Brandeis University
INTERNATIONAL BUSINESS SCHOOL
Finance 202a – Corporate Finance
Spring 2016
Instructor: Debarshi K. Nandy
Office: Sachar International Center, Room 209A
Email: dnandy@brandeis.edu
Phone: (781) 736 - 8364
Office Hours: Wednesday 10:30am to 12:00noon. All other times by prior appointment, please
email me to make an appointment.
Teaching Assistant: Riddhish Rege
Email: ridreg@brandeis.edu
Office Hours: TBD.
Prerequisites:
FIN201a (Investments) and FIN212a (Accounting and Financial Analysis).
Course objectives:
The objective of this course is to provide an analysis of the major issues affecting the financial
policy of a modern corporation in a global environment. We will first review some of the
important theoretical and empirical work in each area before going on to discuss real-life cases
dealing with the major issues of financial policy facing the firm, such as its choice of dividend
policy, capital structure and related financing choices, the role of venture capital financing, the
going-public decision, the impact of agency problems between firm management and security
holders and between different classes of security holders on corporate governance (and different
ways of solving such agency problems), as well as mergers/takeovers and other restructuring
decisions. In this context, we will also discuss the valuation of firms and the use of various
financial instruments. The purpose of this course is to develop your skills as a financial manager.
The course builds on the basics of financial theory FIN201a. Note that this syllabus is
preliminary and may change as the course progresses.
Method of Instruction:
Instruction will be done on the basis of a combination of lectures, case discussions, and problem
solving. This course is fast paced, reasonably technical in nature, and it requires each student to
do considerable out-of-class work. Problem solving is very important in this course and I
encourage participation from all my students in this activity throughout the term. Answers to
most assigned questions will be provided to students. You should read the assigned book
chapters prior to coming to class. The material will mean a great deal more to you, and you will
Page | 1 understand and retain much more of it, especially when you review the class notes and problems
prior to an exam.
Course materials
Text:
 Ross, Westerfeld, and Jaffe (RWJ), Corporate Finance, 10th Edition, McGraw-Hill, 2011.

The materials that I will post on LATTE are as important as the required text.

Reading current business periodicals, such as the Financial Times or the Wall Street Journal
can only help! I will comment on current business happenings as they may relate to course
content. A very important benefit of keeping up with current business events is that it may
provide you some ammunition with which you can impress career job interviewers.
Cases and Additional Readings:
Will be either handed out in class or electronically distributed via LATTE or email.
Problem Sets:
You will also be provided with additional practice problems on various topics throughout the
course. I cannot overemphasize the importance of working these problem sets out in detail by
yourself before coming to class. The exam problems are very often modeled on the problems in
these problem sets. The most important and most helpful suggestion I can give you for doing
well in this course is to do all the assigned questions and problems and then review them so that
you are able to do them on the exam. The surest way to do poorly in this course is to not do the
assigned problems or leave them to do the day before the exam. If you have any difficulty in
solving the problems, please contact me or the TA for this course.
Case Assignment:
The group assignments for handing in can be completed in groups of no more than four people
in your section. Each group will have to present the final assignment in class. Written
assignments are due at the start of the class. Late assignments will not be accepted.
Each case write-up must include an executive summary (maximum length one page) outlining
key issues and recommendations. The main body of the report must be no longer than 8 pages,
double spaced. Figures and tables should be put in an appendix at the end of the paper. All
figures and tables must be numbered and all pages, including pages with tables and figures must
be numbered.
Assignment Due dates will be confirmed in class.
Grading and Student Evaluation:
The final grade will be determined according to the following components:
Page | 2 Case Studies (Group and Individual)
Quizzes (2 @ 5% each)
Midterm Exam
Final Exam
Final Group Assignment
Class Contribution
15%
10%
25%
30%
15% (includes presentation and teamwork)
5%
Total
100%
Class Contribution:
Contribution is an essential component in the overall education experience. Contribution takes
many forms: asking informed questions in class, handing in solved problem sets, making
intelligent comments, reading the case and being prepared to discuss the issues, actively listening
to your peers and working with others. Please remember that quantity is no substitute for
quality. There will be ample opportunity to contribute to the class. It is your responsibility to
ensure that you take an active role in the class. If this is a problem for you, I urge you to
talk to me to discuss ways you can make a contribution.
Exams:
There will be 2 quizzes, 1 midterm exam and 1 final exam. Quizzes will be held in the second
half of the class, midterm will be for the full class, and the final will be a 3 hour exam. The final
exam is comprehensive and cumulative. Last minute illnesses only (to be verified with a
doctor’s note) will be handled by rearranging the weights of the exams to reflect the missed
work. (Weights will be moved to the other exams. Missing the midterm will split its weight
equally between the quizzes. Missing a quiz will add its weight to the other quiz). You cannot
miss/skip the final exam – if you do you will get zero for the final – the weight from the final
will not be moved to the other components. There will be no makeup exams or quizzes for this
course, except only under extraordinary circumstances. There is absolutely no opportunity to
move the weights for the case studies and/or analyst reports – you must submit them.
