Financial Management_ Eugene F. Brigham and Michael C. Ehrhardt_ 20086

Syllabus

Financial Management MBAD 6152 Section #U92 Summer II 2008

Required:

5:30 p.m. - 9:15 p.m. Monday & Wednesday

Instructor:

Location:

Room #TBA Uptown Campus

Office Hours: UNCC: 4:30 - 5:15 p.m. Monday - Friday Uptown: 9:15 - 9:30 p.m. Mon. & Wed. other times arranged by appointment. Phone Numbers: UNCC: 687-4413 (voice) 687-6987 (fax) Internet: [email protected]

Dr. Tony Plath Room 250-C Friday Building

Text

Preparatory Coursework Component of the MBA Curriculum: MBAD MBAD MBAD MBAD MBAD MBAD

To facilitate the identification of each specific article shown in Table 1 below on the course FTP site, the title of each article represents the file name of the specific PDF file containing the article on the FTP server. Students are welcome to use whatever FTP client software they prefer in accessing this FTP site and downloading assigned reading material; however, please note that you must be familiar with the nonanonymous login procedure used by your FTP client software in order to access the homework solutions. Anonymous FTP login is not enabled for the /coba/finn/plath/classes/mbad6152/ directory or any of its subdirectories. For students using Microsoft’s Internet Explorer as an FTP client, simply enter the following URL on the Explorer command line to access the appropriate directory of the University’s FTP server:

5112 5113 5131 5141 5142 5191

Foundations of Microeconomics Foundations of Macroeconomics Fundamentals of Financial Accounting and Financial Management Business Statistics Quantitative Analysis in Business Legal Environment in Business

Recommended: Functional Coursework Component (Primary Block) of the MBA Curriculum: MBAD MBAD MBAD MBAD MBAD

Financial Management: Theory and Practice, 12th rev. ed. Eugene F. Brigham and Michael C. Ehrhardt (Hinsdale, IL: Thompson South-Western), 2008. As discussed in class, the supplemental readings that accompany the course and the Web extension material that accompanies the Brigham textbook will be available for download from the passwordprotected UNC-Charlotte FTP server at ftpserv.uncc.edu. The user ID for this FTP site is MBAD6152, and the password for the site will be provided to students in class. If you enter the FTP server from the root directory, browse to the folder /coba/finn/plath/classes/mbad6152/coursereadings/articles to locate all of the nontextbook course reading material shown in Table 1 below in Adobe’s Acrobat (e.g., PDF) format. To make it easy to locate the main subdirectory for the course reading material, when you login to the FTP site using the userid/password combination shown above, you will automatically begin your FTP session in the /coba/finn/plath/classes/mbad6152 directory.

6100 6112 6121 6131 6141

Leadership, Ethics, and the Business Environment The Economics of Business Decisions Business Information Systems Management Accounting Operations Management

Course Description This course explores the theory and the practice of corporate finance, and includes an introduction to asset management, the cost of capital, capital budgeting, financial optimization issues, and the socioeconomic aspects of financial management.

Course Objective To provide students with an introduction to the nature and methods of financial analysis within the context of the business enterprise. Our attention will focus on: (1) developing an awareness of some major financial problems facing modern, for-profit business organizations as well as individual consumers; (2) obtaining an understanding of the basic principles and concepts necessary to analyze these financial problems; (3) reviewing the applied corporate finance literature to discover how contemporary financial managers are using the principles of financial management to solve business problems; and (4) developing the ability to apply these principles and concepts and independently evaluate alternative solutions to basic problems facing the financial manager.

ftp://mbad6152:[email protected]

Important Dates Recommended: The Wall Street Journal and/or Business Week. Optional:

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Course Prerequisites

Time:

Required:

Financial Management - MBAD 6152

Study Guide to Accompany Financial Management: Theory and Practice. Eugene F. Brigham, and Michael C. Ehrhardt (Hinsdale, IL: Thompson South-Western), 2005.

