FIN 357 – BUSINESS FINANCE
FALL 2014
MW 9:30 AM – 10:45 AM, UTC 4.110 (SECTION 03640)
Professor
Office
Office Hours
E-Mail
Course Web Page
Ari Kang
CBA 6.230
Wednesday 11 am – 12 pm; 2 pm – 3 pm
ari.kang@mccombs.utexas.edu
via Canvas
Head TA
Gonzalo Maturana
Gonzalo.Maturana@phd.mccombs.utexas.edu
Ben Zhang
Miao.zhang@phd.mccombs.utexas.edu
Kerri Murphy
Kerri.Murphy@mba15.mccombs.utexas.edu
TA
Course Objectives
Business Finance is designed to introduce students to the three basic ideas
underpinning finance: the time value of money, risk and return, and value creation. The
aim of the course is to provide students with introductory exposure to (1) present value
and capital budgeting techniques, (2) asset valuation and the trade-off between risk and
return, and (3) the financing decisions of the firm. It provides students with a solid
foundation that is subsequently built upon in subsequent courses in corporate finance,
security analysis, investment management, fixed income securities, derivative markets,
and real estate finance.
Since the emphasis is on the fundamental concepts underlying corporate finance, the
approach will be analytical and rigorous and requires some familiarity with accounting,
mathematical, and statistical tools.
After completing the course, you should be able to understand and critically evaluate
the discussion of financial issues in the popular press and have a framework for
analyzing the major types of financial decisions made by corporations.
FIN 357 – Business Finance – Fall 2014
Ari Kang
Course Material/Requirements
Required Text
Jonathan Berk, Peter DeMarzo and Jarrad Harford, Fundamentals of Corporate
Finance (3rd ed.), Boston, MA, Pearson, Inc., 2014.
Establish a MyFinanceLab account: You can gain access by registering at the
following class section URL:
http://www.pearsonmylabandmastering.com/northamerica/
Suggested Materials
Subscription to the Wall Street Journal. We will cover the conceptual material to
help you think through financial decisions, however, details of a particular issue I
might ask your thoughts on may come from the press.
Calculator
You will probably need a calculator for the homework, quizzes, and exams. I
recommend a scientific calculator; you will not be able to use a graphing
calculator. A financial calculator is permitted, but I do not use financial
calculators so you are on your own with them. Also, you will not get credit on
quizzes or exams for simply writing down the inputs and outputs from the
financial calculator, so it may be more of a hindrance than a help. I strongly
recommend doing your homework using both Excel and a scientific calculator.
Course Webpage
The course webpage via Canvas will serve as the primary mechanism for
communicating course-related information. A PowerPoint file containing the overhead
transparencies for the next class will be available at least 24 hours before the scheduled
class meeting. You are responsible for getting a copy of the file and bringing it to class.
Adobe Acrobat PDF files of the course syllabus, class schedule and the solutions to the
end-of-chapter problems are available on the course web page. The solutions to the
end-of-chapter problems have been prepared by the publisher of the textbook. Please
inform me or my TA if you feel you have found a mistake in any of these documents.
Adobe Acrobat PDF files containing all class assignments (quizzes, exams, case
questions and homework) will be available to download from the web page throughout
the course.
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Ari Kang
FIN 357 – Business Finance – Fall 2014
Course Requirements and Grading
Your grade in the course will be determined as follows:
Homework
Participation
Quizzes
Exam I
Exam II
Exam III
Points
10
5
25
20
20
20
100
Class assignments: See Calendar or Syllabus on Canvas for class assignments, as
well as dates for all course requirements (quizzes, exams, and homework).
Homework: Homework assignments for each chapter will be available on
MyFinanceLab. All help tools will be turned on for these assignments and you will be
able to rework the problems that you get wrong for (full) credit. You should complete
the assignments by the due date; otherwise you will likely perform poorly on the quizzes
and exams. However, you will be able to rework incorrect problems without a deadline,
up to the day of the last exam.
Quizzes: Quizzes are administered in class (approximately 20 minutes) and consist of
a maximum of 10 questions/problems. Four quizzes will be given. Conflicts between
the scheduled quizzes and other academic or work requirements should be resolved by
the student. There are no make-ups for the quizzes; however, only the best 3 of 4
scores will be counted.
Exams: The exams can be a mixture of multiple choice, short answer and problems.
Alternate exam dates are not an option. Conflicts between the scheduled exams and
other academic or work requirements should be resolved by the student. Exams are
scheduled in the evening. The class period immediately before the exam will be used
for additional office hours rather than lecture. MAKE SURE YOU ARRANGE YOUR
SCHEDULE TO BE AVAILABLE DURING THE EXAM. Attending the exam must be
your highest priority and non-academic scheduling conflicts will not in general be taken
into account. Please bring any scheduling issues to the attention of the head TA as
soon as possible.
There will not be a “final” exam during the exam period. Due to the nature of the course
all exams are effectively cumulative; however, this caveat applies primarily to the
problems rather than the multiple choice and short answer questions.
Calculators may be used when taking an exam. You cannot share calculators with
others during the exam. Be sure to learn how to use your calculator and make sure the
batteries have sufficient power before the scheduled exam.
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FIN 357 – Business Finance – Fall 2014
Ari Kang
page 4
Missing Exams/Quizzes
If you must miss an exam for illness or another emergency, you must go through
student emergency services. Once you have the appropriate documentation, you will
need to coordinate a makeup with the Head TA.
Grading Curve: Grading will be based on a hybrid curve. Any student can guarantee
himself or herself at least the grade given by the cutoffs below by reaching the relevant
percentage score. If the exams/quizzes turn out to be harder than anticipated, however,
the class will be curved to produce the grade distribution that follows.
