Brigham Manual Solution Financial Management 11 Edition

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Brigham Manual Solution Financial Management 11 Edition Powered By Docstoc
					                  FIN 507, Section 120: FINANCIAL MANAGEMENT
                                    Fall Semester 2010

Class Meeting Times and Location:
       1:15-5:15pm in Room 149 on the following five Saturdays: 9/25, 10/3, 10/30, 11/13, 12/4

Instructor: Dr. Mary H. Kelly

       Office: Room 151B, Main Campus
       Phone: 254-519-5779
       Office Hours:
               M and F: 11:00 – 12:00 noon Virtual Office Hours
               Tuesday: 11:00 – 7:00 pm,
               Wed, Th 11:00 – 5:00 pm, except 2 - 3
               Saturday: 11:30 – 1:00 pm on 9/25, 10/16, 10/30, 11/13, 12/4
               By Appointment for other days or times, and I am frequently on campus Monday thru Friday.

1.0 Course Description:
    This is the core course in financial management for students in the MBA program. Coverage is deeper
    than undergraduate finance courses and our master’s level course titled “Foundations of Financial
    Management.” Topics in this course emphasize financial valuation methodology, capital structure
    decisions, working capital policy, financial statement analysis, dividend policy, and bankruptcy
    procedures. Financial Modeling techniques are an integral component to this course and, accordingly,
    the class will meet in a computer-lab style classroom on the main campus.

2.0 Course Objectives:
    2.1 Student Learning Objectives:
    Upon completion of this course students should understand:
  • The building blocks of value-based corporate decision making aimed at maximizing the firm's stock price.
 • The distinction between accrual and cash basis accounting.
 • The importance of understanding the firm's financial statements.
 • The importance of financial forecasting in overall financial planning.
 • The basics of the firm's financial environment as it pertains to interest rates.
 • The basics of risk and return as they relate to stocks in isolation and in a portfolio.
 • The various stock valuation models, including free cash flow models.
 • Time value of money methods and bond and stock valuation.
 • The importance of a firm's bond rating.
 • Construction and use of the firm's weighted average cost of capital.
 • The basics of the capital budgeting process including techniques of cash flow estimation.
 • Risk analysis in capital budgeting decisions.
 • How leverage and capital structure are related to risk and expected return.
 • The basics of the firm's dividend policy decision.
 • Various working capital management strategies.

 • The financial aspects of bankruptcy and reorganization.
 • The importance of ethical behavior and how ethics should impact decision making
 • The relationships between academic course material and real-world decision skills

   2.2 Competency Goals Statement:
   Upon completion of this course the student should be able to:
 • Read real-world financial statements and draw conclusions about the firm's financial health.
 • Construct and interpret important financial ratios.
 • Carry out a financial forecast and make the necessary funding adjustments as suggested by projected cash
   shortfalls or projected cash surpluses.
 • Make informed short- and long-run financing decisions about the firm’s financing mix based upon
   expected movements in interest rates.
 • Apply risk and return concepts in assessing the equity minimum required rate of return.
 • Apply time value of money methods to corporate decision making.
 • Undertake fundamental valuation of the firm's debt and equity securities using prescribed models.
 • Compute and utilize the firm's cost of capital in financial decision making.
 • Make investment decisions using established capital budgeting techniques.
 • Incorporate risk analysis in capital budgeting.
 • Understand the different types of risk associated with various forms of leverage.
 • Understand the implications of a sub-optimal capital structure.
 • Recognize the real-world factors that impact the capital structure decision.
 • Understand dividends and share repurchases as they impact firm valuation.
 • Understand how a firm’s dividend policy can impact its stock price.
 • Implement an appropriate working capital management policy.
 • Recognize unethical corporate governance and behavior and be able to identify decision making that may
   impinge on ethical standards.
 • Use spreadsheets in the recording and manipulating financial data so as to make more informed financial
 • Be able find appropriate financial information on the Internet.

3.0 Required Reading, Materials, and Textbooks:
    (1) Text: Corporate Finance: A Focused Approach, 3rd edition by Ehrhardt and Brigham; alternatively,
        the 4th edition may be used and variations between the editions will be discussed in class.

    (2) Financial Calculator: Different models require different keystrokes, which can lead to different answers
        and the wrong financial decision; hence, YOU must know how to use the calculator you decide to use
        for this course. Only a limited amount of classroom time will be spent confirming proper use of

    (3) The university provides an online Tutoring and Writing Center at http://www.smarthinking. com.
        Go to and click on "Academic Support" to gain access and see a listing
        of the tutoring subjects and hours. Obtain your unique username and password for tutoring in the
        Introductory Finance course, as well as other subjects.

4.0 Course Requirements:

   Attached to the end of this syllabus is a schedule of course topics and assignments referred to as
   the Course Calendar; however, depending on class dynamics, we may move more quickly or
   more slowly to enhance the learning environment. The course schedule shows the Assignment(s)
   due for that class, and the format of this course requires you to work on your own a great
   deal. To facilitate your learning, solutions to problems/cases will be posted on Bb, probably
   in the form of the entire Solution Manual; hence, be fiscally prudent with any printing.
5.0 Grading Criteria and Rubric:

   The total grade will come from Six in-class Assignments, Three Exams, One Group Presentation,
   and Class Participation. A maximum of 1000 points will be awarded as follows:

       Each of the six in-class assignment will be worth a maximum of 100 points. If you miss a class, then
       The assignment(s) must be emailed to the professor within 48 hours of the missed class to earn any
       points. If you attend class, it is expected that you will complete the assignment during class, in
       addition to assisting classmates when appropriate, and earn full credit for each of the six assignments.

