Finance321– TheoryofCorporateFinance
Spring 2013CourseSyllabus
INSTRUCTION
Michael Milligan
Office: SGMH 5177Phone:714-278-3864
Meetings: M/Win SGMH 2508
Office Hours: M/W 1:00 am to 3:00pm & by appt
Email:
REQUIRED/SUGGESTED MATERIALS
Fundamentals of Corporate Finance,First Custom Edition for Finance 321, CSUF by Berk, DeMarzo, and Harford; Pearson Custom Publishing, 2012. Purchase the package which includes MyFinanceLab
- 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. You will build upon the principles learned in FIN 320.
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 A+=4.0 98-100%; A=4.0 94-97%; A-=3.7 90-93%; B+=3.3 88-89%; B=3.0 84-87%; B-=2.7 80-83%, C+=2.3 78-79%, C=2.0 74-77%; C-=1.7 70-73%; D+=1.3 68-69%, D=1.0 64-67%; D-= 0.7 60-63%; F=0.0 less than 60%
Final grades are non-negotiable.
COURSE PREREQUISITE
The prerequisites for this class are FIN 320 and classified CBE 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, and Titanium, 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 321 / Chapters
- Introduction to the Theory of Corporate Finance
- The Time Value of Money
- Risk & Return
- Financial Statements and Free Cash Flow
- Bond and Stock Valuation
- Long-Term Financial Planning
- Valuing Corporations
- Investment Decision Rules
- Fundamentals of Capital Budgeting
- Capital Structure
- Payout Policy
Date(week) / Lectures/Topics/Assignments
Jan 28 / Intro–Lecture1
Feb 4 / Lecture2
Feb11 / Lecture 3Excel/BetasforProject
Feb 18 / Lecture 4 (no class Monday)
Feb 25 / Lecture 5
Mar 4 / Lecture 6 EXAM 1
Mar 11 / Lecture 7
Mar 18 / Lecture 8 Beta/ValuationProject& Peer Evals Due
Mar 25 / Lecture 9
Apr 8 / Lecture 10
Apr 15 / Lecture 11EXAM 2
Apr 22 / Lecture 12
Apr 29 / Lecture 13
May 6 / GroupPresentations– attendancerequired
2ndPeer Evals. Due
May 13 / GroupPresentations – attendancerequired
2ndPeer Evals. Due
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. You will have as much of an opportunity to develop these technical skills as you want in this course.
Required Work
GROUP PROJECT. The class will be divided into groups (of 4–6 students/group). Each group will calculate the intrinsic (fundamental) value of an actual company – this is the group project. While technical analysis is interesting; we take the perspective of the financial manager (CFO) of a corporation when calculating the value of a firm. The course is designed around this required projects, and counts for a total of 30% of your grade, as itemized below. Aside from the in-class presentation, your group will have to meet several deadlines during the semester concerning the progress of your group project. The group's progress in meeting these deadlines will be part of the grade for the project. Remember that you should communicate with one another using email.
Twice during the semester each member of a group will submit a Peer Evaluation (you do not grade yourself). You will not be able to see the evaluations done by your group members of you – they remain “anonymous”. The purpose for this evaluation is to minimize free-riders and to ensure fairness with the group.I will post the peer evaluation on Blackboard. Anyone that does not turn their evaluations on time will loose 5 points.
Assignments carry the associated weight of the course grade:
Two exams / 15% each exam 30%
Beta/Dividend Valuation Project 10%
Homework/Quizzes 10%
Project:Group presentation and executive summary20%
Final Exam 30%
100%
BETA/FIRM VALUATION PROJECT
The assignment is to collect 5 years of daily stock price data (with prices as recent as possible) for a publicly traded company that has paid dividends for at least 7 years.Be sure to check first on Yahoo.com whether your firm has paid dividends for the past 7-10 years or more. You will also collect price data for 3-6 indices and calculate a beta for your company using Excel (or a statistics software package). This project will be discussed and illustrated in more detail in class. You should submit a paper of no more than 1200 words, with at most one page of graphs/charts and one additional page (printout from Excel) of your original data. This last page should clearly indicate the company name or ticker, the most recent dates you collected and at least one of the indices you used for your project. The project counts for 15% of your course grade as indicated above. You may work with on another on these projects, but you must each use different companies.Copying from one another is penalized (plagiarism).MAKE SURE THAT YOU CITE ALL WORK REFERENCED.
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(two pages, front & back)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 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. See my homepage for additional comments about plagiarism.