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BGMT 340
Business Finance
Spring 2013
Dr. Karen Hallows
Class time: TTh 11:00 – 12:15 (0301), 12:30 p.m. – 1:45 p.m. (0501), 3:30 – 4:45 (0701), and
5:00 – 6:15 (0601), all in VMH 1333
Office: VMH 4464
Office Hours: M. 12:00 noon – 3:00 pm, TTh.2:15 – 3:15 p.m. and by appointment
Telephone: 301 405-1058
E-mail: khallows@rhsmith.umd.edu
Mr. Benjamin Munyan
Class time: MW 5:00 - 6:15 (0401) (VMH 1412)
Office: VMH 3330M
Office Hours: MW 9 – 11 a.m., 3:30 – 4:45 p.m., Tuesday: 2 p.m. – 5 p.m. and by appointment
Telephone: 301 661-1682
E-mail: bmunyan@rhsmith.umd.edu
Dr. Susan White
Class times: MW 2-3:15 p.m. (BL1) VMH 1212 and MW 3:30-4:45 p.m. (BL2) VMH 1212
Office: VMH 4455
Office hours: MW 11 a.m. - noon, Tuesday: 10 a.m.-12, 2-4 p.m. and by appointment
Telephone: 301 405-8700
E-mail: suwhite@rhsmith.umd.edu
Course website: ng.elms.umd.edu
Textbook on-line study centre: http://www.mhhe.com/rwj
Textbook and Course Materials

Textbook: McGraw-Hill/Irwin publishes 2 versions of Ross, Westerfield, and
Jordan: Fundamentals of Corporate Finance, 9e: The Standard Edition and The
Alternate Edition. For more specifics, see appendix at the end of this syllabus
Other Required Course Materials:

Financial Calculator: You may use any calculator that will calculate net present value and
internal rate of return. Go to the Financial Calculator link on elms for more details about
financial calculator models.

Recommended: It is recommended that you read business press like the Wall Street Journal,
Business Week, Fortune, etc. regularly. As a business major, you’ll need to be fluent in the
language of business. These publications are great ways to practice that fluency.
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Course Objectives
The purpose of this course is to provide you with a basic foundation in corporate finance. You'll
build on this foundation if you continue to take finance courses and courses in other business
disciplines and as you work with finance concepts in your life after graduation. You'll also use
these concepts if you choose to develop your own personal investment portfolio. The course
includes a review of accounting principles as they apply to corporate finance, the financial
environment of business, valuation of projects, companies, and investment securities, and how a
business allocates financial resources in an uncertain environment to maximize shareholder
wealth. After completing the course, you should have gained an intuitive comprehension of
financial concepts and analysis, an understanding of current issues in financial management, and
the knowledge that all areas of finance are firmly rooted in valuation.
Course Prerequisites
You should have basic accounting, including an understanding of accounting terms and financial
statements from BMGT 220 and 221, statistics, including probability, regression analysis,
calculating mean and standard deviation from BMGT 230 or 231, and algebra (high school
algebra I provides the math basics you will use most in this class).
Grading and Exams
75% (25% each)
25% (Optional)
25%
Extra Credit
Three exams, held in the evening for all sections
Final exam
Project/Homework/Video quizzes, in class assignments, due
throughout the semester
Two homework assignments may be completed for extra
credit
The final exam is optional. If you have taken all three exams and are satisfied with your grades
prior to the final, you may choose not to take the final. If you choose to take the final, then it will
replace your mid-semester exam with the lowest grade. If you score lower on the final exam than
on any of the three mid-semester exams, then the final exam will not count.
If you are absent from one of the three in-class exams, you must take the final exam, and the final
will count for the missing exam. If you have missed one mid-semester exam, then the final will
count 25%. If you've missed two mid-semester exams, the final will count 50%. If you've
missed all three mid-semester exams, the final will count 75%. Note that if you take all three
exams, the final exam will only replace one grade, your lowest grade – it will not replace more
than one exam grade. Because all of the sections are taking the same exam on the same evening,
there will be a make up exam day scheduled for each mid-semester exam date.
Exam grades will be curved, if needed. Exams with answers and grades with the curve included
will also be posted on the web site.
