Entrepreneurial Finance

Document Sample
Entrepreneurial Finance Powered By Docstoc
					                                Rawls College of Business
                                 Texas Tech University
                                      Spring 2012

Corporate Finance 1                                       Instructor: George D. Cashman
FIN 3322 T, Th 2.00-3.20; 3.30-4.50                            George.Cashman@ttu.edu
Office Hours T, Th 10.00am-10.50am                                   Office: Rawls 317W
Rawls 01                                                                  (806) 834-1932
Michael Nichols (TA) office hours: 5.00-6.00 in Rawls 103

The primary objective of this course is to provide an understanding of the tools and
concepts involved in financial decision-making. We will develop an understanding of the
time value of money and use this understanding to value uncertain cash flow streams that a
firm may receive, to perform simplified asset valuations, and to assess the desirability of
different investment projects. We will develop an understanding of basic investment
criteria used by many corporations as well as the trade-off between risk and return.
    Students should be able to find the present value of any stream of future cash flows
    Students should be able to identify which cash flows are important when valuing an
      investment, and which investment rules to apply to different investments.
    Students should have an basic understanding of the Capital Asset Pricing Model
    Students should understand the concept of market efficiency
    Students should understand why capital structure does not matter, as well as when
      it does.
The book for this class is Corporate Finance: 2nd Edition, by Ivo Welch. You can
purchase the book at Amazon for $60, or read the free online edition at

The slides are available on the class web site http://gcashman.ba.ttu.edu/fin3322.htm. I
provide these slides to reduce the amount of note taking required of you so that more time
can be devoted to discussing issues. You will also need a Texas Instruments BA II Plus
or BA II Plus Professional. Please note that the Finance Area has mandated these
calculators for all undergraduate classes

This course will require considerable preparation outside of class. The class is centered on
lectures and accompanied by related reading assignments and problem sets. The best way
to prepare for exams is to work the assigned problems. It is very important that you keep
up with the assigned work so that you will not be overwhelmed at exam time.
Your grade will be determined by your performance on quizzes, homework, and exams.
                           Homework                           10%
                    Good Citizenship Quizzes                   5%
                 Feb 21st             Exam I                  25%
                  Apr 5               Exam II                 30%
             May 12th 10.30 am     Exam III Sec 1             30%
             May 15th 7.30 am      Exam III Sec 2             30%

I do not give make-up exams. If a student misses an exam and provides appropriate third-
party documentation, the weight from the missed exam will be applied to the remaining

Your final grade will be the weighted average of your performance on the test and
assignments. The final grading scale is:

                                    A       100.00 - 89.45
                                    B       89.44 - 79.45
                                    C       79.44 - 69.45
                                    D       69.44 - 59.45
                                    E       59.44 - 0

   You are responsibility for making sure recorded grades are accurate
                              before the final.

Good Citizenship Pop Quizzes
There will be an unknown number of these quizzes given throughout the semester. These
quizzes will be on the material that we are currently going over. They will be a single
question, with a correct answer getting full credit and an incorrect answer receiving a zero.
Students who miss a quiz cannot make it up, and will receive a zero on the quiz.
There will be several homework sets assigned during the semester. Homework due dates
are specified in the syllabus. Homework is due at the beginning of class, once I have
collected the homework any remaining homework is late. I do not accept late homework.
The goal of homework is to help your understanding of the material. I want you to work in
groups of 2-4 students, with each group handing in a single assignment, with all group
members’ names. Students from different sections can be in the same group but the
homework must be handed in with the earlier section, and each students section identified.
Note that questions similar to the homework may appear on exams – so it is important that
you understand how to work problems by yourself. Submitted work must be legible. If I
cannot read your work it will receive a grade of zero. Homework will be graded on a
“check” “minus” system. Homework that is not turned in, or not completed will receive a
zero. I will post solutions to the homework after it is collected; any group catching a
mistake in a posted solution will receive an extra half point on the assignment, until I have
notified the class of the mistake.
Exams are closed book and closed note. Exams later in the semester will tend to focus on
new material, however I may re-examine some older material, especially on the final. As
exams approach, I will provide more information as to what types of questions you should
expect. Also, note that the material we cover in the earlier exams provides a basis for
understanding the material in the remainder of the course.
Academic Honesty
Exams must be strictly individual work. You may not use notes, texts, or any aids other
than a calculator. You must neither give help to nor receive help from any other person. All
transgressions will be reported according to University Procedures.
Office Hours
A graduate student will be holding review/homework help sessions each week. Please visit
these if you are having any question or concerns about the material. If questions persist
then please visit me during my office hours posted above. Office hours will only be useful
if you come prepared, and you can be specific about what you don’t understand. That is,
identify a specific section of the notes or a particular problem that you are struggling with.
If you are having trouble with a particular problem, bring your attempt to solve the
problem with you. Broad statements such as “I just don’t get it” are not helpful, and often
suggest that you have not been doing your work.

