BSNS 6140 -
FINANCIAL MANAGEMENT
Semester II,
Spring 2007, Three Credit Hours
Dr. Jerrald
M. Fox, CFP – Instructor
jmfox@anderson.edu – 765.641.4361
Class Meeting Information
The class will usually meet
on Monday evenings in Hardacre Hall, Room 232.
The class times--with exceptions to usual meeting times--will be as
follows:
January 8 – February 19 6:00
p.m. – 7:50 p.m.
February 26 – Mid-Term Exam 6:00 p.m. – 9:50 p.m.
March 5 – April 16 8:00 p.m. – 9:50
p.m.
March 12, 19 – Spring Break No class sessions
March 20 (Tuesday) – Joint
Session 6:00 p.m. – 8:30 p.m.,
April 26 (Thursday) - Final 6:00
p.m. – 9:50 p.m.
Course Resources
Financial Management:
Theory and Practice, 11th edition by
Eugene Brigham, and Michael C. Ehrhardt.
Published by South-Western, part of the Thomson Corporation, 2005. Includes instructional CD for computer
tools. ISBN: 0-324-25968-9
This will be our common text
and basis of study and discussion.
Specific reading assignments appear on the class schedule below.
The Wall Street Journal – All students should have daily access. Each class session will include a time of
open discussion of current financial news from The Journal and other business
news sources. All students are expected
to come prepared to participate in these discussions.
The Holy Bible: New International Version or New Living
Translation – Specific relevant passages will be included in the assigned
readings. These passages—and other
biblical references from your own study—will be included in our discussions of
the ethical frameworks for financial decision making.
Calculator/Software: You will need a calculator or laptop computer capable
of finding the internal rate of return and the net present value of uneven cash
flows for in-class problems. I will be using a Texas Instruments BA II plus
and/or HP10bII calculator and MS-Excel for demonstration purposes. Excel templates and problem analyses are
included in the instructional CD included in your textbook.
Course Objectives
This course provides an
overview of the financial management of the business enterprise, with an
emphasis on ways financial managers create value. Decision-making skills
relying on discounted cash flow techniques, capital budgeting, and the
fundamentals of security pricing are presented.
We will also consider the legal, moral, ethical, and spiritual
dimensions of these financial decisions.
Specific Learning Goals
At the completion of this course you should be able
to:
Define the agency problem.
Compose and explain common
financial statements.
Calculate the taxable
equivalent yield on a municipal bond.
Calculate the after tax yield
on a corporate bond.
Plot a yield curve.
Calculate the expected
return, standard deviation, and coefficient of variation for an individual
investment and a portfolio of investments.
Define beta and be able to
estimate beta using time series data.
Draw a timeline to depict a
series of cash flows.
Calculate the present value,
future value, length to maturity, payment per period, and interest rate per
period for a series of cash flows.
Define an annuity.
Calculate the price, the yield
to maturity and the yield to call for a bond.
Describe how changes in
interest rates affect bond prices.
Define a call provision.
Estimate the price of a share
of stock using the zero growth, constant growth, and supernormal growth models.
Calculate the cost of equity
using the capital asset pricing model.
Calculate the after tax cost
of debt.
Describe the correct weights
of debt, equity, and preferred stock for a firm’s optimal capital structure.
Calculate the weighted
average cost of capital.
Calculate the payback and the
discounted payback period.
Calculate the internal rate
of return, modified internal rate of return, and the net present value of an
investment.
Identify the relevant cash
flows for capital budgeting decisions.
Calculate the initial
investment outlay, the operating cash flows, and the terminal year cash flows
for a capital budgeting project.
Expectations
As
a courtesy to all in the class, come to class on time! And please come to each
class prepared. You should read all assigned text material prior to class. Take notes of your reading and complete all
assigned problems and cases.
You
should also read the Wall Street Journal
and Web sources each day to find current information related to our study. Read your text assignment first and then scan
the Journal, AU library online, and
other web-based sources for current examples of topics from your readings. If you have a question or concern related
to the class, please talk with me so we can find answers together.
COURSE CONTENT
Exams
You will take a mid-term and
a final exam. Each exam will have a take-home portion and an in-class portion.
You may bring one eight-and-a-half-by-eleven inch sheet of paper with any notes
you would like to have with you for the in-class portion of the exams. You may
bring a financial calculator with you to the in-class portion of the exams.
Make up exams will only be given in extraordinary circumstances.
Groupwork
The class will be divided
into 4 groups of equal number. You will select your own group. Choose
carefully! You will need to work
together outside of class. You will need
to develop a sense of joint responsibility and group cohesion. Your group work
activities will consist of a debate, a group paper, and a group presentation.
Each of these group assignments will be described in more detail below.
Debates
Each group will defend a
position in one debate. Each member of a debating team must obtain at least one
outside-of-class source material for your debate (i.e. newspaper article, web
site, etc.). The Anderson University Nicholson Library can assist you with searches
of business data bases.
Every class member is expected to participate in every debate.
Format: The
opening round will begin with the “Yes” group speaking for approximately 4
minutes followed by the “No” group for approximately 4 minutes. There will be
an approximately 10-minute period where other members of the class can ask
questions directly related to information presented in the opening round.
The concluding round will
begin with the “Yes” group speaking/rebutting for approximately 3 minutes
followed by the “No” group speaking/rebutting for approximately 3 minutes.
There will again be an approximately 10-minute period for questions.
Grading: Non-debating
students will complete an evaluation form for the debate. The debate will conclude with a class vote to
determine which side best defended their position. Presenting groups will be graded on their
level of preparation and the strength of their presentation. Other students will receive credit (determined
solely by the instructor) for their evaluations and feedback. Specific grading percentages are noted below
in the “Grading Standards” section.
