SCHOOL OF BUSINESS ADMINISTRATION
SYLLABUS
FINC-301
FINANCIAL MANAGEMENT
FALL 2015
Instructor
Office
Phone
E-mail
Web Page
Office Hours
appointment
: Dr. D.K. Malhotra
: 104B Tuttleman Building
: (215) 951-2813
: Malhotrad@philau.edu
: http://faculty.philau.edu/MalhotraD
: 11.00 a.m. – 12:30 p.m. Mondays and Wednesdays or by
Required Text:
Foundations of Finance: The Logic and Practice of Financial Management by
Keown, Martin, and Petty, 8th Edition, Prentice Hall/Pearson, ISBN-10: 0133423999
Calculators:
A calculator that has a power function will be necessary for the course. Relatively
inexpensive will suffice. No programmable (text storing) calculators will be allowed
for tests. Calculators performing financial functions are allowable. If you have a
smartphone, you can download financial calculator application on it. IT IS
MANDATORY TO BUY A BUSINESS/FINANCIAL CALCULATOR FOR THIS COURSE.
Digital Resources: Power point notes will be available on http://bb.philau.edu
Course Description:
This is an introductory level finance course that will examine the role of the
financial decision-maker at the corporate level. The emphasis will be on the goal of
the firm, the efficient market hypothesis, discounted cash flow analysis, and the
trade-off between risk and return.
Prerequisite:
All students must have completed ACCT 101, STAT 201, or MATH 321.
It is the students' responsibility to make certain that they have successfully completed
these courses. If at any time during the semester it is learned that a student has not
successfully completed these prerequisites, he/she will be dropped from the course
receiving, neither credit nor tuition refunds.
Course Objective:
The objective of the course is to teach students how to approach and solve the
fundamental financial problems facing all businesses including non-profit and
government. Each topic explored in the course represents a real-life financial
problem facing the "firm". Much of what the students will learn currently is in use in
firms across the state and nation.
Course Outcomes:
A successful student should have the ability to
 use a financial calculator and excel spreadsheet in finance
 Understand the goal of a firm
 Understand the external financial environment
 Compute expected return and risk of a security?
 understand the significance of portfolio and compute risk and return of
portfolio
 explain the concept of beta and application to portfolio theory
 compute present and future value of a series of cash flows
 identify an annuity and a perpetuity
 distinguish between preferred and common stock
 compute the value of common stock and preferred stock
 explain the basic features of bonds
 compute fair market value of bond
 distinguish between current yield and yield to maturity
 compute payback period and interpret it
 compute Net Present Value and interpret it
 compute IRR and interpret it
 compute PI and interpret it
Requirements:
1.
2.
3.
Attend class regularly.
Do homework.
Study class notes prior to next class and come prepared to the class to participate
actively in discussions.
4. Be able to take time pressure tests.
Attendance:
Attendance is mandatory. You are responsible for what is covered in the class and
any absence on your part leaves you responsible for finding out what was presented
in class. You will benefit a lot from the course by doing problems and reviewing
concepts, which are covered in the class.
Grading:
EXAM I
EXAM II
FINAL EXAM
QUIZZES
Class Participation
25%
25%
25%
15%
10%
No late homework will be accepted. No makeup exams will be given. If you miss an
exam due to an unavoidable reason, the grade on the missed exam will be
transferred to the final exam. THE FINAL EXAM IS COMPULSORY AND
COMPREHENSIVE. DO NOT EXPECT ANY SCALING ON THE GRADES.
Help Sessions:
I do plan on devoting a class before each exam reviewing the material that will be
covered on the test.
Academic Honesty:
Students are expected to perform according to a code of academic honesty that
prohibits cheating on tests and plagiarizing others’ work. Violation of this code may
result in failure of the course.
Disability Services (http://www.philau.edu/disabilityservices/index.html)
Philadelphia University does not discriminate on the basis of disability, in
accordance with the Americans with Disabilities Act and Section 504 of the
Rehabilitation Act of 1973. The University makes accommodations for students
with disabilities who seek accommodations in the classroom. All students
interested in receiving accommodations must contact the Office of Disability
Services by email at DisabilityServices@philau.edu, phone at (215.951.6830) or
office visit. The office is located in Kanbar 102D. Students requesting
accommodations in the classroom must present a current accommodation letter
from the Office of Disability Services to the instructor, before accommodations may
be made. Philadelphia University works with students with disabilities regarding
equal access to all services and programs. Requests for accommodations may be
made at any time (although accommodations are not retroactive). The University
encourages all students who have any inquiries to contact Disability Services.
Grading Policy:
The following policy will be followed for assigning letter grades in this course.
o
o
o
o
o
o
o
o
o
o
o
93 and above
90<93
87<90
83<87
80<83
77<80
73<77
70<73
65<70
60<65
Less than 60
A
AB+
B
BC+
C
CD+
D
F
Retention of Student Exams, Papers, etc:
Students’ materials will be retained for a minimum of four weeks into the
subsequent semester.
Academic Support Services:
Learning and Advising Center
Gutman Library
Technology Assistance
:
:
:
http://www.philau.edu/learning
http://www.philau.edu/library
http://www.philau.edu/OIT
Inclement Weather Policy
To ensure the continuation of student learning in time of emergencies, including
severe weather, it is the policy of Philadelphia University not to cancel classes.
However, if on campus sessions are not possible, students are responsible for
checking their university email and/or Blackboard for information regarding
holding of classes through online adobeconnect.
TENTATIVE COURSE OUTLINE:
08/25
Introduction to Financial Management (Chapters 1)




