow and Financial Planning.
1/26 Continue Ch. 3.
1/28 Turn in problems 1, 3, 8, 16 from Chapter 3. Start Ch 4, Time Value of Money.
2/2 The Spreadsheet Exercise on p. 138 is assigned to be done in Excel, worth 10
points, and will be graded.
Continue Ch 4.
2/4 Turn in problems 4 case A, 8 a, 11 case A, 19 case A, 20, 24 b, 29 a, case A,
33 a, 44 case A, 48 a, 51, 54 case A, 57 case A from Ch 4.
Start Ch 5, Risk and Return.
2/9 Continue Ch 5.
2/11 Turn in problems 1, 8, 10, 17, 21 (cases A&B) from Ch 5.
Ch 1 & 2, Personal Financial Planning Guide
2/16 Problem Set #1 due (15 points).
2/18 Exam 1
2/23 Start Ch 6, Interest Rates and Bond Valuation.
2/25 Personal Planning Case due (15 points).
Continue Ch 6.
3/2 Turn in problems 6, 11 cases A, B & C, 16, 18 from Ch 6.
Start Ch 7, Stock Valuation.
3/4 Continue Ch 7, Stock Valuation.
3/9 Turn in problems 8 a, 9 cases A&B, 13, 16 cases A&B from Ch 7.
Start Ch 8, Capital Budgeting Cash Flows.
3/11 Continue Ch 8.
3/16&18 Enjoy Spring Break!
3/23 Turn in problems 9, 12, 15, 23 from Ch 8.
Start Ch 9, Capital Budgeting Techniques.
3/25 The Spreadsheet Exercise on pp. 359-60 is assigned to be done in Excel, worth
10 points, and will be graded.
Continue Ch 9.
3/30 Turn in problems 15, 17, 23b, 32 from Ch 9.
The Spreadsheet Exercise on p. 410 is assigned to be done in Excel, worth 10
points, and will be graded.
Ch 3-6 Personal Financial Planning Guide.
4/1 Problem Set #2 due (15 points).
4/6 Exam #2
4/8 Morningstar assignment due (5 points).
Start Ch 10, Cost of Capital.
4/13 Continue Ch 10.
4/15 Group Project is due.
Turn in problems 16, 17 from Ch 10.
Start Ch 11, Leverage and Capital Structure.
4/20 Continue Ch 11.
4/22 Turn in problems 8, 11, 15, 21 (parts a, e, f and g only; for part e use the Expected
eps given in the problem for each capital structure) from Ch 11.
Ch 7-8, Personal Financial Planning Guide
4/27 International Finance, materials to be distributed in class.
4/29 Problem Set #3 due (10 points).
Final Exam: Section 4, Tuesday, May 4, 12:30 pm
Section 5, Thursday, May 6, 12:30 pm
Course Learning Outcomes: At the end of this course, students should be able to:
A. Describe the institutional and tax environments in which firms operate.
B. Assess the financial health of firms by examining their financial statements.
C. Adjust the values of cash flows across time.
D. Calculate returns, and assess riskiness of returns for various assets.
E. Describe the source of asset value, and be able to calculate values for various financial assets.
F. Assess the value of potential investments in fixed assets, and make correct decisions on whether or not to proceed with the investment.
G. Describe the sources of capital available to firms, and estimate the cost for various sources.
H. Forecast financial statements into the future, and determine future external financing needs.
I. Discuss personal financial planning topics including personal budgets and balance sheets, retirement plans, investment vehicles, and insurance products.
J. Describe how international trade creates additional risks and opportunities for firms.
Safe Environment Policy
NAU’s Safe Working and Learning Environment Policy prohibits discrimination and promotes the safety of all individuals within the university. The goal of this policy is to prevent the occurrence of discrimination on the basis of sex, race, color, age, national origin, religion, sexual orientation, disability, or veteran status and to prevent sexual harassment, sexual assault or retaliation by anyone at this university. You may obtain a copy of this policy from NAU’s Affirmative Action website http://www4.nau.edu/diversity/swale.asp. If you have concerns about this policy, it is important that you contact the dean’s office, the Office of Student Life (928-523-5181), or NAU’s Office of Affirmative Action (928-523-3312).
Academic Integrity
The university takes an extremely serious view of violations of academic integrity. NAU is dedicated to promoting an atmosphere of honesty and committed to maintaining the academic integrity essential to the education process. Inherent in this commitment is the belief that academic dishonesty in all forms violates the basic principles of integrity and impedes learning. Students are therefore responsible for conducting themselves in an academically honest manner.
Individual students and faculty members are responsible for identifying instances of academic dishonesty. Faculty members then recommend penalties to the department chair or college dean in keeping with the severity of the violation. The complete policy on academic integrity is in Appendix G of NAU’s Student Handbook http://www4.nau.edu/stulife/handbookdishonesty.htm.
Students With Disabilities. If you have a learning and/or physical disability, you are encouraged to make arrangements with the Counseling and Testing Center for special assistance with assignments and exams. If you believe you qualify for special consideration due to a disability, you should contact the Counseling and Testing Center immediately and inform the instructor during the first week of class.