MANAGEMT 7101NA - Managerial Finance

Ngee Ann Academy - Trimester 2 - 2014

This course introduces you to the world of modern finance, especially to the financial operations of business. It covers the concepts of time value of money, asset valuation, risk and return paradigm, capital budgeting, financing, and payout decisions, and derivatives. Upon completion, students will be able to value bonds and stocks, estimate asset returns according to their risk characteristics, choose projects that maximize shareholder's wealth using a wide range of analytical tools. They will also develop a good understanding on how firms finance their capital expenditure on their investment and the levels of dividends and other payouts for their shareholders. Finally, students will gain a basic understanding on derivatives such as options and futures, and apply them for sound risk management practices.

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Course Details

Course Code	MANAGEMT 7101NA
Course	Managerial Finance
Coordinating Unit	Adelaide Business School
Term	Trimester 2
Level	Postgraduate Coursework
Location/s	Ngee Ann Academy
Units	3
Prerequisites	MANAGEMT 7100NA
Assessment	Exam/assignments/tests/tutorial work as prescribed at first lecture

Course Staff

Course Coordinator: Chris Howland

Name: Chris Howland, Ph.D.
Location: N/A
Telephone: +61 437 719 022 (text first please)
Email: chris.howland@adelaide.edu.au or chris.howland@gmail.com
Course Website: www.myuni.adelaide.edu.au

Course Timetable

The full timetable of all activities for this course can be accessed from Course Planner.

1st Intensive

Session 1 Saturday	1:00pm - 2:00pm	Introduction: Issues in Corporate Finance – scope and activities of corporate finance, role of the corporate finance manager, key goal of financial management. Chapter 1. up to section 1.6 and Chapter 2
Session 2 Saturday	2:45pm - 4:15pm	The "Time Value of Money" – Compound Interest & Annuities. Chapter 5.
Session 3 Saturday	4:30pm - 6:00pm	The "Time Value of Money" – Perpetuities & Effective Annual Interest Rates. Chapter 5.
Session 4 Saturday	6:15pm – 7:45pm	Valuation of Bonds & Shares – Valuation of Fixed return securities. Chapter 6.
Session 5 Sunday	9:00am - 10:30am	Valuation of Bonds & Shares – Valuation of Variable return securities. Chapter 6.
Session 6 Sunday	10:45am - 12:30pm	NPV & IRR - Net Present Value & Internal Rate of Return. Chapter 7.
Session 7 Sunday	1:30pm - 3:00pm	Alternative Project Metrics – Project Decision Making Metrics. Chapter 7.
Session 8 Sunday	3:15pm - 4:30pm	Capital Budgeting - various capital budgeting criteria, application of criteria to investment proposals, advantages and disadvantages of each criterion. Chapters 8 & 9.
Session 9 Monday	7:00pm - 8:15pm	Capital Budgeting - determination of relevant cash flows for investment analysis & the effects of corporate taxes on cash flows. Chapters 8 & 9.
Session 10 Monday	8:30pm - 10:00pm	Questions and Answers to review course to date and regarding the first assignment.

2nd Intensive

Session 11 Saturday	1:00pm-2:30pm	Review of first assignment. Risk, Return - benefits (&limits) of diversification. Chapters 10 & 11.
Session 12 Saturday	2:45pm - 4:15pm	Risk, Return & the "Efficient Market Hypothesis" - benefits (&limits) of diversification, beta of stocks, three forms of market efficiency. Chapters 10 & 11.
Session 13 Saturday	4:30pm - 6:00pm	Cost of Capital - cost of equity capital, cost of preferred stock capital, cost of debt capital. Chapter 17.
Session 14 Saturday	6:15pm – 7:45pm	Cost of Capital – Weighted Average Cost of Capital (WACC). Chapter 17.
Session 15 Sunday	9:00am - 10:30am	Capital Structure and Leverage- types of long term capital, Modigliani and Miller capital structure decision. Chapter 19.
Session 16 Sunday	10:45am - 12:30pm	Capital Structure and Leverage- Modigliani and Miller capital structure decision with the effects of corporate taxes, effects of financial distress. Chapter 19.
Session 17 Sunday	1:30pm - 3:00pm	Dividend Policy – Distribution to shareholders in dividends and share repurchases. Chapter 18.
Session 18 Sunday	3:15pm - 4:30pm	Derivatives & Options in Corporate Finance – Options and risk management. Chapter 20.
Session 19 Monday	7:00pm - 8:15pm	Derivatives & Options in Corporate Finance – Options and risk management, real options, hedging. Chapter 20.
Session 20 Monday	8:30pm - 10:00pm	Questions and Answers to review the course, the second assignment & the exam

