School of Business and Economics Department of Accounting and Finance Course Name: Corporate Finance Course Code: FIN 440 COURSE & SECTION INFORMATION Course This course examines in details investment and financing, and their interrelatedness. The Description overall goal is to obtain a comprehensive and in-depth perspective of the area of Corporate Finance. Major topics include financial analysis and planning, valuation, capital budgeting, capital structure, dividend policy, working capital management, mergers and acquisition, hybrid financing, bankruptcy, multinational financial management, and risk management. Special emphasis is given on integration of the concepts of financial management into a total systems approach to business decision-making. Course Objectives This course is designed to provide students with a deeper understanding of how firms finance, invest and manage themselves in the `real world'. In FIN254, we typically assume that financial markets are perfect. In practice, firms face a variety of market imperfections. For example, flotation costs for equity is considerably higher than for debt; firms sometimes face significant costs in raising capital; shareholders cannot constantly supervise managers; certain expenses can be claimed as tax deductions whereas others cannot etc. After completing this course, you will better understand how shareholders try to maximize the value of their stake in the firm given such market imperfections. In this course, we will mainly be discussing the analysis of financial statements, including financial planning, capital budgeting, valuation, capital structure, and payout policy. Student Learning Outcomes Upon the successful completion of this course, a student will be able to: 1) Analyze financial statements using vertical, horizontal, and standard financial ratios to determine a firm's strengths and weaknesses, and be able to use the analysis to improve performance. Apply techniques to project financial statements for forecasting long-term financial needs. 2) Demonstrate proficiency in valuation techniques. Apply future value and present value concepts to single sums, mixed streams, annuities, and perpetuities. Describe what determines the value of a firm's securities and how management can influence these values. 3) Apply the concept of risk, its measurement for single assets and portfolios, various types of risk, the source and use of betas, and the CAPM and SML. Apply techniques for estimating the cost of each component of the cost of capital and understand how to assemble this information into a cost of capital. 4) Use Financial Statements to obtain Free Cash Flows for the firm and equity holders. Identify relevant cash flows, discuss various methods for evaluating capital budgeting projects, how to apply them, and what to do if there are conflicting recommendations. 5) Understand how a firm influence its leverage, and how leverage affects a firm. Apply measures of the cost of capital and financial leverage to form long-term financial policies for business. Describe the common factors influencing dividend policy. REQUIRED TEXT BOOK Author Title Ross Westerfield Fundamentals of Jordan Corporate Finance Reference Text Financial Edition & Year Publisher ISBN 9th Edition The McGraw-Hill 978-0-07-018334-6 10th Ed. – 2005 Pearson Prentice 0131450654 Book Arthur J. Keown John H. Martin John W. Petty David F. Scott Management: Principles and Applications Hall TEACHING STRATEGY The class will be conducted through various activities including presentation of concepts and situations, discussion and exchanges of ideas, student initiative and active involvement, cases reflecting real-world context, and project. Students are expected to actively involve and to take the initiative for their own learning experience. The four fundamental skills that students should bring to class on day one includes basic statistics, financial statement analysis, time value of money and fundamental spreadsheet skills. ASSESSMENT STRATEGY AND GRADING SCHEME Grading tool Mid-term 1 Mid-term 2 Final Exam Group Project Quiz (Best two out of three) Class Participation Total Points 20 20 25 20 10 5 100 Please Refer to NSU Student Handbook, Section: "Grading Policy" RULES OF CONDUCT 1. You may use your laptops in the class for class-related work. Do not use your laptop for non-class related work or in any manner that will be distracting to other students or the instructor. Without a valid reason, students are not allowed to suddenly leave the class during a lecture and disturb other classmates. 2. Besides a financial calculator, no other electronic devices are allowed during quizzes and exams. Such prohibited items include laptops, iPads, tablets, cell phones, smartphones, text messaging systems and similar devices. If you have any questions about the legality of your calculator, check with your instructor. For all the exams, the student must sign in the exam attendance sheet. Otherwise, he/she will be considered as absent. 3. Academic Integrity Policy: NSU does not tolerate academic dishonesty by its students. Students are responsible for both knowing and abiding by all rules relating to assessment, academic dishonesty, nondiscriminatory language, conduct and performance as contained in the NSU students' handbook. Students are advised that violations of the Student Integrity Code will be treated seriously, with special attention given to repeated offences. During a test, as well as on any written assignment, paper, or project, anyone caught exchanging information or copying someone else's work will be given a grade of "0" on that work and face further disciplinary action. 4. Office Hour: Students are encouraged to contact their instructor as early as possible when experiencing difficulties in the study of this unit. For course related queries, the instructor will be available for consultation at designated times. Students do not need to make an appointment if he/she wants to contact the instructor during designated times. The instructor follows an open-door policy, and during the designated hour students are advised to directly enter the office room, even if there is other people/student in the room. For project related queries, students are encouraged to come with their group members. If any student wants to consult with the instructor outside the office hour, he/she must make a formal appointment through email. GROUP PROJECT POLICY Each group (strictly between 4-5 students) will conduct a group project. It is imperative that each team have at least four and maximum of five members. In rare circumstances, the instructor may relax such restriction. Students are advised to start the group project work from the start of the semester. It is the student's responsibility to form his/her group, and the instructor will not play any supporting role in group formation. If a particular student has any concern/complain regarding his/her group members, he/she needs to communicate through email and include all the group members in that email. For this particular issue, any other forms of communication will not be accepted. Each group will select a group leader. The group leader will ensure that the formats of each member are the same. In final report submission, the group leader's name should be stated first, followed by the name of other group members. As the group leader plays a very significant role in the report, there can be some bonus marks for the group leader. Each of the group members will