Corporate Finance
March / April 2009
Instructor:
Contact info:
Arshad Ahmad, PhD
arshad@jmsb.concordia.ca
Text:
Berk, J., & DeMarzo, P. (2007) Corporate Finance.
Pearson. ISBN: 0-201-74122-9
Other:
Ahmad, A. (2007) Corporate Finance: Financial Decisions, Time Value,
Investment Techniques. Permachart.
A financial calculator is required for this course.
Objectives & Learning Outcomes:
To welcome you in discovering the exciting discipline of corporate finance! To encourage you to
work with financial information and to participate in making financial decisions. To get a deep
understanding of the fundamental concepts and to think critically about controversial issues in
financial management. The course also provides opportunities to practice, problem solve and apply
concepts.
At the end of this course, you should be able to:





Understand the terminology and basic concepts underlying financial management.
Develop a conceptual framework for foundation topics including valuation, investment,
financing and risk management.
Problem-solve and improve your analytical skills that address fairly complex financial
management issues.
Identify major & minor problems in case settings & apply tools and concepts to real world issues.
Increase your confidence to participate in financial decisions.
Evaluation
Participation
Assignment 1
Assignment 2
Case 1
Case 2
Final Exam
Total
10.0
10.0
10.0
15.0
15.0
40.0
100.0
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Course Schedule
Date
Chapter (BD Text)
Topics
MARCH
14
17
21
Review(Ch.1, 4 & 5)
1: The Corporation; 4: Time Value of Money;
5:Interest Rates
Practice Problems in class
Handout
8: Valuing Bonds
8.1 Cash Flows, Prices & Yields
8.2 Dynamic Behavior of Bond Prices
8.3 The Yield Curve
8.4 Corporate Bonds
9: Valuing Stocks
9.1 Prices, Returns & Investment Horizon
9.2 Dividend-Discount Model
9.3 Total Payout & Free-Cash Flow
9.4 Valuation Based On Comparables
6: Investment Rules
6.1 NPV
6.2 Alternative Decision Rules
6.3 Mutually Exclusive Opportunities
6.4 Selection with Resource Constraints
7: Capital Budgeting
7.1 Forecasting Earnings
7.2 Free Cash Flow & NPV
7.3 Analyzing the Project
Mini Case on Relevant
Cash Flows
Handout
Review Assignment
Case Discussion
ASSIGNMENT 1 DUE
CASE 1: The Super Project DUE
2
Date
Chapter (BD Text)
Topics
APRIL
21
10: Capital Markets &
The Pricing of Risk
23
14: Capital Structure
In A Perfect Market
28
10.5 Common vs Independent Risk
10.6 Diversification
10.7 Estimating Expected Returns
10.8 Risk & the Cost of Capital
10.9 Capital Market Efficiency
14.1 Equity vs Debt Financing
14.2 Modigliani-Miller I
14.3 Modigliani-Miller II
14.4 Capital Structure Fallacies
14.5 MM: Beyond Propositions
15: Debt & Taxes
15.1 The Interest Tax Deduction
15.2 Valuing The Interest Tax Shield
15.3 Recapitalizing
15.5 Optimal Capital Structure with Taxes
18: Capital Budgeting
& Valuation with Leverage
18.1 Overview
18.2 The Weighted Average Cost of Capital
18.3 The Adjusted Present Value Method
18.4 The Flow-To-Equity Method
18.5 Project-Based Costs of Capital
18.6 APV With Other Leverage Policies
18.7 Other Effects of Financing
ASSIGNMENT 2 DUE
30
Review Chapters
Closure
&
CASE 2: Fojtasek Companies DUE
3
Evaluation Details
Participation – 10%
For each lecture, you will be asked to identify at least three concepts, terms or issues related to the required
reading. You are also encouraged to ask questions and contribute to class discussion
2 Assignments (Individual or Group Activity) - 20%
Each assignment will consist of 30 percent theory and the remainder will be problem solving. The format
will include true/false, multiple choice and open ended questions and will simulate the final exam.
2 Cases (Group Activity) 30%
A case report consists of defining the problem, conducting analysis, and arriving at a conclusion(s) for
action. The length of the report is 3 pages, 12 font, double spaced. There are no limits to appendices. Case
Reports must use the following format:
Introduction & Problem Statement:
Summarize and highlight events and information from the case that provides a context for your problem
statement and analysis. Identify the main issue or central problem that you will address as well as other
related issues. Max length: ½ page.
Analysis:
Specify any assumptions to proceed with case information. Using case information only, develop
arguments supported by calculations. Demonstrate deep understanding of the issues. Present evidence to
back up and substantiate decisions that you have undertaken. Determine and weigh alternative courses of
action. Max length: 2 pages.
Conclusions:
Summarize how you have addressed the main problem and related issues. Detail follow up and
recommendations. Max length: ½ page.
Important:
Imagine your report will be submitted to a client or a superior in the organization. It should follow
professional report writing standards and avoid unnecessary jargon.
Final Exam 40%
The Final Exam will be 3 hours long and will consist of 30 percent theory and the remainder (70 percent)
will be problem solving. The format will include true/false, multiple choice and open ended questions.
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ARSHAD AHMAD, Ph.D.
Dr. Arshad Ahmad is an Associate Professor in the Department of Finance at Concordia University in
Montreal, Canada. Dr. Ahmad has led his faculty in numerous pedagogical innovations. He was the first to
introduce an elective web based course in Personal Finance, which today attracts over 500 students each
semester. He was also the first to design business courses using theory-based models from cognitive and
instructional science. For his PhD thesis, he validated an open learning model that earned him the George L.
Geis best dissertation award in higher education.
Winner of several teaching awards, Dr. Ahmad was awarded a 3M National Teaching Fellowship in 1992
for teaching excellence and educational leadership. For the past six years, he has been Coordinator of the
Fellowship Program. Dr. Ahmad has also produced a rich variety of learning materials that include three
textbooks, several supplements, case studies, video series, CD ROMs, web-course frameworks, and other
devices on the world wide web.
For his expertise in Corporate Finance, Interdisciplinary Curriculum design, Technology Integration,
Pedagogy and Professional Development, Dr. Ahmad has been invited to give seminars and workshops to
Universities & Colleges across Canada. He has also worked extensively in both the public and private sector
Institutions in the US, Germany, France, Latvia, Lithuania, Slovenia, Serbia, Trinidad & Tobago, China, and
Pakistan as a trainer, consultant and seminar leader.
Arshad Ahmad, Ph.D.
Associate Professor
3M Teaching Fellow & Program Coordinator
Concordia University
1455 deMaisonneuve West
Montreal, Que. H3G 1M8
(514) 848-2424 extension 2928
email:arshad@jmsb.concordia.ca
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