Brandeis University
International Business School
Financial Modeling I (1)
Online Only – Spring 2015
Course Delivery
This course is IBS’s first online course. Because it is our first foray into distance instruction,
the professor will be available for extended hours working with students. In exchange,
students are expected to be motivated and disciplined. Every week, the course will have:
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Synchronous Meetings (SB1A and SB1B; 30 minutes each) - everyone meets virtually
using Bluejeans software. The “1” stands for week 1, and “A” or “B” for each of the two
weekly meetings. Mostly used for discussions of case solutions
Asynchronous work - students work alone or in groups of two on course activities and
cases at days and times of their own choosing provided they meet all deadlines!
Round Tables (RT1A and RT1B; 30 minutes each) – reviews of the course material.
Using the same nomenclature as SB, RT_A will cover a real-life modeling example and
RT_B will cover any “night-before” case questions and overall discussions
All SM and RT meetings will be recorded and posted on Latte for your review
There will also be:
 Online office hours - to answer questions on the material and discuss other topics
individually or in groups. I label these OH
 Online office hours by appointment – may be done any day/time that works
The days/times of the above will be as follows:
Morning
Sun.
10-10:30
SM_A
Mon.
Tue.
Wed.
Thur.
Fri.
Afternoon
Night
9
Graded
cases
returned
10-11
OH
10-11
OH
10-10:30
OH
10:30-11
RT_A
10-11
OH
10-11
OH
10-10:30
OH
10:30-11
RT_B
Sat.
12
Cases
due
6-6:30
SM_B
TA
Qixuan “Oceana” Wang is the on-campus course TA. She may be reached at
oceana@brandeis.edu . Her hours are by appointment only.
Course Goals
This course acquaints students with financial modeling by having them calculate the values of
various companies and projects under different market and financial conditions by forecasting
its cash flows. Once students complete this course, they will understand finance for what it is
- the sum total of quantitative analysis, judgment, understanding of various industries and
markets, timing, and cleverness. Most importantly, students will become comfortable in
making quantitative assessments under conditions of extreme uncertainty.
Course FAQs
1. Who should be taking this course?
Students concentrating in finance should take this course. This course provides the
foundation for doing quantitative valuations. The fact that the course is online should not
limit students. That said, students taking this online-only course should be motivated and
disciplined. They may use the IBS network to access the course.
2. What are the pre-requisite courses?
Accounting and Corporate Finance are pre-requisites for this course. If students are
taking corporate finance concurrently, the professor’s permission will be required.
3. What skills will be developed in this course?
After completing this course, students should be able to develop sophisticated financial
models. Students should also be comfortable with the basic mathematics underlying these
models and understand their strengths and weaknesses.
4. What are the basic requirements/workload?
Workload is high. The course philosophy is that finance is a mind game and those that
have been steeled through rigorous work will have an advantage – the self-confidence of
having a thorough training under conditions of great uncertainty.
Materials for the Course
This course uses readings and cases at no additional charge and may be downloaded from
Latte. Additional readings, as they come, will be posted on Latte.
Grading
Students may work alone or in groups of two. I must approve each group. All case
analyses will be submitted electronically. The final grade will be based on the following:
 Case analyses (80%)
 Class participation (20% - considers oral as well as online written contributions)
 Please note that lack of class participation and, for that matter, quality class participation
will result in a final grade no higher than a B.
All case analyses will be returned the day following their submission. Final grades will be
posted the day following the last case submission.
Disabilities
If you are a student with a documented disability on record and wish to have a reasonable
accommodation made for you, please advise.
Academic integrity
You are expected to be familiar with and to follow the University’s policies on academic
integrity (see http://www.brandeis.edu/studentlife/sdje/ai/). Instances of alleged dishonesty
will be forwarded to the Office of Campus Life for possible referral to the Student Judicial
System. Potential sanctions include failure in the course and suspension from the University.
Week
1
Topics
Activities
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
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Synchronous Meeting 1A:
 Syllabus review
 Discussion of course expectations
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
Introduction
Discounted cash flows
Seasonality and
forecasting
Pro forma statement
preparation
Profitability vs. risk
and liquidity
Balance sheet
forecasting
Readings/Videos (read and understand before
watching each reading’s video):
 Brazilians Build, Trade “Maid Routes”
 Introduction to CF Valuation Methods
 Using APV: A Better Tool for Valuing Operations
 Case: Toy World, Inc.
RT1A, RT1B, and SM1B:
 Discussion of readings/case
 Answer student questions
 Industry metrics: Airlines (RT1A)
2
 Discount rate
methodologies
Synchronous Meeting 2A:
 Toy World, Inc. – discussion of solutions
Case/Video (read before watching video):
 Globalizing the Cost of Capital and Capital
Budgeting at AES
RT2A, RT2B, and SM2B:
 Discussion of concepts/case
 Answer student questions
 Valuation of Frequent Flyer Miles (RT2A)
3
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Capital budgeting
Debt and equity
financings
Acquisitions
Consolidations
Synchronous Meeting 3A:
 Globalizing the Cost of Capital and Capital
Budgeting at AES – discussion of solutions
Case/Video (read before watching video):
 Friendly Cards
RT3A, RT3B, and SM3B:
 Discussion of concepts/case
 Answer student questions
 Valuation of a vaccine: Merck’s valuation of the
Human Papilloma Virus vaccine (RT3A)
4
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

Comparables
valuation
Cash Flow valuation
Exponential growth
Synchronous Meeting 4A:
 Friendly Cards – discussion of solutions
Case/Video (read before watching video):
 Boston Beer
RT4A, RT4B, and SM4B:
 Discussion of concepts and case
 Answer student questions
 Pricing the rights to pollute (RT4A)
5
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
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Synchronous Meeting 5A:
 Boston Beer - solutions
Pricing the rights to
pollute
Industry regulation
Optionality in
contracts
Case/Video (read before watching video):
 Acid Rain: The Southern Company
RT5A, RT5B, and SM5B:
 Discussion of concepts and case
 Answer student questions
 How is an athlete’s contract valued? (RT5A)
6


Valuing an athlete and
a team
Pricing in uncertain
markets
Synchronous Meeting 6A:
 Roche’s Acquisition of Genentech - solutions
Case/Video (read before watching video):
 Tottenham Hotspur plc – case preparation
RT6A, RT6B, and SM6B:
 Discussion of concepts and case
 Answer student questions
 Valuing companies in the internet space (RT6A)
7

Wrap-up and
reflection
Synchronous Meeting 7A:
 Tottenham Hotspur plc - solutions
RT7A, RT7B, and SM7B:
 Summation and reflection
 Answer student questions
Professor Alfonso Canella
Mobile: 978.394.7318
Skype: alfonso_canella
email: canella@brandeis.edu