I batch process emails and will do my best to reply to you within a 24-hour period.
However, some questions do not lend themselves to an easy answer via email, in which
case I may ask you to stop by office hours or see me after class. Sometimes your questions
are important enough that I feel they are worth bringing to the attention of the whole class.
If that is the case, you can expect me to address the issue in our next class meeting rather
than provide an individual email response.

I will rely primarily on class web site and in-class announcements for communications.
However, from time to time I may use the class e-mail feature to send important messages.
Please ensure that the email you have on file with the university is current.

The use of cell-phones, laptops, and other electronic devices is prohibited during class
unless we are using them for an in-class exercise. Any administrative announcements that I
may make in class or the class web site forms part of this syllabus.

Students requiring accommodations
Any student who, because of a disability, may require special arrangements in order to
meet the course requirements should contact the instructor as soon as possible to make any
necessary arrangements. Students should present appropriate verification from Student
Disability Services during the instructor’s office hours. Please note instructors are not
allowed to provide classroom accommodations to a student until appropriate verification
from Student Disability Services has been provided. For additional information, you may
contact the Student Disability Services office in 335 West Hall or 806-742-2405.
A student who intends to miss an exam because of a religious holy day must make the
intention known to me prior to the absence. For more information regarding policy for
observance of religious holy days see http://www.depts.ttu.edu/opmanual/OP34.19.pdf .

                                Course Schedule (Tentative)
This schedule is tentative in that I may adjust coverage of specific classes conditioned on
how we progress throughout the semester.

R    Jan 19       Syllabus, Wall Street Journal, Corp Fin Intro
T    Jan 24       Financial Statements
R    Jan 26       Time Value of Money
T    Jan 31       Time Value of Money
R    Feb 2        In Class Problems / Stocks and Bond Valuation
T    Feb 7        Stocks and Bond Valuation                                       TVM
R    Feb 9        Stocks and Bond Valuation
T    Feb 14       In Class Problems
R    Feb 16       Review                                                     Bonds & Stocks
T    Feb 21                                               Test 1
R    Feb 23       Investment Rules
T    Feb 28       In Class Problems
R    Mar 1        Making Investment Decisions                                     Rules
T    Mar 6        Making Investment Decisions
R    Mar 8        In Class Problems
                                           Spring Break
T    Mar 20       Risk & Return: Primer/ In-Class                               Decisions
R    Mar 22       Capital Asset Pricing Model                                    Primer
T    Mar 27       The Capital Asset Pricing Model
R    Mar 29       In Class Problems
T    Apr 3        Review                                                          CAPM
R    Apr 5                                                Test 2
T    Apr 10       Arbitrage Pricing / Market Efficiency
R    Apr 12       Cost of Capital                                            Arb. & Mkt. Eff.
T    Apr 17       Cost of Capital
R    Apr 19       In Class Problems
T    Apr 24       Capital Structure                                       Risk & Cost of Capital
R    Apr 26       Capital Structure
T    May 1        In Class Problems
R    May 3        Review                                                     Capital Structure

Shared By: