VILLANOVA UNIVERSITY, College of Commerce and Finance, Dept. of Finance
Applied Corporation Finance
Dr. Michael Pagano, CFA
Fall 2003, Course: MBA 8410, Section: 002
Office: Bartley 2041
E-mail: Michael.Pagano@villanova.edu
Phone: (610) 519-4389
Office Hours: Wednesdays 4:00-5:30 pm, or by appointment.
Course Prerequisites: MBA standing; MBA 8401. It is the student’s responsibility to be
certain that the prerequisites have been successfully completed. If at any time during the
semester it is determined that a student has not completed the prerequisites, the student
can be administratively dropped from the course without credit or tuition refund.
Course Materials:
Required:
Financial Management: Theory and Practice (10th Ed.) by
E.F. Brigham and M.C. Ehrhardt, Harcourt College, 2002.
Financial Calculator.
MBA 8410 Case Package (Available at Villanova Bookshop).
My web site also contains relevant files for this course:
www.homepage.villanova.edu/michael.pagano
Regular reading of a financial newspaper such as The Wall Street
Journal or the Financial Times is assumed.
Optional: Study Guide for above text. (Harcourt College).
Course Description and Objectives:
MBA 8410 is an advanced, graduate-level course in corporation finance. It is intended to
develop a student’s abilities to apply the theories and concepts of corporate financial
management to a wide range of practical business problems and situations (as detailed in
the Course Outline).
Teaching Methodology: There will be an emphasis on the use of cases and problemsolving as an approach to covering the material. Students are expected to prepare
assigned problems and cases prior to the class meeting. Students are required to actively
participate in the discussion of the cases and engage in role playing activities (e.g.,
participate in the discussion “as if” the student was a CFO or a financial analyst). A
financial calculator is essential for this class. It should perform net present value and
internal rate of return calculations.
Course Grade and Requirements: The final grade will be based on two exams,
three 5-page Case Analyses and three 3-page Case Summaries and three 1-page Case
Analyses-in-Brief. The Mid-Term Exam will account for 20% of your grade while the
Final Exam represents 30%. The Final Exam will be cumulative. The three 5-page Case
Analyses account for 30% of your grade (i.e., 10% for each case analysis). The
remainder of your grade, 20%, is based on the completion of the six other case
assignments (the three 3-page Case Summaries and three 1-page Case Analyses-in-brief).
The three 5-page Case Analyses are to be written independently by groups of 3-4
students. The three 1-page Case Analyses-in-brief are to be completed by each student
individually. For the three 3-page Case Summaries, you have the choice of completing
the assignments either individually or by groups of 3-4 students. In preparing these
assignments, unauthorized sharing of relevant spreadsheets and other electronic files
between groups is also prohibited. Students/groups who fail to submit a paper on the due
date will receive a letter grade penalty for that assignment for each day that it is late.
Class Participation and Attendance Policy: Attendance of all classes is strongly
encouraged. The success of this course depends on extensive class participation in
weekly discussions. Class members are expected to read and complete all of the assigned
materials. While there is no formal penalty for missing classes, poor attendance may
adversely affect your exam performance and final grade in the course.
Email Communication: Class announcements and other communications will be
through your Villanova email account. You should monitor this account on a regular
basis for information on “handouts,” announcements, assignments, readings, articles in
newspapers, magazines, and journals, etc.
Exam Rules: 1. You can bring one sheet of formulas no larger than 8 ½’’ x 11”.
2. Except for a documented medical emergency, a missed exam will receive a grade of
zero. Students with documented medical emergencies will get a make-up exam that is
different from the one given in class.
3. Academic dishonesty will not be tolerated and will be enforced as stated in the
University’s Code of Academic Integrity.
Academic Integrity Policy: The Code of Academic Integrity of Villanova University
addresses cheating, fabrication of submitted work, plagiarism, handing in work completed
for another course without the instructor’s approval, and other forms of dishonesty, such
as discussing the content of an exam with a student who has not taken that exam. For the
first offense, a student who violates the Code will receive 0 points for the assignment.
The violation will be reported by the instructor to the Dean’s Office and recorded in the
student’s file. In addition, the student will be expected to complete an education
program. For the second offense, the student will be dismissed from the University and
the reason noted on the student’s official transcript.
Students with Disabilities: It is the policy of Villanova to make reasonable academic
accommodations for qualified individuals with disabilities. If you are a person with a
disability please contact me after class or during office hours and make arrangements to
register with the Learning Support Office by contacting 610-519-5636 or
nancy.mott@villanova.edu as soon as possible. Registration is needed in order to receive
accommodations.
Course Outline:
Date
Chapter(s)
Case
Study
Topic(s)
A. Usage of Fundamental Tools
This section of the course is devoted to understanding the key components and ethical issues
related to the financial system (Ch. 1, 5) and the essential tools (Ch. 3, 11) needed to make
informed financial decisions in a global, technologically advanced market place (Ch. 13, 14).
Aug. 27
1, 5
Sept. 3
3, 4 (pp.
122-129)
Sept. 10
11
13
Sept. 17
13
Sept. 24
Hand-out
Oct. 1
14
Introduction, Finance Pre-test,
and the Financial Environment
Analysis of Financial Statements
Cost of Capital
and
The Basics of Capital
Budgeting
Hampton Machine Tool (A & B)
(9-280-103)
The Basics of Capital
Budgeting (continued)
Legal and Ethical
Considerations in Corporate
Finance
Cash Flow Estimation and Risk
Analysis in Capital Budgeting
Investment Analysis &
Lockheed Tri Star (A & B)
(9-291-031)
Oct. 8
Mid-term Examination
Oct.
13-19
Fall Break
B. Advanced Applications of Fundamentals to Various Financial Problems
This section is devoted to applying the key tools and concepts learned during the first portion of
the course to more complex, real-world financial decisions. These principles will be applied to
financial decisions facing the firm such as estimating the effect on firm value of staggering
investment decisions (Ch. 15), altering capital structure (Ch. 16), issuing and repurchasing
securities (Ch. 18, 19), and managing multiple risks (Ch. 24). Lease-versus-buy decisions (Ch.
20) and short-term capital management (Ch. 22) will also be explored.
Date
Chapter(s)
Oct. 22
15 (skip pp.
605-608)
Introduction to Real Options
16 (skip pp.
632-641)
Capital Structure Decisions
Oct. 29
Nov. 5
Nov. 12
18
Case
Study
Topic(s)
Du Pont: Titanium Dioxide (B)
(9-284-066)
Arundel Partners (A)
(9-292-140)
Also, read HBS Tutorial: 9-295-074
19 (skip pp.
763-776)
Distribution to Shareholders:
Dividends and Repurchases;
and
Issuing Securities,
Investment Banking, Etc.
24
Corporate Risk Management
Cox Communications (B)
(9-201-003)
Sealed Air Corp. (A)
(9-294-122)
Nov. 19
20
Leasing Decisions
Cephalon Inc. (B)
(9-298-116)
Nov. 25 – Nov. 30
Dec. 3
22
Thanksgiving Break
Current Asset Management
Riverbend Telephone (A)
(9-197-104)
Dec. 10
Dec. 17
Summary & Concluding
Thoughts
Final Examination
(TBA)
Note: This is a preliminary outline that is subject to change.
Hanson Ski Products (A & B)
(9-187-038)