Day

Date

Monday Monday

July 21st August 11th

Event Last Drop Day Comprehensive Final Exam 5:30 p.m. - 8:30 p.m.

Syllabus

Financial Management - MBAD 6152

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Syllabus

Financial Management - MBAD 6152

Other Valuable Information 1.

The assigned readings shown below in Table 1 may be subject to modest change, depending on the pace at which the class is able to cover material. This outline, however, should serve as a guide so that you can maintain an appropriate reading pace. Students are expected to read the assigned material and be prepared to discuss it prior to the date each topic is covered in class. In addition, students are expected to review on a regular basis current business events that involve financial management. The best way to develop an awareness of current financial events is by reading The Wall Street Journal and/or Business Week.

2.

This course is an analytical (quantitative) course with direct applications to the practice of management. The course is designed to acquaint students with the principles of financial management, demonstrate how these principles are used to solve business problems, and develop students' abilities to apply these principles to brief financial cases as well as current business events. Class discussions will focus on (1) the assigned text and supplemental readings; (2) the analysis of current events related to financial management; and (3) quantitative problem-solving in finance.

3.

The end-of-chapter problems contained in the text provide an excellent way for students to begin applying the concepts introduced in each chapter. In addition, mastering these problems provides excellent preparation for course examinations. Occasionally, we will use specific problems to demonstrate financial concepts and methods during class time. Because our class periods do not provide sufficient time to cover all of the end-ofchapter problems, however, the solutions to these problems are available from the course FTP site in the /coba/finn/plath/classes/mbad6152/homework11e directory. Students are advised to use these solutions to verify the accuracy of their work, and gain a better understanding of the manner in which financial problems are presented, structured, and evaluated.

4.

Given the limited number of hours allocated for class meetings, class time is not sufficient to cover all of the material presented in the assigned readings. However, students are responsible for all assigned material, whether or not it is discussed in class. We will devote class time to (1) discussion of the more difficult conceptual material contained in the readings, and (2) analysis of current events. The more descriptive material contained in the course readings can be assimilated easily by students outside the classroom, and therefore, this material will be frequently discussed in class in a cursory fashion.

5.

Given the frequent quantitative manipulation of financial information required in business administration in general and this course in particular, it is necessary for each student to possess and use a basic financial calculator to complete this course in a satisfactory manner. A basic financial calculator can accommodate time value of money problems, net present value problems, calculation of the yield to maturity (YTM) associated with corporate bonds and the internal rate of return (IRR) associated with capital investment projects, and evaluate basic exponential functions. While students are welcome to select whichever brand of financial calculator that they prefer, the instructor recommends the use of the Hewlett Packard Model 10-B or Model 17-B II. In order to help students become proficient with the use of the advanced financial functions available on most financial calculators, the course FTP site contains calculator manuals and tutorial exercises for all popular brands of financial calculators currently on the market. Students can locate this material in the /coba/finn/plath/classes/mbad6152/calculatorstuff/ directory of the course FTP site.

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Important University and/or College Policies 1. ACADEMIC INTEGRITY. "All UNCC students have the responsibility to be familiar with and to observe the requirements of The UNCC Code of Student Academic Integrity (see the Catalog). This code forbids cheating, fabrication or falsification of information, multiple submission of academic work, plagiarism, abuse of academic materials (such as Library books on reserve), and complicity in academic dishonesty (helping others to violate the code). Any further specific requirements or permission regarding academic integrity in this course will be stated by the instructor, and are also binding on the students in this course. Students who violate the code can be punished to the extent of being permanently expelled from UNCC and having this fact recorded on their official transcripts. The normal penalty is zero credit on the work involving dishonesty and further substantial reduction of the course grade. In almost all cases, the course grade is reduced to "F". If you do not have a copy of the code, you can obtain one from the Dean of Students Office. Standards of academic integrity will be enforced in this course. Students are expected to report cases of academic dishonesty they become aware of to the course instructor who is responsible for dealing with them." 2. ATTENDANCE. Students are expected to attend punctually all scheduled sessions in the courses for which they are registered and are responsible for completing the work from all of the class meetings. Absences from class may be excused by the instructor for such reasons as personal illness, religious holidays, participating as an authorized University representative in an out-of-town event, or unavoidable professional responsibilities that require missing a class. Whenever possible, students are expected to seek the permission of the instructor prior to absences. 3. DISENROLLMENT. At the discretion of the department offering a course, a student may be disenrolled from a course section if he or she does not attend the first scheduled meeting of the section. The department chair has the responsibility for providing timely notification to the student who is disenrolled. 4. COURSE WITHDRAWAL. Under the UNCC Course Withdrawal Policy, students may withdraw from a course until the withdrawal deadline and the mark of "W" will be assigned. No withdrawals will be permitted after the course withdrawal deadline. It is the student's responsibility to determine by the withdrawal deadline whether to withdraw from the course or stay in for a grade. The last day to withdraw is Monday, July 21st.

