FINA 463: Case Studies in Corporate Finance
Fall 2015
Instructor:
Time and Room:
Sergey Tsyplakov
M, W 5:30PM - 6:45PM, BA 124,
Office Hours:
Room: BA 457F:
Phone: 777-4669
Time: Wed 2:00-3:00PM and by appointment
E-mail: sergey@moore.sc.edu
Required Material:
Course textbook is an e-book comprised of 1) several cases from the book “Case Studies in Finance:
Managing for Corporate Value Creation” by Robert F. Bruner, Kenneth M. Eades, And, Michael J. Schill
from Darden Graduate School of Business, and 2) selected chapters from Corporate Finance, by Stephen
Ross, Randolph Westerfield, and Jeffrey Jaffe 9th edition, Irwin/McGraw-Hill.
This e-book is available to be downloaded. Instructions are posted on the BlackBoard for the course.
Alternative Book:
If you have the book from FINA 365 by Ross, Westerfield, and Jordan, Fundamentals of Corporate Finance, it
can be used for most of the material, except that it has no Mini Cases that we will be covering in class.
Additional Requirements:
1. An advanced (e.g. BA II Plus) calculator is required in class.
2. Familiarity with MS Excel.
Purpose:
The goal of this course is to provide you with a deep understanding of the financing issues that firms must
deal with. The course will include many cases that illustrate different real-world financing situations faced
by corporations. The cases we discuss will be from Darden Business School and are used in many of the
world’s leading business schools. This course will help prepare students for careers in commercial and
investment banking, corporate financial management, as well as more general business careers that have a
substantial finance component. By the end of this course you must be able to both conceptually and
analytically attack the financing and investing decisions firms make using real-life cases. Excel is a must.
You are responsible for the prerequisite FINA 363, FINA 365 and ACCT 222 material.
Course Structure:
The course consists of lectures and cases designed to review an advanced elements of corporate finance. The
lectures are not note taking drills. I will discuss cases in class instead of presenting them to you. Therefore, it
is absolutely essential that you read the assigned cases before coming to class, since the case discussions are
designed under the assumption that the material has been read by all students. Moreover, the material needs to
be understood, not just read! I reward student participation and sometimes will actively call on students.
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Written Case Solutions:
There are five Mini Cases from the end of the chapter that I plan to cover in class, plus six related
Darden cases that illustrate the issues that we cover. Mini Cases have to be read before the scheduled class.
You don’t need to submit the solution to Mini Cases but be ready to discuss it in class.
For the Darden Cases, you must work in a group of 3 people. The group should hand in one assignment
for the case solution. These assignments are due at the beginning of the class. In grading case solutions, I
will pay attention to the clarity of writing and understanding of the big picture and less to the calculations
and numbers. The case writing should not be longer than 2-3 pages (not longer than around 1500 words) plus
2-3 tables if applicable. Thus, total 3 pages is a max. Points will be taken if the writing is not clear and the
text is too long. When cases are submitted, please be prepared to discuss your solutions as I will actively call
on students to discuss their answers in class.
For each case solution submitted to me, along with your names on the title, you should put the
“participation grade” X, expressed in %, for each member of the group that he/she deserves for his/her
participation in the discussion and writing of the case. The percentages are between 0% and 100% (rounded
to 10%, i.e. 100%, 90%...), where 100% is assigned when the group member fully participated in the writing
of the case, and 0% corresponds to the case when the group member did not participate in the case solution
at all. The grade for the case for the member of a group is calculated as the case grade times “participation
percentage” X, i.e., (case grade)*X. If the group members encourage “free riding”, the group is free to assign
the participation grade of 100% for everybody even if some members never participated. The submitted
participation grades are between the members of the group. I cannot be involved in any disputes between
members of the group as to who deserve what participation grade %. Students are free to migrate from group
to group.
Topic Coverage and Course Sequence:
The course will contain three interdependent sections:
1. Cash Flow Valuation; Financial Statement Analysis;
2. Capital Budgeting;
3. Risk; Cost of Capital; Topics Related to Capital Structure.
Exams:
Exams 1, 2 and 3 will test your understanding of corresponding class lectures, mini-cases, and
Darden Cases. It is your responsibility to show up on time for the classes or exams. The exams will take
approximately 75 minutes and will be held in class. You are allowed to bring a calculator and a “cheat sheet”
which is a double-sided 8 ½ x 11 sheet of hand-written notes and formulas to each exam. No printed versions
or photocopies of the “cheat sheet” are allowed. There are no make-up exams for any unsatisfactory reason. If
an exam is missed for a valid reason, the weights of all other grades will be adjusted proportionately. There is
no Final Exam.
