Solutions to End of Chapter Problems Fundamentals of Financial Management Houston Brigham

Document Sample
Solutions to End of Chapter Problems Fundamentals of Financial Management Houston Brigham Powered By Docstoc
					                                                 Principles of Finance
                                                FIN 3403 – Section 591
                                                       Fall 2010

INSTRUCTOR:         Richard Borghesi, Ph.D. (Call me Dr. B)  TEL:         941-359-4524 (Voice)
OFFICE:             C220                                                  941-359-4367 (Fax)
OFF. HOURS:         M 4:00 – 6:00 and by appointment         E-Mail:

This course provides an introduction to finance and to problems confronting financial managers. Topics include
risk, return, time value of money, financial markets, determinants of interest rates, equity and debt valuation, and
capital budgeting.

In this course you will develop:
     An understanding of overall firm management from the finance perspective of maximizing wealth within the
     constraints of legal and ethical behavior
     An understanding of the relationships between financial markets and the price of credit
     Knowledge of the role of financial statements in both managing firms and analyzing firms
     The ability to compute the value of cash flows
     An understanding of firms’ use of stocks and bonds and the determinants of stock and bond value
     An understanding of the relationship between risk and return
     Knowledge of the purpose and mechanics of project analysis and the importance of cost of capital

By the end of this course, students should be able to distinguish between different types of financial markets,
calculate the value of cash flows, stocks, and bonds, determine project rates of return using IRR and MIRR methods,
calculate the required rates of return for stocks and bonds, understand the differences between total risk and market
risk, and quantify a firm’s cost of capital.

This course is designed to be a lecture-based class with time allotted for in-class independent problem solving.

    • Text: Fundamentals of Financial Management Concise Sixth Edition, Brigham & Houston, Thomson
        Southwestern, 2008.
             o You are required to read chapters 1 and 2 prior to the first class.
    • Calculator: Hewlett Packard 10BII.
             o You are required to bring this calculator to the first class.
             o A common question is: ‘can I use another type of financial calculator or an engineering/graphing
                 calculator?’ The answer is yes, but only if you come to the first day of class knowing how to set the
                 number of decimal places and periods per year, input and solve for N, I, PV, PMT, and FV, toggle
                 between begin mode and end mode, enter exponents, and solve for mean, standard deviation, NPV,
                 and IRR.
             o If the bookstore is sold out, look elsewhere! Many other stores (such as Wal-Mart) carry this model.
    • Course Pack: Pre-printed lecture slides can be purchased through the bookstore. You can also download and
        print them yourself via Blackboard, but the bookstore option is available to you as a time- and money-saver.
    • Text: Fundamentals of Financial Management Concise Sixth Edition Study Guide, Brigham & Houston,
        Thomson Southwestern, 2008.

In addition to my office hours, a TA will be available much of the week to help you outside of class. His name is
Joey, and you can reach him by email at He will be in his office (C214) up to three days
per week. Specific days and hours will be announced during the 2nd week of class. He can help you to study for
exams, review general concepts, etc.

                                                        FIN 3403
                                                       Page 1 of 4
                                                 Principles of Finance
                                                FIN 3403 – Section 591
                                                       Fall 2010

I do not take attendance regularly, but may give extra credit for attendance on randomly selected days. Make-up
exams will be an option only to those who provide prior notice and/or have a documented emergency.

Students are permitted to sell their personal class notes to other students. Students may not sell the posted
PowerPoint slides.

In the event of an emergency, it may be necessary for USF to suspend normal operations. During this time, USF may opt
to continue delivery of instruction through methods that include but are not limited to: Blackboard, Elluminate, Skype,
and email messaging and/or an alternate schedule. It’s the responsibility of the student to monitor Blackboard site for
each class for course specific communication, and the main USFSM, College, and department websites, emails, and
MoBull messages for important general information.

Students who anticipate the necessity of being absent from class due to the observation of a major religious observance
must provide notice of the date(s) to the instructor, in writing, by the second class meeting.

Students with disabilities are responsible for registering with the Office of Student Disabilities Services in order to
receive special accommodations and services. Please notify the instructor during the first week of classes if a reasonable
accommodation for a disability is needed for this course. A letter from the USF Disabilities Office must accompany this

Please note that any form of plagiarism or cheating on exams, projects, or papers is considered unacceptable behavior.
Software will be utilized to assess potential plagiarism. Sources must be properly cited. Please be sure to review the
university’s policy in the student handbook or check:

Your final course grade will consist of three midterm exams and a final exam. The +/- grading system will be used
in assigning final grades. You will receive at least one grade before the semester drop date.

