ROCKHURST UNIVERSITY
HELZBERG SCHOOL OF MANAGEMENT
Essentials of Finance
FN 3000
Spring 2011 (Revised)
______________________________________________________________________________
INSTRUCTOR:
Dr. Sudhakar Raju
OFFICE:
Conway 311
OFFICE HOURS:
M, W 2 – 3.30 pm & by appointment
TELEPHONE:
(816) 501-4562
E-MAIL :
SUDHAKAR.RAJU@ROCKHURST.EDU
FAX:
(816) 501-4650
______________________________________________________________________________
REQUIRED TEXT: Ross, Westerfield and Jordan, Essentials of Corporate Finance, McGraw-Hill
Irwin Inc., Seventh Edition. (Earlier editions are also acceptable).
CALCULATOR: Hewlett-Packard (H-P) 10B II Business calculator.
(Note: Programmable calculators are not allowed. The use of programmable calculators in class
examinations will be construed as cheating)
COURSE WEBSITE: Problem sets, answers to problem sets, practice exam questions, course
syllabus, course announcements, etc. are posted on my website. You can access the website by
accessing the Rockhurst CTE (Centre for Teaching Excellence) site at http://cte.rockhurst.edu. Find
my name under the Faculty Directory listing and click on it to access the website.
COURSE DESCRIPTION: This course is an introduction to the important areas of corporate
managerial finance. Emphasis is placed upon developing an understanding of the tools and
methodologies available to the financial manager for decision-making in such areas as capital
budgeting, working capital management, capital structure and profit planning and control.
Prerequisites: AC 2000 and AC 2100, or AC 4500; EC 2000 and EC 2100 (or EC 2050 and EC 2150),
or EC 4550; Statistics or EC 4500; Junior Standing.
COURSE OBJECTIVES: After completing this course, students should be able to:
1. Read, analyze and interpret financial statements and financial ratios.
2. Value financial instruments and determine cost of capital.
3. Apply financial and quantitative techniques.
4. Select and implement appropriate capital budgeting and valuation techniques to
evaluate projects.
5. Effectively communicate the results of financial analysis.
6. Discuss the ethical dimensions of financial decision-making.
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COURSE REQUIREMENTS
1. A college level Algebra (Finite Mathematics) class
2. A college level Economics or Accounting class
3. Basic knowledge of EXCEL
EVALUATION
Exam 1
Exam 2
Exam 3
Quizzes/Papers/Projects
Optional Comprehensive Exam:
25%
25%
25%
25%
Comprehensive exam that may be substituted for any of the
above exams
___________________________________________________________________
TOTAL
100%
Your final grade for the course is determined as follows:
A = 91 - 100%
A- = 88 - 90%
B+ = 85 - 87%
B = 80 - 84%
B- = 76 - 79%
C+ = 67 - 75%
C = 63 - 66%
C- = 60 - 62%
D+ = 57 - 59%
D = 51 - 56%
F = 0 - 50%
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POLICIES
1. ASSIGNMENTS: You will get the most from the lectures if you get the required reading done
before you come to class. I will also hand out problem sets periodically.
2. ATTENDANCE: You are required to come to all classes. If you are absent from a class you should
get notes from a classmate and you are, of course, responsible for any tests or assignments missed.
Excessive absences will result in a semester grade of DF. The college policy on attendance is
contained in the Rockhurst University Catalog.
3. MAKE-UP EXAMS: If you miss a mid-term examination, the mid-term exam must be made up by
taking the comprehensive exam. Make-up exams are considered on a case by case basis. The HSOM
follows the University’s policy and schedule regarding make-up final exams in accordance with the
final exam schedule published by the Office of the Registrar. Make up exams will only be
administered by the HSOM on the dates and times indicated by the registrar. In addition, a $20
dollar fee will be collected from the student per university policy.
4. STUDENTS WITH DISABILITIES: Rockhurst University is committed to providing reasonable
accommodations for students with disabilities. Please contact Sandy Waddell in Access Services
(Massman Hall, Room 7, 501-4689, sandy.waddell@rockhurst.edu) to provide documentation and
request accommodations. If the Access Office has already approved accommodations, please
communicate with the instructor(s) of this course regarding these arrangements by the second
week of class in order to coordinate receipt of services.