       Each of the three exams will be worth a maximum of 100 points, consisting of questions that are
       multiple choice, true or false, problems, and/or short essays that cover both concepts and calculations.
       The due date of each exam will be as scheduled on the attached Course Calendar, with changes
       subject to the discretion of the professor and posted on Bb. A missed exam will count as a zero unless
       prior arrangements have been made with the professor, who reserves the right to allow a missed exam
       to be made up by applying its weight to another exam or assignment.

       The group project will be worth a maximum of 70 points, awarded by classmates, and based on the
       presentation of a relevant topic approved by the professor.

       Class Participation will be worth a maximum of 30 points awarded by the professor at the end of the
       semester and based on each student’s contribution to the learning environment.

     Incomplete Policy: A grade of “Incomplete” can be given only under extenuating circumstances,
     such as serious illness or other necessary absences. Summer semester grades of “Incomplete” must
     be completed in accordance with university policy. If this does not happen, then the “Incomplete”
     will be changed to an “F.” If you are not earning at least a “C” in the course, and have not complete
     most of the course, then an “Incomplete” grade may not be appropriate.

    Grading Scale will be as described below.

        A = 92 -100% or 920 – 1000 points
        B = 83 - 91% or 830 - 919 points
        C = 74 - 82% or 740 – 829 points
        D = 65 - 73% or 650 – 739 points
        F = below 65 or below 650 points

6.0 Complete Course Calendar:

   The complete course calendar is attached to this syllabus and any changes made at the discretion of the
   instructor will be posted on Bb.

7.0 Blackboard:

    Students should check the site continuously throughout the semester. Announcements, Assignments,
    Exams, Templates for Spreadsheet/Excel Assignments, and helpful information will be posted on

8.0 Drop and Withdrawal Policy:

    If you discover that you need to drop this class, you must go to the Records Office and ask for
    necessary paperwork. Professors cannot drop students; this is always the responsibility of the student. The
    record’s office will give a deadline for which the form must be returned, completed, and signed. Once you
    return the signed form to the records office and wait 24 hours, you must go into Duck Trax and confirm
    that you are no longer enrolled. If you are still enrolled, FOLLOW-UP with the records office immediately.
    You are to attend class until the procedure is complete to avoid penalty for absence. Should you miss the
    deadline or fail to follow the procedure, you will receive an F in the course.

9.0 Academic Honesty:

   Texas A&M University Central Texas expects all students to maintain high standards of personal and
   scholarly conduct. Students guilty of academic dishonestly are subject to disciplinary action. Academic
   dishonesty includes, but is not limited to, cheating on an examination or other academic work, plagiarism,
   collusion, and the abuse of resource materials. The faculty member is responsible for initiating action for
   each case of academic dishonesty.

10.0 Disability Services:

    If you have or believe you have a disability, you may wish to self-identify. You can do so by providing
    documentation to the office of Student Affairs in Room 114 on the main campus at (254) 519-5721.
    Students are encouraged to seek information about accommodations to help assure success in this class.

11.0 Library Services

    INFORMATION LITERACY focuses on research skills which prepare individuals to live and work in an
    information-centered society. Librarians will work with students in the development of critical reasoning,
    ethical use of information, and the appropriate use of secondary research techniques. Help may include, yet
    is not limited to: exploration of information resources such as library collections and services,
    identification of subject databases and scholarly journals, and execution of effective search strategies.
    Library Resources are outlined and accessed at

                         COURSE CALENDAR for 3rd edition of Text NOT the 4th edition
Class # Date      Chapters            Topics, Assignments, and Due Dates
 1      Sept 25   Introduction    Discuss Syllabus, Review Text, Video on Careers in Finance

                      Ch 1             An Overview of Financial Management and the Financial Environment
                                       In-class Assignment: Discuss Minicase at end of chap 1

                      Ch 3             Financial Statements, Calculation of Cash Flow, and Taxes
                                       In-class Assignment:
                                       Do Spreadsheet Problem 3-13 in excel (extra practice problem 3-12)
                                       Discuss Yahoo Finance for several calculations of “Cash Flow” vs. text

                      Ch 4             Analysis of Financial Statements
                                       In-class Assignment:
                                       Do Minicase at end of chap 4 in excel
                                       Video on MVA and EVA

                      Exam 1 Online Due Oct 10, Sunday, by midnight
2      Oct 16         Ch 2             Time Value of Money Applications for:
                                                (1) Lumps Sums (chap 2)
                                                (2) Annuities (chap 2)
                                                (3) Multiple or Uneven Cash Flows (chap 2)
                                                (4) Bonds (chap 5)
                                                (5) Stocks (chap 7)
                                                (6) Capital Structure Decisions (chap 9)
                                                (7) Capital Budgeting Projects (chap 10)
                                       In-class Assignment:
                                       Do Minicase at end of Chap 3
                                       Do Minicase at end of Chap 5
                                       Video on Bonds
3      Oct 30         Ch 7             Stock Valuation
                                       In-Class Assignments:
                                       Do Spreadsheet problem 7-20
                                       Do Minicase at end of Ch 7 (includes Ch 6 on risk-Return relationship)
                      Ch 8             Stock Options, only pp263-69

                  Exam 2 Online Due Nov 7, Sunday, by midnight
4      Nov 13       Ch 9          Calculating the Cost of Capital and WACC
                    Ch 14         Capital Structure Decisions

                      Ch 10            Capital Budgeting Decisions (mainly NPV, IRR, Payback Period)

                      Ch 15            Distributions to Shareholders (Cash and Stock Dividends, Stock Buybacks

                                       In-class Assignment: TBD
5      Dec 4     Group Presentations

                 Final Exam Online Due Dec 8, Wednesday, by midnight


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