You can bring one 8 1/2 x 11 sheet of paper to each exam, one side only, with anything written on
it that you like. The sheet can be handwritten or typed. You must turn this in with your exam. It
will be returned to you after the exam is graded. You can bring all three sheets with you to the
final exam.
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You may review your exam for two weeks after taking the exam. Please email your assigned TA
to set up an appointment to review your exam. After two weeks, exams/projects/assignments will
not be reviewed. Exams will be returned on request.
If the University is officially closed on the date an examination is scheduled, the exam will be
held on the next class meeting date.
Time period allowed to complete Exams 1, 2 and 3 = 1 hour and 15 minutes
Time period allowed to complete Final Exam = 2 hours
All students’ exams will be picked up by the professors and TAs when the exam time has expired.
If you do not turn in your exam when this last call is made, you will receive a zero on the exam.
Grades will be posted throughout the semester. Please note that there are 500 students in this
course, and unfortunately mistakes can happen when grades are entered. Email your professor
immediately if there is a problem with your posted grade, but no later than 2 weeks after a grade
due date. Note also that if there is a curve on an exam, the curved grade (raw score with points
added) is the grade that is posted.
The Smith School of Business offers rigorous, academically-challenging courses and provides
meaningful feedback on student performance to facilitate learning. Transparency and consistency
in grading are important elements that ensure the integrity of the curriculum.
The Smith School expects a grade point average of approximately 3.10 for 300-level
BMGT core courses.
Your final grade will be an average based on 100%, with 89.5 as the cutoff for an A-, 79.5 for a
B-, 69.5 for a C-, 59.5 for a D. Grades will include pluses and minuses as per the official
university grading policy. Please see the plus/minus grading policy on testudo.
Project/Homework Assignments/Extra Credit

Project Assignments: You will be working on short finance project assignments throughout
the semester. You are responsible for keeping up with due dates. Details are posted on elms
and detailed guidelines are at the end of this syllabus. All projects must be submitted through
elms, showing all work including formulas. A hard-coded answer will NOT be counted as
correct. Using excel is the best way to create your assignments.

Homework Assignments: There will be regular homework assignments for each chapter
covered in the course. Homework assignments are due as indicated in the assignment
schedule posted on elms under the Homework/Practice Problem Tab Folder. Your homework
and practice problems are taken online through an online program called CONNECT. The
list of the homework and the practice problems for this course are located in the
Homework/Practice Problem tab on elms. You will need to register with Connect and take
the Homework/Practice Problems directly at the CONNECT website.
online registration instructions for CONNECT
Go to the following Web address
and click the "register now" button:
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http://connect.mcgraw-hill.com/class/_finance_bmgt340_all_sections_spring_2013_1
This is a unique address for BMGT340
Please see the information in that Homework/Practice Problem tab to learn about how to
complete the homework assignments in this course. For each textbook chapter, on
CONNECT you will be provided with practice problems and homework assignments from
the end of each chapter. The homework assignments will have different numbers than the
end-of-chapter problems but they are essentially the same problems. You will submit only
the homework assignments for a grade. The practice problems are ungraded and you can
work these as many times as you wish and receive immediate feedback so you can learn how
to do the problems. You will have three chances to compute the correct answer for each
homework assignment and there are 6 problems per assignment. There will be twelve total
homework assignments throughout the semester. We will keep your best 10 homework
assignments for grading purposes for a total of 120 maximum points, or 12% of your grade.
The final two homework assignments are for extra credit for a maximum total extra credit
from homework assignments of 24 points or 2.4% of your total grade.
Helpful Tips:


Work the practice problems before attempting the homework – your chances of
success are much higher. These practice problems give you the correct answer
and an explanation of how to work the problem as soon as you submit your
practice problem set.
If you work the book problem for homework prior to completing the homework
online, you will reduce the number of times you have to complete homework
and obtain the highest possible score.
Please don’t wait until the last minute to complete your homework or study for an exam. The
professors or your TAs may not be available to respond to homework questions or exam
questions at the last minute.

