ADVANCED ENGINEERING ECONOMY
ISyE 6225 Fall 2011
Professor:
Phone:
Email:
Office Hrs:
Steve Hackman
404-894-2327
shackman@isye.gatech.edu
TBD
1. Course Description and Objectives
Students learn core concepts and techniques for economic decision analysis of complex problems
that involve dimensions of time, uncertainty, economics, strategy and constraints, as well as basic
terminology, concepts and issues relevant to financial engineering and management.
2. Course Materials
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Required Text:
o Corporate Finance, 2nd ed by J. Berk and P. DeMarzo. Pearson, 2011.
Additional handouts will be posted on my website. It is your responsibility to bring any
handouts to class if posted 24 hrs prior to the start of class.
Powerpoint presentations will be posted on my website, typically after class.
3. Course Organization
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With respect to the class period:
o Time will be used to motivate, explain, and illustrate concepts and techniques.
o Participation encouraged!
o Bring name tags to class, please!
o You may be asked to discuss and solve problems in class. Bring a calculator.
With respect to book and handout material:
o Not all material will be covered in class.
o Not all material covered in class will be required for the exams.
Attendance policy:
o Attendance is not required.
o If you miss class, it is your responsibility to find out what was covered, what you are
responsible for and to catch up. No private lectures.
o You may attend class late. If you do, please enter the door nearest the podium, and
pick up any course materials for that lecture that were not posted on my website.
4. Grading
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Your grade will be based on three exams:
o Exam 1:
Sept 29 (25%).
o Exam 2:
Nov 10 (35%).
o Final:
Final exam period (Dec 13 Tues 2:50-5:40pm). Cumulative (40%).
There will be extended office hours before exams.
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Grading policy:
o “No regarding.”
o If you miss an exam due to a real emergency or serious illness, you must notify me
immediately as is feasible and provide appropriate documentation in a timely
manner.
o If you miss either of the first two exams for legitimate reasons, then it will be my
prerogative to either (a) administer a make-up exam of my choosing (i.e. oral or
written), or (b) to add the weight for the missed exam to the final exam weight.
o If you miss the final exam for a legitimate reason, an alternate make-up exam of my
choosing (i.e. oral or written) will be administered during the official alternate exam
or conflict periods.
o You will not be excused for any personal business, such as interviews, social
gatherings, etc.
o All unexcused absences will result in an exam grade of zero.
5. Homework
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Homework problems will be posted on my website.
Solutions to chapter exercises are available via MyFinanceLab.
Chapter answer keys will be posted on my website.
Solutions to supplemental homework problems will be posted on my website.
You must do homework! You are encouraged to work together and consult with me.
6. Projected Topical Outline
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III.
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IV.
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Cash Flow Equivalence
Arbitrage and Financial Decision-Making (Chapter 3)
The Time Value of Money (Chapter 4)
Interest Rates (Chapter 5)
Basic Valuation
Investment Decision Rules (Chapter 6)
Fundamentals of Capital Budgeting (Chapter 7)
Risk and Return
Expected Utility and Portfolio Choice (Handouts)
Capital Markets and the Pricing of Risk (Chapter 10)
Portfolio Optimization and Capital Asset Pricing Model (Handouts, Chapter 11)
Estimating the Cost of Capital (Chapter 12)
Capital Budgeting and Valuation with Leverage (Chapter 18)
Advanced Valuation
Financial Options (Chapter 20)
Option Valuation (Handouts, Chapter 21)
Asset Price Dynamics (Handouts)
Real Options (Handouts)
How to Register and Enroll in Your
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Textbook: Berk/DeMarzo: Corporate Finance 2e
Course Name: ISYE 6225
Course ID: XL0P-R1YN-701Y-9UB2
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