Course Syllabus
Corporate Finance
1128-FIU01-FIN-6406-SECRXA_AP_1128-90844
GENERAL INFORMATION
Professor Information
Professor's Photo
Instructor:
Prof. Edward R. Lawrence
Phone:
(305) 348-0082
Office:
RB 207A (MMC)
Fax:
(305) 348-4245
Office Hours:
By appointment
 
Course Information

Course Title: Corporate Finance

Course Number: FIN 6406

Course Description

The course is covered in two parts. In part one; we will have an overview of financial management and financial environment. We will analyze firm’s financial performance using financial ratio analysis. We will then discuss the time value of money (TVM) and use the concept of TVM in the valuation of bonds and stocks. In part two we will understand the methods for computing cash flows and the company’s cost of capital and then use them to learn capital budgeting which involves project selection decisions.

Course Objectives

The objective of this course is to give the students an operational knowledge of corporate finance by combining theory and applications.  Introduce the concepts or risk, return, and time-value-of-money as applied to valuation of securities and capital budgeting.  Here are the course level learning outcomes:

  1. Perform Internet research and find relevant financial data.
  2. Use information technology to assess the financial position of organizations.
  3. Learn how to perform financial statement analysis.
  4. Understand the mathematics of Time Value of Money.
  5. Be able to compute the price of bonds and the intrinsic value of stocks.
  6. To understand the use of Capital Asset Pricing Model (CAPM).
  7. To calculate firm’s cash flow using its income statement and balance sheet.
  8. To understand project selection criterion.

Week 1: Introduction to the Fundamental Concepts of Corporate Finance and Financial Statements

  1. Students will be able to explain and evaluate the Anglo-Saxon concept of shareholder wealth maximization, how it relates to other possible objectives of the firm's management, as well as the nature of the agency relationship inherent in the corporate structure.
  2. Students will be able to understand the motivation behind corporate social responsibility and good governance issues
  3. Students will understand the significance of information included in the income statement and balance sheet, discuss the importance of the cash flow statement and explain the difference between accounting net income for the firm and cash flow.

Week 2: Analysis of Financial Statements

  1. Students will be able to analyze the success, failure, and progress of a firm's financial performance using financial ratio analysis.
  2. Students will be able to analyze ways of improving firm’s performance using Du Pont system.

Week 3: Time Value of Money

  1. Students will be able to explain the concepts of compounding and discounting and utilize these tools to calculate the future value and present value of lump sums, annuities, and uneven cash flow streams and in addition calculate the value of other variables such as the effective interest rate, time-period, and periodic payments.

Week 4: Bonds & Interest Rates

  1. Students will be able to describe how interest rates are determined and the role played by financial markets and institutions in the global financial system.
  2. Students will understand and explain the determinants of intrinsic value and utilize these concepts to determine the value and yields of bonds.

Week 5: Risk/Return Tradeoff and CAPM

  1. Students will be able to determine the expected rate of return and risk of an individual investment as well as a portfolio of assets, including concepts such as standard deviation, correlation, diversification, and the trade-off between risk & return.
  2. Students will be able to understand how to compute the systematic risk.
  3. Students will understand the capital Asset Pricing Model.

Week 6: Stock Valuation

  1. Students will be able to understand the concepts, be able to compute the intrinsic value and utilize the various models available to determine the value and yields of preferred and common stocks.

Week 7: Capital Budgeting & Evaluating Cash Flows

  1. Students will calculate various measures of project profitability using traditional capital budgeting techniques including Payback Period, Discounted Payback, Net Present Value, Internal Rate of Return, and Modified Internal Rate of Return.

Week 8: Cost of Capital

  1. Students will be able to explain the concept of the cost of capital, how it is affected by the firm’s capital structure, and the application of these concepts to capital budgeting decision making and dividend policy.
Teaching Methodology

This course covers a substantial amount of material.  Online lectures are based on the assumption that students read and at least partially understand the assigned materials. All exams will be multiple-choice. Students are encouraged to have a business function calculator and to use them to work the problems in the video lectures and notes.

Assurance of Learning

The College of Business cares about the quality of your education. More on the College's commitment to Assurance of Learning can be found at the following link:

http://businessonline.fiu.edu/course_addons/Learning_Commitment.pdf

IMPORTANT INFORMATION
Policies

Please review the policies page as it contains essential information regarding guidelines relevant to all courses at FIU and additional information on the standards for acceptable netiquette important for online courses.

Technical Requirements & Skills

For detailed information about the technical requirements, please click here.

Accessibility And Accommodation

For detailed information about the specific limitations with the technologies used in this course, please click here.

For more information about Blackboard's Accessibility Commitment, click here.

For additional assistance please contact our Disability Resource Center.

Textbook
Textbook cover

Corporate Finance (with Thomson ONE - Business School Edition)
Ehrhardt/Brigham
Thomson: South Western (2011)

ISBN 10: 1111260664

Click here to buy your textbook.

  1. Financial Calculator (Texas Instruments BA II Plus, recommended)
  2. Wall Street Journal
Library Resources

As a distance/online student, you have access to the same library services and resources as on-campus students. Please watch the videos below and find out how you can access the Library resources;

Introduction to Library Resources

Students can access the library resources from anywhere in the world. From the library homepage (library.fiu.edu), click Off-Campus Access to tap into the library treasures from the comfort of your home or from across the world.

Take a look at the video tutorial

The CMBA Program has created a CMBA library guide to help you with your course research and gain access to all the resources that are available to you as an FIU student.