Extra Credit: You can complete the two additional homework assignments, as posted on
elms, for a total of 24 points (2.4%) of extra credit. You can also receive an additional 0.6%
(6 points) added to your grade in extra credit by completing BOTH a pre and post-assessment
for the course. This is to assess how much you have learned throughout the course. The pre
and post-assessments are on Connect and more will be discussed about this in class. Total
maximum possible extra credit points: 30 points or 3% of the grade.
Course Materials and TAs
Course materials including power point lecture notes, helpful web sites, and other course
information are posted on elms. Please check this web site regularly for updates. To get the
most out of class, you must come to class having read the chapter. You will be even more
prepared for class if you work some of the suggested end of chapter problems. The TAs are
valuable resources for the course. They will hold regular office hours and will be available to
review exams, help with project and homework assignments and answer questions about the
course material. While you will be assigned a TA based on your last name, feel free to go to any
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TA’s office hours, even if the TA is not your assigned TA, and email for help. The TA
assignments are primarily for grading purposes.
Course Policies
Honor Code and Academic Integrity
The University’s Code of Academic Integrity is designed to ensure that the principles of
academic honesty and integrity are upheld. All students are expected to adhere to this code. The
Smith School does not tolerate academic dishonesty. All acts of academic dishonesty will be
dealt with in accordance with the provisions of this code. Please visit the following web site for
more information on the University’s Code of Academic Integrity:
http://www.studenthonorcouncil.umd.edu/code.html. On each assignment you will be asked to
write out and sign the following pledge: “I pledge on my honor that I have not given or received
any authorized assistance on this exam/assignment.”
Classroom Policies
Please be considerate of the other students in the room. This means not talking, rustling papers,
etc. during class. I understand emergency needs, but please refrain from leaving early and
arriving late if possible. The slamming door is very distracting. However, the professors prefer
that you arrive late or leave early rather than not attend.
Special Needs
Any student with special needs or special accommodations needs because of disabilities should
bring this to your professor’s attention as soon as possible, but no later than the second week of
class. You should also inform your professor in advance of any intended absences for religious
observances or absences due to athletics or university activities.
Inclement Weather Policy
In case of inclement weather, check the University of Maryland homepage or call 301 405SNOW to check on cancellation status. If classes are cancelled, schedules will be adjusted
accordingly. It is very unlikely that exam dates will be changed from the dates stated in the
syllabus. It is possible that the material covered on the exam might be adjusted. Missed classes
will most likely be made up through recorded lectures.
Absence Policies
The university has a new policy for absences, approved in May 2011. The complete policy can
be found at: http://www.president.umd.edu/policies/v100g.html. For a single absence, The
University will accept as an excused absence a self-signed note from a student who has missed a
single lecture, recitation, or laboratory, attesting to the date of the illness. The note must also
contain an acknowledgement by the student that the information is true and correct and that
providing false information is prohibited under Code of Student Conduct. The student is also
obligated to make a reasonable attempt to inform the instructor of his/her illness in advance.
Students who miss more than a single class, whether consecutive or non-consecutive misses or
experience an illness during a Major Scheduled Grading Event, shall be required to provide
written documentation of the illness from the Health Center or from an outside health care
provider. Major grading events are the three mid semester exams, the final exam and the four
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project parts. In cases where written verification is provided, the Health Center or outside health
care provider shall verify dates of treatment and indicate the time frame that the student was
unable to meet academic responsibilities. The student is also obligated to make a reasonable
attempt to inform the instructor of his/her illness in advance.
Course Challenges
What is “rigor”? Sometimes individuals define it as the amount of homework associated with a
course; other times it might be construed as the level of difficulty or complexity of a particular
assignment. While both of these statements are correct, I define this as the process of developing
students’ critical thinking skills. This class will challenge you to think about the data, synthesize
it, blend it with your past and make new connections concerning the material.
In the 21st Century, the ability to engage in careful, reflective thought has been viewed in various
ways—as a fundamental characteristic of an educated person, as a requirement for responsible
citizenship, and more recently as an employability skill for an increasingly wide range of jobs.
Thinking skills are necessary tools in a society characterized by rapid change, ambiguous work
environments, alternative courses of action, and numerous individual or collective choices and
decisions. You will be measured (graded) to a large degree, upon your demonstrated ability to
apply, analyze, synthesize and evaluate key concepts presented as part of the curriculum. I would
like you to equate the term “rigor” with the process of thinking more critically.