Examinations and Grading Examinations 1.

Exams will cover the assigned reading material and topics presented during lectures. Exam questions will include essay questions, short answer questions, and problem solving opportunities. Each exam will include ten short answer and/or problem solving questions, and three essay questions and/or extended problems. Students may select from two different options in completing each course examination: OPTION I:

Students must complete each of the ten short answer questions, and none of the essay questions and/or extended problems. Each of the ten short answer questions is worth eight points, so that the total number of points contained on the exam is 80. In this case, the examination score is calculated according to the number of points awarded as a percentage of the number of points attempted. For example, a student missing 20 points out of the total 80 points attempted would be awarded 80 - 20 = 60 total points, representing 60 ÷ 80 = 75 percent of the total points attempted on the exam. This translates into an examination score of 75.

Syllabus

Financial Management - MBAD 6152

OPTION II:

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Students must complete each of the ten short answer questions, and one of the four essay questions and/or extended problems. Each short answer question is worth eight points, so that the total number of points contained in the short answer section of the exam is 80. The essay question and/or extended problem selected is worth 20 points, so that the total number of points contained in the essay section of the exam is 20. The total number of points contained on the exam is 100. In this case, the examination score is also calculated according to the number of points awarded as a percentage of the number of points attempted. For example, a student missing 20 points out of the total 100 points attempted would be awarded 100 - 20 = 80 total points, representing 80 ÷ 100 = 80 percent of the total points attempted on the exam. This translates into an examination score of 80.

2.

Two examinations will be given in this course: A midterm exam and a comprehensive final exam.

3.

Make-up examinations will not be permitted. Students who do not complete the midterm exam will have the points from this exam reallocated to the final exam. In this case, the final exam will represent 100 percent of students' final course grades. Students who fail to complete the final examination will receive zero credit for this exam, which represents 60 percent of students' final course grades.

4.

Students will be permitted to bring ONE 8 ½"-by-11" sheet of paper containing notes, formulae, etc. into each examination session during the semester. Given the use of a cheat sheet, it is not necessary for students to memorize equations, names, dates, places, etc. when preparing for course examinations. Rather, students should emphasize understanding financial concepts and relationships when preparing for exams.

5.

Given the limited time period allowed for each course examination, students will not be permitted to use calculator manuals or time-value interest factor tables during the exams. There simply isn’t sufficient time to read the examination questions, reference material on your formula sheet, review specific keystroke instructions in your calculator manual, verify time-value interest factors from a hard-copy table, and respond to each examination question during the course exam periods. Thus, students are expected to know how to perform the relevant keystroke sequences necessary to solve basic financial problems on their calculators from memory during each course exam.

Course Grades Final course grades will be determined according to the following schedule. While the point-grade assignment may be subject to downward revision, it will never be increased.

Assignment Midterm Examination Final Examination TOTALS

Possible Points 100 100 200

Weight 40% 60% 100%

Weighted Total Points

Course Grade

90 - 100 80 - 89 70 - 79 Below 70

A B C U

Table 1 MBAD 6152 -- Course Schedule Week Number

Week of ...