Class Participation/Attendance
It is essential that you attend every class, be on time, and be prepared to participate. I’ll be running a random
attendance list and will record your attendance and your participation. For each class, when I have an
attendance list, you will get 8 points if you attend, 9 points if you speak up during the class at least once, 10
points if you speak up two or more times. Your attendance and the quality of your questions and observations
will provide a helpful feedback to me. If you are late for class or miss the class, it is your responsibility to
keep up with the material. Unexcused absences may have a negative effect, if your grade is close to a cutoff.
If you have four or more absences I reserve the right to lower your final grade for the class beyond low
attendance grade. If you have to miss class, you have to inform me via e-mail and explain the excuse prior to
the class.
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Grade
Exam 1
Exam 2
Exam 3
Written Cases
Class Participation
20 points
20 points
20 points
20 points
20 points
Grade cutoffs are approximately as follows:
A: ≥ 90
B: ≥ 80
C: ≥ 66
D: ≥ 55
(20% of total grade)
(20% of total grade)
(20% of total grade)
(20% of total grade)
(20% of total grade)
F: < 55
Blackboard:
I will use the Blackboard to post class related links and materials including copies of my presentation used in
the lectures. The class presentations are in MS PowerPoint format and will be available prior the day of the
lecture in which they are used.
Course Policies and Procedures:
Exams will include mostly multiple-choice questions. All grades are assigned after a careful examination of
the work submitted. Any grade disputes should be discussed with the instructor within two weeks of the
receipt of the disputed exam. No adjustments will be made after this two-week period.
Academic Dishonesty
The University’s policy regarding academic dishonesty will be strictly enforced. You are responsible for
reviewing the information at http://www.sc.edu/academicintegrity/honorcode.html. Suspected violations of
the honor code will be reported to office of academic integrity. The office of academic integrity’s web site
(http://sc.edu/academicintegrity) has useful information about the process that is followed when a suspected
violation has occurred.
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Course Outline
I will try to proceed in the order listed below. However, I will adjust the pace of the class as we go along. I
will announce any changes in the outline.
Date
Day
Written
Cases
to submit
Reading: chapters
Topic
in RWJ/Cases
24-Aug
26-Aug
31-Aug
Mon
Wed
Mon
Financial Statements, Cash Flows (review)
Financial Statement Analysis and Financial Models
Financial Statement Analysis and Financial Models
2-Sep
Wed
CASE#1: The Financial Detective
7-Sep
9-Sep
14-Sep
Mon
Wed
Mon
LABOR DAY--NO CLASSES
Discounted Cash Flow and NPV (review)
Making Capital Investment Decisions
16-Sep
Wed
MINI CASE: BETHESDA MINING COMPANY
21-Sep
Mon
CASE#2: Gemini Electronics
23-Sep
28-Sep
30-Sep
Wed
Mon
Wed
Test 1
Risk, Real Options, and Capital Budgeting
Capital Budgeting and Equivalent Annual Costs
5-Oct
Mon
MINI CASE: Bunyan Lumber, LLC
7-Oct
Wed
12-Oct
14-Oct
Mon
Wed
19-Oct
Mon
21-Oct
Wed
CASE#4: Nike Inc.: Cost of Capital
26-Oct
28-Oct
2-Nov
Mon
Wed
Mon
4-Nov
Wed
TEST 2
Capital structure: Limits to the Use of Debt
Capital structure: Limits to the Use of Debt
MINI CASE: McKENZIE CORPORATION’S CAPITAL
BUDGETING
9-Nov
Mon
CASE#5: WORLDWIDE PAPER COMPANY
11-Nov
16-Nov
18-Nov
Wed
Mon
Wed
23-Nov
Mon
25‐Nov Wed
Capital structure: Limits to the Use of Debt
Valuation of Capital Budgeting of the Levered Firm
Valuation of Capital Budgeting of the Levered Firm
MINI CASE: THE LEVERAGED BUYOUT OF CHEEK
PRODUCTS, INC.
THANKSGIVING--NO CLASSES
30-Nov
Mon
CASE#6: The Wm. Wrigley, Jr. Company: Capital Structure,
Valuation, and Cost of Capital.
2-Dec
Wed
TBA
CASE#3: Wells Fargo: Solar Energy for Los Angeles
Branches
Cost of Capital: CAPM and Cost of Debt (review)
Capital structure: Basic Questions
MINI CASE: STEPHENSON REAL ESTATE
RECAPITALIZATION
3
3
CASE#1 is
due
6
Read MINI CASE, ch
6.
CASE#2 is
due
7
7
Read MINI CASE, ch
7.
CASE#3 is
due
16
16
Read MINI CASE, ch
16.
CASE#4 is
due
17
17
Read MINI CASE, ch
17
CASE#5 is
due
17
18
18
Read MINI CASE, ch
18.
CASE#6 is
due
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