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Course Outline
Department:
School of Management
Course Number:
Course Title:
FMGT 2474
Financial Management I
Semester Year:
Days:
Classroom:
Fall 2011
Mondays & Wednesdays
B148
Credits: 3
Section: 001
Hours: 12:30 – 14:20
Instructor Contact
Name:
Aziz Rajwani, CA
Office (Room No.) B253k
Phone: 604-323-5845
Office Hours:
Mon & Wed 11:30 – 12:20
Tue & Thurs 2:30 – 4:20 and Tuesdays 4:30−5:20
Other times by appointment.
E-Mail:
arajwanil@langara.bc.ca
E-Mails will be answered within 24 hours (during weekdays).
Course Description
FMGT 2474 builds upon essential financial concepts introduced and developed in Financial
Management I (FMGT 2371). In this course, the focus lies with investment and rate of
return analysis of major business investments, with capital budgeting analysis, with cost of
capital and with capital structure. While 2371 concerned itself more with operational, shortterm and medium-term financial analysis and strategies, 2474 looks at more fundamental,
longer-term decision-making and its relationship to capital markets.
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Learning Objectives/Outcomes
Learning Objectives/Outcomes
Calculate the net present value (NPV) of a capital
budgeting project and decide whether it should be
undertaken.
Calculate the payback period, the discounted payback
period, the profitability index and internal rate of return of a
capital budgeting project.
Calculate the NPV of a capital budgeting project where
revenues and/or expenses are growing at a certain rate for
a period of time.
Calculate the equivalent annual cost of projects with
dissimilar lives.
Calculate the NPV of bond and/or preferred share
refinancing and whether refinancing should occur.
Describe the differences between bonds, preferred shares
and common shares.
Calculate a company’s weighted average cost of capital.
Calculate the indifference EBIT between different capital
structures.
Describe the different capital structure theories.
Calculate the NPV of a lease vs. buy decision.
Describe the different dividend policy theories.
Measurement
Assignments, Midterm 1
Assignments, Midterm 2
Assignments,
comprehensive Final
exam
Prerequisite(s)
None
University Transferability
Refer to www.bccat.bc.ca for transferability and whether credits are assigned or
unassigned.
Required Textbook and Calculator
Introduction to Corporate Finance, by Laurence Booth and W. Sean Cleary, 2nd Edition,
Wiley 2010. You can also use the First Edition. We do NOT use WileyPlus. The textbook’s
website has (useful) materials for students: www.wiley.com/canada/booth
A business calculator which can perform discounted cash-flow calculations is required.
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I will be using a Hewlett Packard 10BII (or 10B, or 10BII+) for in-class demonstration.
Thus, unless you already have a business calculator, I highly recommend that you purchase
the HP 10BII. The Texas Instruments Business Analyst II, the Sharp Business
Calculator (EL733-A and EL-738) and the TI-83/84 Graphing Calculator are also capable
of performing discounted cash-flow calculations; however, the Texas Instruments
Business Analyst (BA35) is not capable of performing certain discounted cash-flow
calculations.)
The website www.tvmcalcs.com has some useful/helpful materials.
Recommended Readings
Any readings (in addition to the required textbook readings) will be announced in class.
Blackboard
Assignment templates and other instructional materials will be posted on Blackboard.
Students are expected to regularly check Blackboard (and their Langara email accounts) for
messages from the instructor.
Grade Allocation
Assignments
Midterms 1 and 2
Comprehensive Final
TOTAL
A+
A
A-
95-100%
90-94%
85-89%
10%
55%
35%
100%
B+
B
B-
80-84%
75-79%
70-74%
C+
C
C-
65-69%
60-64%
55-59%
D
F
50-54%
<50%
Students will have to pass the examination portion of the grade in order to pass the
course- i.e., obtain at least a 45/90 on the mark derived from the midterms and the final
[(MTsx55% + FINALx35%) ≥ 45%].
Projects, Case Studies
As directed by your instructor during the course.
