of University Oklahoma Michael F. Price College of Business Advanced Business Finance FIN 4303-003
Fall 2008 Tuesday, Thursday 3:00 4:15 pm AH 315 Office Hours: Wednesday by appt.
Evgenia(Janya) Golubeva Office AH252 325-7727 (phone) 325- 7688 (fax) [e-mail]
Course Overview The Advanced Business Finance course focuses on financial decisions of corporate managers. The course covers several major topics: - firm and role of financial manager - net present value (NPV) and investment (capital budgeting) decisions - valuation of bonds and equities - risk, return, and capital budgeting decisions under uncertainty - financing corporate investment projects - capital structure - dividend policy - mergers and acquisitions Prerequisites You must have completed Finance 3303 to receive a grade for this class. Special Accommodations: Any student in this course who has a disability that may prevent him or her from fully demonstrating his or her abilities should contact the instructor personally as soon as possible so we can discuss accommodations necessary to ensure full participation and facilitate your educational opportunities. The University of Oklahoma is committed to providing reasonable accommodations for all students with disabilities. Students with disabilities who require accommodations in this course are requested to speak with me as early in the semester as possible. Students with disabilities must be registered with the Office of Disability Services prior to receiving accommodations in this course. The office of Disability Services is located in Goddard Health Center, Suit 166, phone [phone] or TDD only [phone]. Religious Holidays It is the policy of the University to excuse absences of students that result from religious observances and to provide without penalty for the rescheduling of examinations and additional required class work that may fall on religious holidays.
Academic Integrity The University policy on academic integrity will be strictly followed. The information about the policy on academic misconduct is located on the following website: http://www.ou.edu/provost/integrity Attendance I shall not check your attendance by circulating an attendance sheet. You need NOT bring me an excuse note unless you miss a quiz or a test (see below regarding my policy on missed quizzes / tests). Textbook The required textbook for this course is Corporate Finance, eighth edition, by S.A. Ross, R.W. Westerfield, and J. Jaffe. Your reading assignment sheet attached to this syllabus states which (sections of) the book chapters you should read before each class. Grades Your grades will be determined based on the following: Ten Quizzes (10 pts each) Three WSJ articles (50 pts each) Midterm I Midterm II (Not Comprehensive) Term Project Final Exam (Not Comprehensive) TOTAL 100 points 150 200 200 150 200 1000 points
Letter Grades A = 90% or above; B=80-89%; C=70-79%; D=60-69%; F=<60%. No curve shall apply. I shall grade the exams and the term project. My graduate assistant will grade the quizzes and the WSJ essays. Quizzes A total of twelve quizzes shall be given. The quizzes will be on Thursdays, except for the Midterm Exam days and Thanksgiving holiday. A quiz missed for an unexcused reason will receive a zero. There will be no make-up quizzes. A quiz missed for a valid reason (a note is required) shall receive the same score as the next test. For example, you receive the following quiz scores over the term:
Q1 10 Q2 6 Q3 0 (excused absence) Q4 10 Q5 8 Q6 10 Q7 0 (took quiz; scored zero) Q8 5 Q9 0 (unexcused absence) Q10 10 Q11 8 Q12 6
Suppose you receive a score of 150 out of 200 on Midterm 1 (the test following the quiz you missed for an excused reason). That is 150 / 200 = 75% Your quiz grade will be determined as follows: - The grade for quiz 3 becomes 75% * 10 = 8 points (I round off). - The two lowest grades are dropped, in this case quizzes Q7 and Q8. Note that Q9 is not dropped due to unexcused absence!
-
The remaining scores are added up: 10+6+8+10+8+10+0+10+8+6 = 76 The total score is 76/100 = 76%, or 76 points out of 100. The point score of 76 points is recorded in your grade report as the total quiz score for the term.