CMBA Library Guide

COURSE DETAIL
Course Communication
  • E-mail: Contact me via my Blackboard email
Student Performance Outcomes
  1. Students will work on the problems in the chapter notes that are qualitative and quantitative in nature as a form of formative assessment that will help ensure good performance in the graded assessments.
  2. Students will take four quizzes in which they will be required to analytically solve qualitative and quantitative problems. For each quiz, students will be given two attempts and 30 minutes for each attempt. Highest score out of the two attempts will be recorded.
  3. Students will be individually assessed by two multiple-choice exams that contain about 75% problems and about 25% conceptual questions. These are not cumulative per se, but build on the knowledge and skills amassed throughout the course.
  4. In a group research project, students will perform quantitative and qualitative financial ratio analyses, which include Internet search tasks that assess a company’s financial situation, performance and future potential. It is highly advised that students work in groups on this research project. Choose your groups in the first week based on an analysis of the strengths of others that you know are complementary to your own. If you need help forming groups contact your coach as soon as possible. The project will involve peer evaluation and students who do not perform adequately as per other members of the group may get  lower grades and/or will be expected to do ALL the work on their own. In the corporate world you will be expected to collaboratively solve problems with the most efficient use of available resources. This project will give you the opportunity to collaborate in a financial context; however students will be expected to use their critical thinking skills to personally reflect or consider how they would use the qualitative and quantitative analysis undertaken while doing this project to make personal decisions on investing. The project deliverables must be submitted individually. The spreadsheet, graphs and analyses can be the same for each group member; however the discussion and conclusions must be individual work and will be assessed for academic integrity.
  5. Students will participate in one Discussion Forum that require their knowledge of topical issues and how the situation can be assessed and solved using techniques from assigned text readings or business periodicals. For the discussion forum, you must provide constructive feedback to at least two other students to earn the assigned points.

The final grade will be determined by the student's performance on two exams, four quizzes and a project.

Grading
Course Requirements Weight
Exam 1 30%
Exam 2 30%
Quizzes 20%
Project 15%
Discussion Forum (both parts) 5%
Total 100%

 

Letter
Grade
RAnge Letter
Grade
Range Letter
Grade
Range
A 91-100% B- 80-81% D+ 67-69%
A- 89-90% C+ 77-79% D 64-66%
B+ 87-88% C 74-76% D- 60-63%
B 82-86% C- 70-73% F < 60%
Discussion

This is a fully online course and hence there are no scheduled class meetings. Students are fully responsible to keep up with the course content in the Blackboard. Students can email the coach and the professor directly within the Blackboard system and will get a response with 48 hours, however it is highly advisable that the students pose questions in the “discussion board” on the blackboard since it is an opportunity for interaction with your classmates and your questions may be answered either by the Professor or your classmates even before you’ve thought of them!

I encourage you to participate in the discussions on the open forum of discussion board. Any subject related enquiry should be posted on the discussion board (and not to my email inbox) so that I reply it for the benefit of all students.

Assignments

Each student has to submit a separate project report for project part two (ratio analysis). Students have an option of forming the groups on their own. If you need help forming groups contact your coach as soon as possible. Changes in the groups formed at the beginning of course are allowed only in extreme situations and only after the approval from course instructor. The various aspects of the project will be outlined on the class web page.

COURSE CALENDAR
Weekly Schedule
Date Topic Assignment

Week 1

Oct 1

Introduction, Financial statements cash flow and Taxes

Chapter 1 and Chapter 2

Take Quiz 1 by Midnight Oct. 7th 2012

Week 2

Oct 8

Analysis of Financial Statements

Chapter 3

Project Discussion

Take Quiz 2 by Midnight Oct. 14th 2012

Week 3

Oct 15

Time Value of Money

Chapter 4

Take Quiz 3 by Midnight Oct. 21st 2012

Project Part one (company selection) due by 11:55pm on October 21st 2012

Week 4

Oct 22

Valuing Bonds

Chapter 5

Exam 1: From 8am on Oct. 26th to 8pm Oct. 28th 2012 (Covers Chapters 1, 2, 3, 4 and 5)

Week 5

Oct 29

Risk, Returns, Beta and CAPM

Chapter 6

Discussion

Work on Project

Discussion Board: Post your response by 11:59pm on Oct. 31st and reply to at least two of your peers by 11:59pm on Nov. 4th 2012

Week 6

Nov 5

Valuing Stocks

Chapter 7

Turn in Project Part two (ratio analysis) by Midnight Nov. 11th 2012

Week 7

Nov 12

Captial Budgeting

Chapter 10

Take Quiz 4 by Midnight Nov. 18th 2012

Week 8

Nov 19

Cost of Capital

Chapter 9

Exam 2: From 8am on Nov. 21st to Nov. 23rd 2012 (Covers Chapters 6, 7, 9 and 10)
Additional Information

Important Notes:

  • All times are US Eastern Standard Times
  • Detailed solutions of the quizzes will be available by 8:00AM of the following morning from the date due.
  • To guarantee academic integrity and to ensure that the outcomes from your degree are accurately assessed (thus guaranteeing continued quality assurance) one of your Midterms may be proctored using applicable software.
  • Use your time wisely, during weeks that there are no grade-able assessments due, read ahead and do the problems in the notes to check your understanding of the material.
  • When submitting your discussion postings as far as possibly cut and paste your response directly in the text box for ease of reading and assessment. It is necessary for each person to respond to another’s comment to provide a different perspective to the discussion. If you wait until the last minute you will not have the benefit of learning from others as it is highly likely that others may not see your own posting in time.
  • For project part one (company selection) only one set of answers needs to be turned in per group and answers must be typed. Each student has to submit a separate project report for project part two (ratio analysis).