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Expectations
You are responsible for all course content and are therefore responsible for knowing what
has been covered and said in all classes. Your instructor will not provide answers to e-mails
requesting a restatement of what has been said in a previous class. Furthermore, you are
expected to read and be prepared to discuss material assigned prior to the class.
Langara College welcomes all students into an environment that creates a sense of
community of pride and respect; we are all here to work cooperatively and to learn together.
You are encouraged to participate actively in class and contribute to the creation of a
positive learning environment.
All assignments must be handed in at the beginning of the class on the due date. Students
who arrive late should submit their assignments at that time. No late assignments will be
accepted unless arrangements have been made with the instructor before the due
date/time.
Where applicable, assignment templates (.pdf files) will be posted for each assignment on
Blackboard. Assignments/examinations should be submitted with your Last (Family) Name,
First (Given) Name (e.g., Rajwani, Aziz).
You are expected not to make any travel plans on exam dates. There will not be any
alternative date and/or time for the midterms or the final exam without your instructor’s
permission. There will be no exceptions to this rule unless there are exceptional
circumstances (with appropriate supporting documentation) or medical reasons. Therefore,
if you miss an exam, assignment or deadline, you are required to contact your instructor
prior to the exam, assignment or deadline and provide a doctor’s note for verification or you
will receive 0%.
Any class work, which is not completed because you were late for, or missed, a class, will
receive 0%. Remember that it is your responsibility to attend class, keep up with the
course, know what has been covered etc. If you miss a class, information will not be
repeated for your sole benefit.
Attendance in class is expected. This course demands regular and continuous effort
directed at problem solving preparation for examinations that integrate various topics. Each
chapter has comprehensive review problems with solution and these are highly
recommended for your study.
Additionally, all electronic communication and music devices (e.g. cell phones, pager, CDplayers, mp3-players, etc.) must be turned off or muted while in class. Cellular phones,
pagers, electronic translators and programmable calculators are not allowed during
examinations. Buy a watch to keep track of time during examinations.
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Overall, you are expected to follow the ordinary rules of courtesy during class sessions.
Students whose behaviour is unacceptable will be asked to leave the class.
For more details, please refer to Langara’s Code of Conduct in the course calendar or
Student Policies and Procedures on Langara’s website at www.langara.bc.ca.
My role as your instructor is to help you and to provide any additional coaching or tutoring
that you may need. Please use me as a resource.
Plagiarism and Cheating Policy
Plagiarism and cheating are serious educational offences, which may result in failure of an
assignment, failure in a course, and possible suspension from Langara College. For further
details, please refer to Langara’s Code of Conduct in the College calendar or Student
Policies and Procedures on Langara’s website at www.langara.bc.ca
School of Management
It is the aim of the School of Management of Langara College to promote throughout each
course the mastery of core skills such as reading and reading comprehension, writing
fluency, verbal articulation, and math development. These core skills will be practiced by
means of student presentations and/or class participation, and will be evaluated on
submitted work. Critical thinking and problem solving exercises will be encouraged at every
opportunity.
As stated in the College Calendar and according to College policy, students are expected to
attend all classes, lectures, laboratories, workshops, seminars, and practicum commitments,
and be available to write final examinations where and when scheduled during the
examination period.
Students are also reminded to refer to policies and procedures related: Code of Academic
Conduct, Improper/Disruptive Behaviour, Appeal of Final Grades, Concerns Related to
Instruction, Attendance, etc. found in the College Calendar and in the current Student
Handbook.
For more information about the School of Management programs, please contact the
School’s advisors (see Advising Schedule posted at the entrance to the B253 offices), or email business@langara.bc.ca.
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Course Schedule
The course schedule is tentative and subject to change. Midterm dates will be
confirmed in class.
Date
Sep. 7,
12, 14,
19
Topic
Cash Flow Estimation and Capital
Budgeting Decisions
The Canadian Tax System
Textbook Readings – 2nd Edition
Chapter 14 (IGNORE CCA recapture and terminal
losses and pages 572-575). Topic 14.5 to be
covered on Sep. 28.