It is important to realize at the outset that BMGT 340 is not a typical introductory course. It
requires a commitment to:
 attend classes;
 take responsibility for your own learning by reading the text and contributing
actively in class;
 learn course material well enough that you can apply it (not merely reproduce it
for examination purposes); and,
 be willing to learn through trial and error.
Participation in the course: Students who participate positively learn more and do better in the
course. Class participation is still part of the learning process and includes the following:
1. Preparation – reading and preparing before class.
2. Relevant participation – including creativity, insights, an understanding of
material, and linkages to theory discussed.
3. Verbal and non-verbal support – including respect and courtesy, attentiveness,
and on-time arrival.
4. Use of your computer at inappropriate times is unacceptable.
5. Please do not use the class listserv for personal messages at all.
Class Schedule
Please note that this class schedule is tentative. The most up to date calendar will be kept on the
web site. Consult this calendar frequently!! It will tell you what we're doing in class that day,
what assignments are due, etc. The exam dates will stay as scheduled here, but the material on
each exam may be different from what is listed in the syllabus, depending on what we have
covered by each exam date.
M/W classes
T/Th classes
Chapter/Assignment
Subject
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Wed., 1/23
Mon., 1/28
Wed., 1/30
Thurs., 1/24
Tues., 1/29
Thurs., 1/31
Introduction
Ch. 1
Ch. 2
Mon., 2/4
Tues. 2/5
Ch. 2
Wed., 2/6
Thurs., 2/7
Ch. 3
Mon., 2/11
Tues., 2/12
Ch. 3
Wed., 2/13
Thurs., 2/14
Ch. 5
Mon., 2/18
Wed., 2/20
Mon., 2/25
Wed., 2/27
Tues., 2/19
Thurs., 2/21
Tues., 2/26
Ch. 5/6
Ch. 6
Ch. 6
Exam 1, Ch. 1,2,3,5,6
Thurs., 2/28
Mon., 3/4
Wed., 3/6
Mon., 3/11
Wed., 3/13
Make up exam 1
Tues., 3/5
Thurs., 3/7
Tues., 3/12
Thurs., 3/14
Ch. 7
Ch. 7
Ch. 8
Ch. 8/12
3/17-3/24
Mon., 3/25
Tues., 3/26
Happy Spring Break!
Ch. 12
Wed., 3/27
Thurs., 3/28
Ch. 13
Mon., 4/1
Tues., 4/2
Ch. 13
Wed., 4/3
Thurs., 4/4
Ch. 13
Mon., 4/8
Exam 2, Ch. 7.8.12.13
Tues., 4/9
Make up exam 2
Wed., 4/10
Thurs., 4/11
Ch. 9
Mon., 4/15
Tues., 4/16
Ch. 9/10
Wed., 4/17
Thurs., 4/18
Ch. 10
Mon., 4/22
Tues., 4/23
Ch. 10
Wed., 4/24
Thurs., 4/25
Ch. 10/14
Mon., 4/29
Tues., 4/30
Ch. 14
Introduction to Corporate Finance
Financial Statements, Taxes and
Cash Flow
Financial Statements, Taxes and
Cash Flow
Working with Financial
Statements
Working with Financial
Statements
Introduction to Valuation: The
Time Value of Money
Discounted Cash Flow Valuation
Discounted Cash Flow Valuation
Discounted Cash Flow Valuation
No class for M/W classes; Evening
exam
No class for T/TH classes,
Evening exam
Interest Rates and Bond Valuation
Interest Rates and Bond Valuation
Stock Valuation
Stock Valuation/Some Lessons
from Capital Market Efficiency
Some Lessons from Capital
Market Efficiency
Return, Risk and the Security
Market Line
Return, Risk and the Security
Market Line
Return, Risk and the Security
Market Line
Evening exam. No class for M/W
students
Evening exam. No class for T/TH
students
Net Present Value and other
Investment Criteria
Net Present Value and other
Investment Criteria
Making Capital Investment
Decisions
Making Capital Investment
Decisions
Making Capital Investment
Decisions/Cost of Capital
Cost of Capital
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Wed., 5/1
Thurs., 5/2
Ch. 16
Mon., 5/6
Tues., 5/7
Ch. 16
Wed., 5/8
Exam 3, Ch. 9.10.14.16
Thurs., 5/9
Make up exam 3
Financial Leverage and Capital
Structure
Financial Leverage and Capital
Structure
Evening exam, No class for MW
students
Evening exam, No class for T/TH
students