5. RU OFFICIAL POLICY REGARDING STUDENT CONTACT INFORMATION: Student contact
information must be kept current in order to receive important notices from Rockhurst University.
Your contact information is online via your Banner Web account. Please check your local address,
local phone number, and emergency contact information on Banner Web and revise as needed. All
important university notices will be sent only to your RU email address. Please check your RU email
account in addition to any other email accounts you may have. Accounts are activated at the
Computer Services Help Desk (Conway 413).
6. RU ACADEMIC HONESTY POLICY: RU does not tolerate plagiarism and cheating. The Rockhurst
University Catalog provides examples of academic dishonesty and outlines the procedures,
penalties, and due process accorded students involved in academic dishonesty. All infractions will be
immediately referred to the Dean's office. In your research paper, make sure you provide citations
for all ideas and information that are not your own.
7. CLASSROOM ETIQUETTE: RU requires its students to convey themselves with decorum. Leaving in
the middle of class, using cell phones and pagers during class, surfing the Internet during lectures,
talking with other students, reading newspapers, etc. violates appropriate classroom conduct.
Usage of laptops during class lectures is not allowed. Violation of appropriate classroom conduct
may result in being dropped from the course.
I reserve the right to make any amendments to this syllabus.
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TOPICS OUTLINE
SECTION 1: FINANCIAL STATEMENTS ANALYSIS
CHAPTER 1
INTRODUCTION TO FINANCIAL MANAGEMENT
Forms of Business Organization
Goal of Financial Management
Financial Markets and the Corporation
CHAPTER 2
FINANCIAL STATEMENTS, TAXES & CASH FLOWS
Features of Bonds, Preferred Stock & Common Stock
The Balance Sheet
The Income Statement
Cash Flows
CHAPTER 3
WORKING WITH FINANCIAL STATEMENTS
Sources and Uses of Cash
Financial Statements Analysis: Ratio Analysis
DuPont Analysis
Internal & Sustainable Growth
EXAM 1:
TBA (To be Announced)
SECTION 2: THE BASICS OF VALUATION
CHAPTER 4
THE TIME VALUE OF MONEY
Present and Future Value of a Lump Sum
Present and Future Value of an Annuity
Annual Percentage Rate, Effective Annual Rate
CHAPTER 5
DISCOUNTED CASH FLOW VALUATION
Multiple Cash Flows
Annuities & Perpetuities
Loan Types & Loan Amortization
Mortgages & Auto Loans
Retirement Planning
EXAM 2:
TBA (To be Announced)
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SECTION 3: FINANCIAL MARKETS, BOND & EQUITY VALUATION
CHAPTER 6
INTEREST RATES & BOND VALUATION
Bond Features, Bond Values and Yields
Types of Bonds
Interest Rate Risk
Interpreting Bond Quotes from the Wall Street Journal
The Term Structure of Interest Rates
CHAPTER 7
EQUITY MARKETS & STOCK VALUATION
Common Stock & Preferred Stock
Stock Valuation Models
Zero Growth, Constant and Non-Constant Growth Models
Institutional Organization of Stock Markets: NYSE
Interpreting Stock Quotes from the Wall Street Journal
SECTION 4: PROJECT VALUATION & CAPITAL STRUCTURE
CHAPTER 8
NET PRESENT VALUE & OTHER INVESTMENT
CRITERIA
Regular and Discounted Payback Methods
Net Present Value
Internal Rate of Return
Mutually Exclusive & Independent Projects
NPV Profiles and the Cross-Over Rate
Unconventional Cash Flows
CHAPTER 12 & 13
COST OF CAPITAL & CAPITAL STRUCTURE
Cost of Debt & Cost of Stock
The Effect of Financial Leverage
Optimal Capital Structure
EXAM 3:
Monday, May 2, 2011 (Tentative)
COMPREHENSIVE EXAM:
Monday, May 9, 10.30 am – 12.30 pm
IMPORTANT DATES
March 7-11, 2011
April 22-25, 2011
May 4, 2011
Spring Break; No Class
Easter Break: No Class
Study Day; No Class
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