Debate Schedule:
Odd-numbered groups argue “Yes.” Even-numbered groups argue “No.”
Debate 1: Group 1 vs. 2 on January 22. Issue: Are CEO's paid too much?
Debate 2: Group 3 vs. 4 on February 5. Issue: Should stock price maximization be the
goal of a corporation?
Group Project
Each group will study one of
the firms in the Dow Jones Industrial Average (DJIA). Your group will begin this project by
completing a Group Contract. This
contract should:
1.
Identify the DJIA
firm you will study;
2.
assign research
responsibilities for each member;
3.
assign
writing/graphics/visuals/handouts responsibilities;
4.
clarify
presentation responsibilities;
5.
be signed and
dated by all group members.
Report: Each
group will be responsible for creating a succinct
written report detailing the past, present, and future aspects of their
firm. All research sources must be clearly cited. Feel free to be creative in the use of
charts, tables, graphics and design that enhance the communication strength of
your project, but note: grading will focus on depth of research and clarity of the information presented.
Presentation: Each
group will also be responsible for sharing their report in a 15 minute (maximum) class
presentation. The presentation should use visual aids and should provide the
class with an increased understanding of your company and its financial
prospects. Everyone in the group must participate in the presentation. Both the
written report and the presentation should each appear as one seamless unified
piece of work, not a disconnected collection of several independent parts.
Grading: The
instructor alone will review and grade the written report. Not so for the presentations, however. Members of other groups will complete a
written evaluation of each presentation which will influence final grading.
Research and Reporting
Each group should utilize the
chosen company's web site, books and articles related to the company, your
text’s CD and Thomson One resources, and other internet resources with company
information in preparing their report.
Each report will be the
group’s demonstration of their learning over the entire semester. The goal is for your group to practice and
display your skills in clearly communicating financial information to diverse
audiences. Each report and class
presentation will be unique and include information specifically important to
your chosen firm and its industry.
However, all written reports should include the following information:
1.
Describe your
company’s primary line of business.
2.
Who are the
company’s main competitors and how do they compete with each other?
3.
A ratio chart
(similar to Table 13-6 p.464) for your company with discussion of any
differences between your company’s ratios and its industry averages and the
trends of your company's ratios over time.
4.
A 12 month
closing price graph (past 12 months or 2006) and/or a table of monthly stock
prices for your company as compared to the S&P 500 along with an estimate
of beta calculated from this data. (See chapters 4 and 9.)
5.
A bond valuation
for one of your company's outstanding bonds (i.e. find the price necessary to
earn a specified yield of 8% and compare that price to the current price). See chapter 6 for techniques used in this
analysis.
|
6.
A stock
valuation for your company with a comparison to the actual price using one of
the valuation methods from chapter 7. |
Important Group Dates
There are two due dates
related to the group projects. A typed and signed group contract which
identifies your group's chosen DJIA firm is due on February 22. The completed
final report is due on the date your group makes its presentation, either April
9 or 16.
GRADING STANDARDS
Mid-Term Take-Home 200 Grading
Scale
Mid-Term In-Class 100 93-100 A
Final Take-Home 200 90-92.9 A-
Final In-Class 100 87-89.9 B+
Debate Presentation 80 83-86.9 B
Debate Participation 20 80-82.9 B-
Research Paper 200 77-79.9 C+
Research Presentation 100 70-76.9 C
Total 1,000 60-69.9 D
DAILY SCHEDULE
|
Date |
Time |
|
|
1/8 |
|
Review syllabus, form groups,
Chapter 1 review, WSJ, film clips |
|
1/15 |
|
Chapter 2, 1 Samuel 8,
Matthew 22:15-22, Mini-Case |
|
1/22 |
|
Debate 1, Chapter 3, Mini-Case |
|
1/29 |
|
Chapter 4, Psalm 37,
Mini-Case |
|
2/5 |
|
Debate 2, Chapter 5, Proverbs 10:22 |
|
2/19 |
|
Chapter 5 cont’d, 1 Timothy
6:3-10, Mini-Case |
|
2/26 |
|
Group contract due, review
Chapters 1-5 for Mid-Term, hand out take-home portion of Mid-Term Exam |
|
3/5 |
8:00-9:50 |
Take-home portion of
Mid-Term Exam is due In-class Mid-Term Exam:
Chapters 1, 2, 3, 4, 5 |
|
3/12 |
|
SPRING BREAK |
|
3/20 |
6:00-8:30 |
Joint Session with all MBA
cohorts at Lawrence North H.S. auditorium |
|
3/26 |
|
Chapter 6, Luke 6:34-35,
Mini-Case |
|
4/2 |
|
Chapter 7, Matthew
25:14-30, Mini-Case |
|
4/9 |
|
Chapter 9, Group Project
Presentations 3 and 4 |
|
4/16 |
|
Chapter 10, Group Project
Presentations 1 and 2, review for Final, pass out take-home portion of Final
Exam, course evaluations |
|
4/23 |
|
No class: BSNS 6350 meets
for final exam |
|
4/26 |
6:00-9:50 |
Take-home portion of Final
Exam is due In-class Final Exam:
Chapters 6, 7, 9, 10 |
|
|
|
|
SUCCESS
by Ralph Waldo Emerson
To laugh often and love much;
to win the respect of
intelligent persons and the affection of children;
to earn approbation of honest
citizens and endure the betrayal of false friends;
to appreciate beauty; to find
the best in others; to give of one's self;
to leave the world a bit
better, whether by a healthy child, a garden patch or a redeemed social
condition;
to have played and laughed
with enthusiasm and sung with exultation;
to know even one life has
breathed easier because you have lived…
this is
to have succeeded.