Chapter 3: Topic 3.5 (pages 89-93 BUT IGNORE
CCA recapture and terminal losses)
Sep. 21,
26
Capital Budgeting, Risk
Considerations, and Other Special
Issues
Inflation and Capital Budgeting
Decisions
Independent and Interdependent
Projects
Callable Bonds and Bond/Preferred
share Refinancing
Equity and Hybrid Instruments
Midterm One [Chapters 3, 13 and 14]
Chapter 13: Topic 13.3 to be covered on Oct. 3.
Shareholders’ Equity
Initial Public Offerings
Chapter 19 (pp. 740-744)
Chapter 17 (pp. 690-691 and 696-697)
Sep. 28,
Oct. 3
Oct. 5,
17
Oct. 12
Oct. 19
Oct. 24, Cost of Capital
26, 31,
Nov. 2, 7
Oct. 28
Last day to Withdraw
Chapter 14: Topic 14.5 (pp. 579-583)
Chapter 13: Topic 13.3 (pp. 528-532)
Class Handout (from different textbook)
Chapter 19: Topic 19.2 (pp. 747-750)
Chapter 20 (IGNORE “Fed Model” pp. 801-802
and Topic 20.7)
Nov. 7,
9, 14
Nov. 16
Capital Structure Decisions,
Chapter 21 (Financial Leverage: pp. 827-832;
Question/Answer Session
Topics 21.5, 21.6 and 21.7)
Midterm Two [Chapters 19, 17, 20 and 21 and Handout (from different textbook)]
Nov. 21,
23, 28
Nov. 30
Leasing
Chapter 16
Dividend Policy
Chapter 22: Topics 22.1, 22.2, 22.5 and 22.6
(IGNORE Repackaging Dividend-Paying Securities)
Final exams will be held from Dec. 5 – Dec. 16. The date and location of the final
exam is determined by the College and will be posted on the College’s website
(usually) by the end of October.
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Textbook Readings – 1st Edition
Chapter 14 (IGNORE CCA recapture and terminal
losses and pages 560-563). Topic 14.5 to be
covered on Sep. 28.
Chapter 3: Topic 3.5 (pages 83-88 BUT IGNORE
CCA recapture and terminal losses)
Chapter 13: Topic 13.3 to be covered on Oct. 3.
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Topic
Cash Flow Estimation and Capital
Budgeting Decisions
The Canadian Tax System
Capital Budgeting, Risk Considerations,
and Other Special Issues
Inflation and Capital Budgeting Decisions
Independent and Interdependent Projects
Callable Bonds and Bond/Preferred share
Refinancing
Equity and Hybrid Instruments
Shareholders’ Equity
Initial Public Offerings
Cost of Capital
Chapter 14: Topic 14.5 (pp. 565-569)
Chapter 13: Topic 13.3 (pp. 519-523)
Class Handout (from different textbook)
Chapter 19: Topic 19.2 (pp. 735-738)
Chapter 19 (pp. 728-732)
Chapter 17 (pp. 678-680 and 684-686)
Chapter 20 (IGNORE “Fed Model” pp. 791-793
and Topic 20.7)
Chapter 21 (Financial Leverage: pp. 817-822;
Topics 21.5, 21.6 and 21.7)
Chapter 16
Chapter 22: Topics 22.1, 22.2, 22.5 and 22.6
(IGNORE Repackaging Dividend-Paying
Securities)
Capital Structure Decisions
Leasing
Dividend Policy
ASSIGNMENT SCHEDULE***
NUMBER
DUE DATE***
1
Sep. 21
2
Sep. 28
3
Oct. 5
4
Oct. 24
5
Nov. 9
6
Nov. 14
7
Nov. 30
*** Subject to change
Assignments will be posted on Blackboard and (where applicable) should be submitted on
the templates provided (print the .pdf file). Only submit the pages starting with “Name (Last,
First) ____________________”.
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