1

July 7

2

3

July 14

July 21

Reading 12th ed. / (11th ed.) None Chronicle Wall Street Journal

Introduction to course and financial management "Finance Education Needs to Return to Basics" "B-Schools' Formula for Irrelevance"

T-1 (pp. 174-190) T-1 Web Extension

Overview of Financial Management and the Financial Environment Forward Interest Rates

T-15 (pp. 538-548) Business Week TIAA/CREF CalPERS Wall Street Journal Wall Street Journal Business Week Business Week CFO Magazine

Corporate Governance and Shareholder Wealth "Tales from the Boardroom Wars" "Sharing our Views ..." "Corporate Governance: Core Principles and Guidelines" "A Primer on Enron Partnerships" "Blockbuster Deal Shows How Enron Overplayed Hand" "An Options Plan Your CEO Hates" "How to Fix Coprorate Governance" "Delaware Rules"

T-26 (pp. 933-952) Wall Street Journal Wall Street Journal

Multinational Financial Management "Dollar Spurts to Seven-Year High Against Yen" "Pound Reaches 6 1/2-Year Intraday Low Against Dollar"

T-3 Business Week

Financial Statements, Cash Flow, and Income Taxes "How to Spot Tax Tinkering"

T-4 (13) Business Week Business Week Business Week Wall Street Journal Class Handout CFO Magazine CFO Magazine CFO Magazine

Analysis of Financial Statements "The Ins and Outs of Cash Flow…" "FASB: Rewriting the Book on Bookkeeping" "The Numbers Game" "What's the P/E Ratio?" "Anatomy of the Income Statement: GAAP vs. Pro Forma Statements" "Five Years and Accounting" "The SEC Rules" "Rewriting the Rules"

Fortune Wall Street Journal

"The Real Key to Creating Wealth" "Strong Sales Focus ..."

T-14 Wall Street Journal Krispy Kreme Doughnuts None 4

July 28

Aubust 4

August 11

"Revolutionary Proxies ..." "2004 Proxy Statement" (SEC Form DEF 14A) MIDTERM EXAMINATION (Tentative Date) Risk and Return: The Basics Risk and Return: Portfolio Theory and Asset Pricing Models "Why 15 Stocks Just Aren't Enough" "Mutual Funds: It's a Cruel, Cruel, Cruel World"

T-2 T-2 Web Extension

Time Value of Money (Review) Continuous Compounding and Discounting

T-8 (7) CREF Investment Forum Bottom Line Wall Street Journal Wall Street Journal Wall Street Journal T-10 (9) Instructor Handout

6

Financial Planning and Forecasting Financial Statements

T-6 (4) T-7 (5) Wall Street Journal Wall Street Journal

T-5 (6) 5

Topic

T-11 (10) T-10 Web Extension T-12 (11) Wall Street Journal Lotus Magazine Financial Management Collection

Bond Valuation Models Stock Valuation Models "Measuring the Equity Risk Premium" "Investment Advice from David Granger" "Personal Finance: The First Question" "Investing Ideas that Stand the Test of Time" "If You Want a Pen Pal…" The Cost of Capital The Marginal Cost of Capital Schedule and the Optimal Capital Budget The Basics of Capital Budgeting: Evaluating Cash Flows The Equivalent Annual Annuity Method Capital Budgeting II: Cash Flow Estimation and Risk Analysis "Buy High, Sell Low" "Pay Attention to Financing Costs" "Corporate Strategy and the Capital Budgeting Decision"

T-16 T-17

Capital Structure Basics Capital Structure Extensions (pp. 583-597 and 604-607)

None

Comprehensive Final Examination Monday, August 11th; 5:30 - 8:30 p.m.

The Belk College of Business strives to create an inclusive academic climate in which the dignity of all individuals is respected and maintained. Therefore, we celebrate diversity that includes, but is not limited to ability/disability, age, culture, ethnicity, gender, language, race, religion, sexual orientation, and socio-economic status.