                              Point System                                                    Course Grade
                         Item                                        Points         Total Points     Expected Grade
   Exam 1 – (9/20) – 2 Points/Problem x 20 Problems                   40             175 – 198          A-Range
  Exam 2 – (10/18) – 2 Points/Problem x 20 Problems                   40             155 – 174          B-Range
  Exam 3 – (11/15) – 2 Points/Problem x 20 Problems                   40             135 – 154          C-Range
 Final Exam – (12/6) – 3 Points/Problem x 26 Problems                 78             115 – 134          D-Range
                      Total Points                                    198              < 115               F

Exam questions will be multiple choice, and will be very similar to those assigned for homework and those gone
over in class. Begin studying by re-reading the posted PowerPoint notes and refer to the textbook whenever you feel
that you need additional explanation. Next, work through the PowerPoint problems presented in class. After this,
review the suggested textbook exercises using the solutions posted on Blackboard for guidance.

Exam grades will be posted to Blackboard usually within a week after being administered. To check your exam

    1. Go to
    2. Log into Blackboard with your user name and password.
    3. Click on the 'Courses' tab near the top of the page.
    4. Click on the class that you would like to view.

                                                        FIN 3403
                                                       Page 2 of 4
                                                     Principles of Finance
                                                    FIN 3403 – Section 591
                                                           Fall 2010

         5. Click on 'Course Tools' tab in the gray box.
         6. Click on 'My Grades'.

     FIN 3403 contains difficult subject matter. I can tell you from years of experience that you will get far more out of
     this course (and be much more likely to receive a better grade) if you do each of the following:
          • Buy your HP10BII calculator immediately
          • Read the textbook chapter to be covered before coming to class
          • Attend every lecture
          • Bring a hard copy of the lecture slides with you to class
          • Finish the suggested textbook exercises as soon as possible after each class, since each lecture builds on the
          • Raise your hand whenever you are stuck; if you have a question, be confident that others have the same
              question and they too will appreciate hearing an expanded explanation


Week                         Chapter        Topic                                   Suggested End-of-Chapter Exercises

                                            An Overview of Financial
                             1                                                      Questions: 1, 2, 3, 4, 7, 9, 10, 13
1            8/23
                             2              Financial Markets and Institutions      Questions: 1, 2, 3, 5, 7, 9

                                                                                    Questions: 1, 2, 3, 4, 8
2            8/30            5              Time Value of Money                     Problems: 1, 2, 3, 4, 5, 6, 7, 8, 19, 20, 21,
                                                                                    23, 24

3            9/6                            Labor Day

4            9/13                           Review for Exam 1

5            9/20                           Exam 1 (Chapters 1, 2, 5)

                                            Financial Statements, Cash Flow,        Questions: 2, 3, 4, 5, 6, 7, 9, 10
                                            and Taxes                               Problems: 1, 2, 3, 8
6            9/27
                                                                                    Questions: 1, 2, 6
                             4              Analysis of Financial Statements
                                                                                    Problems: 4, 5, 6, 7, 8, 9, 12, 15, 17, 20

                                                                                    Questions: 2, 3, 4, 5, 6, 7, 8, 14
                             7              Bonds and Their Valuation
                                                                                    Problems: 1, 2, 3, 4, 5, 7, 9
7            10/4
                                                                                    Questions: 2
                             6              Interest Rates                          Problems: 1, 2, 3, 4, 5, 9, 11, 12, 13, 17,

8            10/11                          Review for Exam 2

9            10/18                          Exam 2 (Chapters 3, 4, 6, 7)

                                                                                    Questions: 2, 3, 4, 5, 6, 7, 8
10           10/25           8              Risk and Rates of Return                Problems: 1, 2, 3, 5, 6, 7, 9, 11, 12, 13, 16,

                                                            FIN 3403
                                                           Page 3 of 4
                         Principles of Finance
                        FIN 3403 – Section 591
                               Fall 2010

                                                    Questions: 3, 4
11   11/1    9    Stocks and Their Valuation
                                                    Problems: 1, 2, 3, 4, 6, 7, 10, 11, 12, 14

12   11/8         Review for Exam 3

13   11/15        Exam 3 (Chapters 8, 9)

                                                    Questions: 2, 3, 4
             10   The Cost of Capital
                                                    Problems: 1, 2, 3, 5, 8, 12
14   11/22
                                                    Questions: 3, 4, 5
             11   The Basics of Capital Budgeting
                                                    Problems:1, 2, 3, 6, 12, 13, 14

                  Current Topics in Finance
15   11/29
                  Review for Final Exam

16   12/6         Final Exam (Chapters 1 – 11)

                                FIN 3403
                               Page 4 of 4

Shared By:
Description: Solutions to End of Chapter Problems Fundamentals of Financial Management Houston Brigham document sample