My exams are not open book or open notes. However, you may bring one crib sheet to each of
my quizzes and the mid-term exam and two sheets for the final exam. A crib sheet is an ordinary
(A4) piece of paper, 8-1/2"x 11", on which you may write, type, print or copy any notes that you
think may be relevant and will help you. You may write or type as small as you wish and you
may use both sides of the sheet of paper. You may not staple or tape any extensions or booklets
onto the crib sheet. Do not abuse this privilege – if you do there will be severe penalties on
your final grade.
Use of Laptop Computers and Cell Phones in Class:
Page | 3 Cell phones and PDA.s (i.e., Blackberry.s, i-Phones, etc.) must be turned off during lectures.
Laptops may be used but only to browse the lecture slides or take notes. Regular class attendance
is strongly advised if you want to do well in the course. I stick quite closely to my slides and
what I discuss in class when setting exam questions. Laptop computers and cell phones may not
be used during exams.
Disabilities:
If you are a student with a documented disability on record at Brandeis University and wish to
have a reasonable accommodation made for you in this class, please see me immediately.
Academic Integrity:
The instructor enforces all University rules, especially those regarding academic honesty and
integrity. Note: there is a zero tolerance level in this area. Plagiarism is cheating. The use of
another’s material without permission and without recognition is cheating. This applies to text
books, solution manuals, study guides, a friend's assignment, past assignments, internet resources
or any other material irrespective of the source.
You are expected to be familiar with and to follow the University’s policies on academic
integrity: http://www.brandeis.edu/studentlife/sdc/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.
Teamwork:
Please see the Teamwork Document IBS_Managing-Performance on LATTE.
Page | 4 Class Schedule
Note: RWJ refers to the Ross, Westerfield, Jaffe, Corporate Finance 10th edition. The instructor
reserves the right to add and remove readings from the course and to alter or modify the lecture
schedule as required. I will give you notice of any such changes or modifications.
Topic and Class Preparation
Topic 1
Topic 2
Topic 3
Topic 4
Review of Time Value, Risk-Return Relationship, and Valuing Stocks and Bonds
Reading:
1. Review of prior concepts.
2. RWJ Chs 2, 8, 9 (review)
3. RWJ Chs 10, 11 (review)
Additional Reading:
4. Graham, John R., and Campbell R. Harvey, 2001, “The theory and practice of
corporate finance: Evidence from the field”, Journal of Financial Economics 60, 187243.
Do: Review Problem Sets
NPV, IRR, and Discounted Cash Flow Valuation
Reading:
1. RWJ Chs 3, 4, 5
Do: Problem Set and
Group Assignment 1: Case Study: Acid Rain
Capital Structure Theory: MM World
Reading:
1. Cost of Capital – RWJ – Ch 13.
2. Lecture Notes on Capital Structure on LATTE
3. RWJ Ch 16.
Do: Problem Set
Capital Structure Theory (cont’d): “Real world with Asymmetric Information, Taxes and
Bankruptcy costs”
Reading:
1. Lecture Notes on Capital Structure on LATTE
2. RWJ Ch 17 and 30 pp. 929 – 932.
Advanced Reading:
3. Jensen, Michael C., and William H. Meckling, 1976, “Theory of the firm: Managerial
behavior, agency costs and ownership structure”, Journal of Financial Economics 3,
305-360.
4. Myers, Stewart C., and Nicholas S. Majluf, 1984, “Corporate financing and
investment decisions when firms have information that investors do not have”,
Journal of Financial Economics 13, 187-221.
Topic 5
In Class Discussion of Case Study: Winfield Refuse Management Inc.: Raising Debt vs.
Equity.
Do: Problem Set
Valuation and Capital Budgeting
Readings:
1. RWJ Ch 18. Valuation and Capital Budgeting for the Levered Firm
Page | 5 Topic 6
Dividend Policy
Readings:
1. Lecture Notes on LATTE.
2. RWJ - Ch 19.
In Class Discussion of Case Study: Dividend Policy at Linear Technologies.
In Class Mid-term Exam either on March 2nd or March 9th
Topic 7
Topic 8
Topic 9 (ONLY
IF THERE IS
TIME)
Raising Financing – Equity – Initial Public Offerings (IPOs) and Seasoned Equity
Offerings (SEOs)
Reading:
1. Jay Ritter and Ibbotson, “Initial Public Offerings”.
2. RWJ – Ch 20.
3. Note on IPOs – from another book chapter on LATTE.
In Class Discussion of Case: Knoll Furniture: Going Public. HBS 9-202-114
Do: Problem Sets
Corporate Governance and Executive Stock Options
Readings:
1. Book Chapter on LATTE on Corporate Governance.
2. Six Challenges in Designing Equity Based Pay – Hall, Journal of Applied Corporate
Finance.
3. RWJ – Ch 22, pp. 681 – 703; Ch 23, pp. 726 – 730.
Do: Problem Set
Mergers & Acquisitions
Reading:
1. Positioning for Growth: Carve-outs and Spin-offs.
2. RWJ Ch 29.
3. Book Chapter on LATTE
Do: Problem Set
Group Assignment: Presentations – Analyst Reports
Final Exams - TBA
Page | 6