be graded on the following criteria: • the degree of clarity • the depth of your answer and coverage of the topics • your demonstration of an understanding of issues related to the topics discussed • the accuracy of calculations including the excel calculation sheet • ability to analyze and draw valid conclusions from material examined More details about the structure, components, and criteria for the assessment of the project will be announced during the semester. Along with hard copy, each group also needs to submit the soft copy (CD/DVD). The soft copies of the assignment will be compared with previous assignments and any group copying someone else's work will be given a grade of "0" on that assignment and face further disciplinary action. LATE GROUP PROJECT POLICY All late submissions without prior approval will attract a penalty of 10% of the full mark of the assessment item per day. "Day" (or part thereof) includes both weekdays and weekend for students. You will be granted an extension only in exceptional circumstances. Excuses such as broken computers, hard drive and lost USB drives are not acceptable. Students wishing to apply for an extension for assessment items must submit a typed application stating the reason for the extension, and your parent/local guardian needs to sign that application. For medical issues, you need to submit required documents such as a medical certificate. Applications for extension must be received before the due date. EXAMS POLICY Exams will consist of multiple-choice, true/false, short questions and/or problems depending on the nature of class lectures. All the exams will take place in the class, and the exam dates have been mentioned in the course outline. The total duration of the exam will be around 75/80 minutes. When the student enters the exam room, he/she can take a pen, calculator and ID card with him/her. Do not forget to bring a scientific calculator, as the instructor will not allow students to share their calculator. The student needs to keep all other items in front of the room, including book, slides, mobile phone and other electronic devices. Cell phones are prohibited and should be turned off during exam sessions. The instructor reserves the right to take stringent actions if any students use a mobile phone during the exam. Students are urged to document the class lectures without discontinuation and read the textbook. Multiplechoice questions may be both qualitative and quantitative. Selected problems and questions from the text will be reviewed in class. However, the student is solely responsible for undertaking all assigned (end-of-thechapter) problems and questions. All the course materials will be provided in NSU resource. Please strive to get clarifications as much as necessary, in and out of class. To complete the course, students must submit all the required assignments and sit for the exams. There will be no make-up for quiz. Exam feedback will be provided in a timely manner so that the student can receive information on his/her progress in the unit at the approximate midway point of the semester. Before the final exam, all the marks will be posted in front of the instructor's office room, and students are advised to check their scores. Students are not allowed to give their mid-term/final/quiz with other section, and the instructor will strictly follow this rule. Registering for a particular section implies that the student accepts the responsibility for attending all the exams in his/her registered section. MAKE-UP EXAM POLICY Make-up midterm exams are not permissible but may be considered on the basis of documented illness. If the student does happen to miss an exam and can show legitimate MEDICAL reason, then the student may be allowed to sit for a COMPREHENSIVE FINAL EXAM. If a student cannot attend an exam due to a medical reason, he/she needs to inform the instructor immediately through email. The student must submit a typed application stating the reason for absence and attach the supporting medical document, such as a medical certificate. The student's parent/local guardian needs to sign the application and provide his/her contact number. The instructor reserves the right to verify the reason for the absence. Subsequently, the instructor will review the medical document and go through the application. The instructor may permit the student to sit for the comprehensive exam after consulting with the department. Approval to sit for a deferred examination should be regarded as a significant concession, and the student will not be granted an unlimited number of deferred examinations over the course of studies. It is the student's responsibility to follow up with the instructor regarding his/her comprehensive exam application and check whether he/she will be allowed to sit for the exam. ATTENDANCE POLICY Students are required and expected to attend all classes and participate in class discussions. North South University has a strict policy for class attendance. Registering for this course implies that you know the time this class meets and you accept the responsibility for attending all classes as well as being on time. COMMUNICATION POLICY All communications should take place using the instructor's official email. If the instructor has an important announcement, he will make that announcement during the class or through sending an SMS from NSU IT portal. For all course-related issues and clarifications, kindly refer to the course outline. STUDENTS WITH SPECIAL NEEDS North South University will provide educational opportunities that ensure fair, appropriate and reasonable accommodation to students who have disabilities/special needs that may affect their ability to participate in course activities or meet course requirements. Students with disabilities are encouraged to contact their instructors to ensure that their needs are met. The University, through its Special Needs section, will exert all efforts to accommodate special needs. STUDENTS COMPLAINTS POLICY Students at North South University have the right to pursue complaints related to faculty, staff, and other students. The nature of the complaints may be either academic or non-academic. For assessments, Students can ask to informally review an assessment item at any time during the semester and should do so within two weeks of the result of the individual assessment item being released. For more information about the policy and processes related to this policy, you may refer to the students' handbook. Lecture No. 1 2 Topic Introduction to Corporate Finance Financial Statements, Taxes and Cash Flow 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Working with Financial Statements Long-Term Financial Planning and Growth Long-Term Financial Planning and Growth Excel Lab Class 1 The Time Value of Money Discounted Cash Flow Valuation MID TERM-1 (DURING CLASS HOURS) Net Present Value and Other Investment Criteria Net Present Value and Other Investment Criteria Making Capital Investment Decisions Making Capital Investment Decisions Return, Risk, and the Security Market Line Return, Risk, and the Security Market Line Cost of Capital MID TERM –II (DURING CLASS HOURS) Excel Lab Class 2 Financial Leverage and Capital Structure Policy Financial Leverage and Capital Structure Policy Dividends and Dividend Policy Dividends and Dividend Policy Mergers and Acquisitions Mergers and Acquisitions FINAL EXAM Note: The instructor reserves the right to make changes to the syllabus if necessary.