Forms of Business Organization
Goal of the Firm
Why Managers should maximize shareholders’ wealth
Ethics and Shareholder Wealth Maximization
08/27
Shareholder Wealth Maximization and Motivating Management
(Chapter 1)
09/01
Financial Environment (Chapter 2)



Role of Financial Markets
Types of Financial Markets
Primary versus Secondary Markets
09/03
Financial Environment (Chapter 2)
09/08
Risks and Return (Chapter 6)
 Meaning of Risk
 Meaning of Return
o Actual Return
o Expected Return of a Security
09/10
Risks and Return (Chapter 6)



09/15
09/17
Measurement of Expected Return of a Security
Risk of a Security
Measurement of Risk of a Security
Risks and Return (Chapter 6)
 Meaning of a Portfolio
 Why Create a Portfolio?
 Expected Return of a Portfolio
Risks and Return
 Measurement of Expected Return
 Risk of a Portfolio
 Measurement of Risk of a Portfolio
09/22
Risks and Return


Capital Asset Pricing Model
Security Market Line
09/24
Risk and Return and Review for Exam I
09/29
Exam I
10/01
Time Value of Money
 Meaning of Time Value of Money
 Why time value of money?
 Concept of Present Value and Discounting
 How to compute future value of a single cash flow?
 Concept of Future Value and Compounding
 How to compute future value of a single cash flow?
10/06
Time Value of Money (Chapter 5)
 Calculation of Interest Rate
 Calculation of time period
10/08
Time Value of Money (Chapter 5)
 The Effect of Compounding
 Multiple Cash Flows and Present Value
10/13
Time Value of Money (Chapter 5)
 Annuities
10/15
Time Value of Money
 Perpetuities
10/20
Bond Valuation (Chapter 7)


10/22
Features of a Bond
Valuation of an Annual Bond
Bond Valuation (Chapter 7)


Valuation of Semiannual Bonds
Bond Yields
10/27
Stock Valuation (Chapter 8)




Features of a Stock
Valuation of a Stock
Zero Growth Model
Constant Growth Model
10/29
Stock Valuation and Review for Exam 2
11/03
Exam 2
11/05
Capital Budgeting Analysis (Chapter 10)




11/10
Meaning and Significance of Capital Budgeting
Techniques of Capital Budgeting
Payback Period
Internal Rate of Return
Capital Budgeting Analysis (Chapter 10)




Modified Internal Rate of Return
Net Present Value
Profitability Index
Evaluation of various techniques of capital budgeting
11/12
Capital Budgeting Analysis (Chapter 10)
11/17
Capital Budgeting Analysis (Chapter 10)
11/19
Cash Flows Estimation for Capital Budgeting (Chapter 11)




11/24
Project Cash flows and Risk Analysis (Chapter 11)


11/26
Significance of Estimation of Project Cash Flows
Relevant versus Irrelevant Cash Flows
Impact of Net Working Capital Change on Project Cash Flows
How to Estimate Project Cash Flows?
Project Risk Analysis
How to Evaluate Projects in the Presence of Risk?
Thanksgiving Break (No Class)
12/01
Cost of Capital (Chapter 9)


12/03
Concept of Weighted Average Cost of Capital
Cost of each component of capital
Cost of Capital (Chapter 9)
 How to Calculate WACC?
 Review for Final Exam