Grade
Score Threshold
A
92
A-
89
B+
87
B
83
B-
79
C+
77
C
73
C-
69
D+
67
D
63
D-
59
Minimum share at or above
35%
70%
90%
95%
Learning Catalytics
I will be using the “Learning Catalytics” software from Pearson on a trial basis in this
class. This software is effectively a “bring your own device” version of iClicker. You will
answer questions from your smartphone, tablet, or a laptop. Halfway through the class I
will likely hold a referendum on whether to continue using this tool, and I welcome
feedback on this system at any point in the class.
Note that this system requires a permissive technology policy; you can bring and use
pretty much any device. If you really must use your phone or laptop for entertainment
during lectures, please do so in a way that minimizes the disruption to other students.
Ari Kang
FIN 357 – Business Finance – Fall 2014
Conduct of the Course and Academic Requirements
Class lectures are an important part of the course. Reading assignments from the
textbook are required. It should be noted that class attendance is considered essential
for passing performance in the course. In addition, student participation is expected.
This involves being prepared when called on in class to discuss any assigned material
and/or to work assigned problems.
Please note dates and times for exams and quizzes are provided in the course
schedule distributed on the first day of class. Both the syllabus and course schedule
are available on the course web page.
If you miss a class, it is your responsibility to determine what was covered including any
administrative announcements. Expect that some of the material covered on exams will
not be in the text. Hence, you are urged to attend class regularly.
Make-up or extra work to improve your grade is not possible. Your final letter grade is
determined by the criteria set forth in the student evaluation section of this syllabus.
Office hours for the teaching assistant will be distributed once the semester has begun.
Office hours may change during the semester. Such changes will be announced in
class and /or posted on the course web page. Additional hours will be scheduled during
exam weeks.
Should you have to leave class early, please extend the courtesy of informing the
instructor before the beginning of the period and leave quietly so as not to disturb the
other members of the class.
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Ari Kang
FIN 357 – Business Finance – Fall 2014
University Policies Affecting the Course
Students with Disabilities:
Students with disabilities may request appropriate academic accommodations from the
Division of Diversity and Community Engagement, Services for Students with
Disabilities, 512-471-6259, http://www.utexas.edu/diversity/ddce/ssd.
Religious Holy Days:
By UT Austin policy, you must notify me of your pending absence at least fourteen days
prior to the date of observance of a religious holy day. If you must miss a class, an
examination, a work assignment, or a project in order to observe a religious holy day,
you will be given an opportunity to complete the missed work within a reasonable time
after the absence.
Campus Safety:
Please note the following recommendations regarding emergency evacuation from the
Office of Campus Safety and Security, 512-471-5767, http://www.utexas.edu/safety/ :
Occupants of buildings on The University of Texas at Austin campus are required to
evacuate buildings when a fire alarm is activated. Alarm activation or announcement
requires exiting and assembling outside.
Familiarize yourself with all exit doors of each classroom and building you may occupy.
Remember that the nearest exit door may not be the one you used when entering the
building.
Students requiring assistance in evacuation should inform their instructor in writing
during the first week of class.
In the event of an evacuation, follow the instruction of faculty or class instructors.
Do not re-enter a building unless given instructions by the following: Austin Fire
Department, The University of Texas at Austin Police Department, or Fire Prevention
Services office.
Behavior Concerns Advice Line (BCAL): 512-232-5050
Further information regarding emergency evacuation routes and emergency procedures
can be found at: www.utexas.edu/emergency.
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FIN 357 – Business Finance – Fall 2014
Ari Kang
page 7
FIN 357 – Business Finance – Spring 2014 Class Schedule*
Date
Class
BD&H
Chapter
Assignments
Due
27-Aug
1-Sep
3-Sep
8-Sep
10-Sep
15-Sep
17-Sep
22-Sep
W
M
W
M
W
M
W
M
1
1
2
3
4
5
6
7
3
4
5
6
7
HW1
HW2
Quiz 1
HW3
HW4
HW5
24-Sep
29-Sep
1-Oct
6-Oct
8-Oct
13-Oct
15-Oct
20-Oct
22-Oct
27-Oct
29-Oct
3-Nov
5-Nov
10-Nov
12-Nov
17-Nov
19-Nov
24-Nov
26-Nov
1-Dec
3-Dec
W
M
W
M
W
M
W
M
W
M
W
M
W
M
W
M
W
M
W
M
W
8
9
8
Quiz 2
HW6
Exam
10
11
12
13
14
15
16
9
9
10
11
12
12
17
18
19
20
21
22
23
13
13
11-13
14
15
16
* Subject to change
24
HW7
HW8
Quiz 3
HW9
HW10
HW11
Exam
HW12
Quiz 4
HW13
HW14
HW15
HW16
Exam
Topics & Assignments
Course Introduction and an Introduction to
Financial Markets
NO CLASS: LABOR DAY HOLIDAY
Time Value of Money I
Time Value of Money II
Time Value of Money – Bond Valuation I
Time Value of Money – Bond Valuation II
Time Value of Money – Stock Valuation I
Time Value of Money – Stock Valuation II
Time Value of Money – Making Investment
Decisions
Time Value of Money –Review
Exam I (evening)
Cash flows and capital budgeting
Analyzing the project
Stock valuation revisited
Risk and Return
Capital Asset Pricing Model (CAPM) I
Capital Asset Pricing Model (CAPM) II
Exam II review
Exam II (evening)
Cost of Capital I
Cost of Capital II
Cost of Capital: Application and review
How Firms Raise Capital
Capital Structure Policy
Capital Structure Policy II
Further Topics/course review
NO CLASS: THANKSGIVING
Exam review
Exam III (evening)