Final Exam Schedule
Class Time
T TH 11-12:15 pm Hallows
M W 5-6:15 pm Munyan
T TH 12:30-1:45 pm Hallows
T TH 5-6:15 pm Hallows
T TH 3:30-4:45 pm Hallows
MW 2-3:15 pm White
MW 3:30-4:45 pm White
Section
0301
0401
0501
0601
0701
BL1
BL2
Final Exam time
Sat., May 11, 8-10 am
Wed., May 15, 4-6 pm
Thurs., May 16, 1:30-3:30 pm
Thurs., May 16, 4-6 pm
Fri., May 17, 10:30-12:30 pm
Wed., May 15, 1:30-3:30
Tues., May 14, 1:30-3:30
General Rules for Project and Extra Credit Assignment Submissions
Submitting Homework Assignments
 Always check to see that an assignment was submitted properly. Your homework grades
will show up in CONNECT. They will be manually posted to ELMS from CONNECT
periodically. Homework assignments are due according to the schedule on ELMS and
CONNECT. There are no extensions given for homework assignments.
Submitting Project Assignments
 Your project assignments will be posted directly on ELMS. More on this will be
provided later.
 A project assignment may be submitted up to 48 hours late for a maximum of 50% of
the points of the assignment. Note that if you do not submit properly, and discover this
after the deadline but before 48 hours after the deadline, you may email your TA the
assignment for up to a maximum of half credit. If you discover this after the 48 hours,
you will not receive credit. IT IS UP TO YOU TO VERIFY THAT ASSIGNMENTS
ARE SUBMITTED CORRECTLY BEFORE THE DEADLINE.
 If you have a documented, university-excused reason for not submitting on time, you can
email your professor before the assignment deadline, and depending on the circumstances
your assignment may be accepted for full or for partial credit. You must, however, email
your professor about your excuse before the assignment deadline (only extraordinary
exceptions to this rule, for example, you are (God forbid) in an automobile accident and
in a coma for 48 hours and cannot use a cell phone.) Note that job interviews, work
hours, oversleeping are not acceptable excuses.
Grading Your Assignment
 For any excel assignments, the cells in which there are calculations must include
formulas, not hard-coded numbers. In other words, don’t calculate numbers with your
calculator and then enter the numbers into the excel sheet – you must do the calculations
in excel. Note that if you copy and paste, often you will lose the formatting and will have
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to re-do the cell calculations. If your numbers cannot be checked you will receive only
partial credit, depending on the assignment. It is possible that with hard-coded numbers
you could receive a zero on the assignment. ALWAYS CHECK YOUR ASSIGNMENT
BEFORE SUBMITTING – CLICK ON A COUPLE OF CELLS AND MAKE SURE
THE CELLS WITH CALCULATIONS CONTAIN FORMULAS AND NOT
NUMBERS!
Grade Concerns
 If you question a grade, you must do so, in writing, within 3 weeks of the assignment
deadline. This includes: disagree with the grade given, no grade given. Your request for
a review should include why you believe points were incorrectly taken off and why they
should be restored. Grades for project or extra credit assignments will NOT BE
REVIEWED under any circumstances past the three-week deadline. .IT IS YOUR
RESPONSIBILITY TO MAKE SURE THAT YOUR SCORES ARE CORRECTLY
POSTED TO ELMS.
Textbook Options



Textbook: McGraw-Hill/Irwin publishes 2 versions of Ross, Westerfield, and
Jordan: Fundamentals of Corporate Finance, 9e: The Standard Edition and The
Alternate Edition. Note that these two versions are the same except that the Alternate
Edition includes 7 additional chapters (covering more advanced topics).Either version
of the book includes the content needed for BMGT 340. If you plan to also take
BMGT 440, the Alternate Edition may be a better reference tool.