Make-up Exams An exam missed for a valid reason may be made up within one week. You will need to make arrangements with me regarding the time / location. If you miss the final exam and cannot make it up before the course grades are due you will receive an I (for Incomplete), pending your taking the final exam. Term Project The description of the term project is at the end of this syllabus. The WSJ Articles I shall assign three current articles from the Wall Street Journal for analysis. You will write short essay answers to the questions at the end of each article. The assignment should be no longer than three double-spaced pages (total, including all questions). The analysis should be typed up and submitted electronically to my graduate assistant before class on the due date. The due dates are to be announced in class separately. Late assignment shall not receive credit. Please save your assignment under the following name: your last name _ your first name _ article # . extension (for example smith_john_wsj2.doc). Although subscription is not required for this course, you are encouraged to check out the student discount subscription options online at http://www.WSJstudent.com Bonus 1You may score 5 bonus points by making one quick 1.5 - 2-minute informal report at the beginning of class about something relevant to the course material that you have read in the news (in the Wall Street Journal or elsewhere). I recommend reading the Wall Street Journal because getting into this habit improves future your employment opportunities. Please reserve your in-class presentation time with me in advance. The reservations will be made on a first come first serve basis. No more than three (3) presentations per class period may be accommodated. No more than two (2) presentations per semester per student please: everyone needs an equal chance to score bonus points! Bonus 2 A bonus problem worth 10 points will be included on the Final Exam. Communication Please check your university email account regularly. The best way to reach me is via email also. Graduate Assistant The graduate assistant for this course is Dorde Kusljic, email [e-mail]
Class Schedule and Reading Assignments Finance 4303-001 Fall 2008 Class Aug 26 Aug 28 Sep 9 Sep 11 - 23 Sep 25 Oct 2 Oct 7 Oct 9 Oct 14 Oct 16 - 23 Oct 28 Oct 30 Nov 11 Nov 13 Nov 18 Nov 20 - 25 Nov 27 Dec 2 Dec 4 11 Topic Introduction Review of PV and NPV Valuing Bonds, Stocks Investment Rules NPV and Budgeting Risk and Expected Return MIDTERM EXAM I: CHAPTERS 5, 6, 7 Risk and Expected Return (cont) Risk and Cost of Capital Long-Term Financing Capital Structure Chapter 10 Chapter 12 Chapter 14 Chapter 15 Readings (Ross, Westerfield, and Jaffe) Chapter 1 Chapter 5 Chapter 6 Chapter 7 Chapter 10
MIDTERM EXAM II: CHAPTERS 10, 12, 14, 15 (no tax) Limits to the Use of Debt Dividend Policy Thanksgiving holiday Dividend Policy (cont) Mergers and Acquisitions Chapter 18 Chapter 29 Chapter 16 Chapter 18
FINAL EXAM, CHAPTERS 15 (taxes), 16, 18, 29 As scheduled by the University
Fall 2008 Fin 4303-001 Term Project The term project will be done in teams of five students. Each team is welcome to choose a project among the following alternative topics: Alternative 1: Mortgage vs. Rent You will consider a decision whether to buy or to lease a home for a fixed period of time (the time frame should be the same whether you lease or purchase). You will need to do a fairly detailed quantitative analysis including as much as possible of the following cash flows: down payments / deposits, interest / principal or rental payments, principal amortization, closing costs, property taxes, insurance, utilities, future resale value, home improvement, maintenance, etc. You need not be excessively elaborate though (for example, you need not consider floating rates, multiple lien mortgages or refinancing options unless you so desire). Consider factors such as the time frame (sensitivity analysis a plus), convenience, the size of your family, liquidity in case of an urgent need to relocate, etc. Whichever your choice is to buy or to lease is not as important as how you justify your conclusion. Alternative 2: Venture Capital You will pretend to be a venture capitalist firm. You will choose a real-life company as your potential target and write a buyout proposal including a fairly detailed quantitative valuation analysis showing why the firm is a good target for a buyout and how exactly you plan to fix up its trouble areas to increase its value. Imagine that I am a potential investor and you are trying to get me to put some of my capital into your project. Alternative 3: Business Plan You will write about an entrepreneurial idea of your own. You may decide to build your own business from scratch or to become a franchisee in an established business. You will show the projected cash flows from operations, investment, and financing, and calculate the v...