CONNECT Access is also required for this course and it is a one-time use
code bundled with your textbook. DO NOT BUY a USED Access Card as it
will not work. McGraw-Hill’s Connect is a web-based assignment and
assessment solution required for this course. Connect is designed to assist you
with your coursework based on your needs.
CONNECT REGISTRATION: Go directly to Connect to register:
http://connect.mcgraw-hill.com/class/_finance_bmgt340_all_sections_spring_2013_1
Access codes are packaged with a new textbook in the bookstore. You can also
purchase Connect access online at the BMGT 340 Connect web address. We will go
over this process on the first day of class.
If you purchase Connect online, you will have the option of purchasing Connect or
ConnectPlus, which includes an interactive eBook to supplement the required textbook
for this course. NOTE: You can register in Connect and have access without a code for a
limited time period (typically three weeks). More information is provided below under
“Textbook and Connect Options”.
Support & Tips: If you have any issues while registering or using Connect, please
contact McGraw-Hill’s CARE team at 1-800-331-5094 (Mon to Thursday – 9AM to
11:30PM / Friday -9AM to 6PM / Sunday- 6PM to 11:30PM) or through
http://www.mhhe.com/support
To avoid problems related to unexpected technical issues, you are advised not to wait
until the last moment to complete assignments.
Textbook and Connect Options
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If you choose to buy an unbundled textbook, the access code can be purchased separately
in two ways & in two forms:
CONNECT PLUS (assignment & study tools with complete ebook).
CONNECT (assignment & study tools (without the ebook))
CONNECT and CONNECT PLUS can be purchased through e-commerce directly from
your instructor’s course web site, closer to the class start date.
The e-commerce costs:
Connect - $49.99
Connect Plus – with ebook $95.75
Connect Code Card ISBNS as separate (unbundled) items are:
0077326865 CONNECT CARD FUND CORP FIN
0077326881 CONNECT PLUS CARD FUND CORP FIN
UMD Bundle ISBN: 0077579755 or 9780077579753
Title: BMGT340: Fundamentals of Corporate Finance Alternate Edition, 9e with
ConnectPlus (University of Maryland College Park) © 2011
This is a discounted custom version of the Ross, Westerfield, and Jordan: Fundamentals
of Corporate Finance, Alternate 9e textbook, in binder-ready loose-leaf format with a
Connect Plus access code. It will be available in early August, only through the UMD CP bookstores ($114.00 NEW - Retail cost at UBC store) and www.shop.mcgrawhill.com.
Traditional Hardbound Textbook ISBNs:
1. Fundamentals of Corporate Finance Standard Edition [Hardcover] Stephen Ross,
Randolph Westerfield, Bradford Jordan
∙ ISBN-10: 0073382396 or ∙ ISBN-13: 978-0073382395
This ISBN includes the Standard edition textbook - You will need an access code in
addition to this ISBN.
2. Fundamentals of Corporate Finance with Connect Plus Access Card [Hardcover]
Stephen Ross, Randolph Westerfield, Bradford Jordan
∙ ISBN-10: 0077388186 or ∙ ISBN-13: 978-0077388188
This ISBN is OK, it includes the Standard Edition textbook & the Access Code you will
need for assignments.
3. Fundamentals of Corporate Finance Alternate Edition [Hardcover] Stephen Ross,
Randolph Westerfield, Bradford Jordan
∙ ISBN-10: 0077246128 or ∙ ISBN-13: 978-0077246129
This ISBN is the textbook only. You will need an access code in addition to this ISBN.
4. Fundamentals of Corporate Finance Alternate Edition with Connect Plus Access Card
[Hardcover] Stephen Ross, Randolph Westerfield, Bradford Jordan
∙ ISBN-10: 9780077388195 or ∙ ISBN-13: 978-0077388195
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This ISBN is OK – it includes the textbook & access code you will need for assignments.
Here is the direct to student ecommerce web link for purchase of the
printed Loose-Leaf textbook with Connect Plus:
BMGT340: Fundamentals of Corporate Finance, Alternate Edition
w/ConnectPlus PPK (Univ of Maryland College Park - COLH) 0077579755
$90.00
Go to: www.shop.mcgraw-hill.com and search with ISBN: 0077579755 or go directly to the
purchase page at:
http://www.mhprofessional.com/mhhe_product.php?isbn=0077579755&cat=108
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