Course Learning Outcomes

The objectives of this subject are to provide students with:

Explain the financial goal governing a firm’s decisions.
Apply various valuation models to value long-term debt, preference shares and ordinary shares.
Explain the importance, role and techniques of capital budgeting in a firm.
Understand risk and return, diversifiable and non-diversifiable risk and asset pricing model.
Understand how to determine the cost of capital of a firm.
Explain operating and financial leverage, and implications for the target capital structure.
Discuss theories and issues related to dividend policy.
Understand the principles of and trade-offs associated with the use of hedging.

University Graduate Attributes

This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

University Graduate Attribute	Course Learning Outcome(s)
Knowledge and understanding of the content and techniques of a chosen discipline at advanced levels that are internationally recognised.	Objectives 1-8
The ability to locate, analyse, evaluate and synthesise information from a wide variety of sources in a planned and timely manner.	Objectives 1-8
An ability to apply effective, creative and innovative solutions, both independently and cooperatively, to current and future problems.	Objectives 1-8
Skills of a high order in interpersonal understanding, teamwork and communication.	Objectives 1-8
A proficiency in the appropriate use of contemporary technologies.	Objectives 1-8
A commitment to continuous learning and the capacity to maintain intellectual curiosity throughout life.	Objectives 1-8

Learning Resources

Required Resources

The text for this course is:

Ross S., Christens M., Drew M., Bianchi R., “Fundamentals of Corporate Finance”, Sixth Edition, 2013, McGraw Hill, 9780071013192

Online Learning

Important messages, topic notes, power point slides, case studies and other materials relating to the course will be placed on MyUni throughout the course. MyUni can be found at (www.myuni.adelaide.edu.au)

Learning & Teaching Modes

Managerial Finance is offered as a 2 x 3 day intensive program and uses a mix of learning methods.

The course is based on interactive discussion regarding the solving of a set of class exercises and the implications of the results when applied to business applications.

Workload

The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

Students should allocate approximately eight hours per week of study time to do appropriate readings, project work and assignments in addition to attendance at scheduled lecture sessions.

Weekly classes are 3 hours long. You can expect to spend about twice the amount of time preparing for each class compared to the lecture times. Assignments and exam preparation will demand additional concentrated periods of non-classroom study on your own. As a rough indication, you could expect to spend in the order of 120 hours of study time to complete the course, of which 36 hours would be in class.

Learning Activities Summary

Topics 1 to 5 will be covered in the first intensive, topics 6 to 10 in the second intensive.

Topic	Topics and Sub-topics
1	Introduction: Issues in Corporate Finance - scope and activities of corporate finance, role of the corporate finance manager, key goal of financial management
2	Valuation Principles and NPV:- introduction to time value of money and net present value
3	Bond Valuation – interest rates, introduction to bonds, valuation of bonds Share Valuation – alternative models
4	Valuation and the Firm – NPV, IRR and other rules
5	Capital Budgeting - various capital budgeting criteria, application of criteria to investment proposals, advantages and disadvantages of each criteria, determination of relevant cash flows for investment analysis, effects of corporate taxes on cash flows.
6	Risk and Return - measurement of expected return and risk volatilities for individual assets and portfolios of assets, Capital Asset Pricing Model.
7	Cost of Capital - cost of equity capital, cost of preferred stock capital, cost of debt capital, weighted average cost of capital (WACC)
8	Capital Structure and Leverage - types of long term capital, Modigliani and Miller capital structure decision, effects of corporate taxes, effects of financial distress
9	Dividend Policy – Distribution to shareholders in dividends and share repurchases
10	Derivatives & Hedging – the reduction of cash flow uncertainty and therefore the cost of capital through the use of hedging.

Specific Course Requirements

Accounting for Managers

The University's policy on Assessment for Coursework Programs is based on the following four principles:

Assessment must encourage and reinforce learning.
Assessment must enable robust and fair judgements about student performance.
Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
Assessment must maintain academic standards.

Assessment Summary

Assessment	Weighting
Assignment 1	25%
Assignment 2	25%
Final Exam (2.5 hours exam)	50%

Assignments
Two assignments are required to be completed on an individual basis

Final Exam
There will be a 2.5 hour open book exam. A financial calculator, an IPad, tablet or other device with a financial calculator app installed is recommended. You can bring in a PC only to use an Excel spread sheet, but for no other purpose (the spreadsheet must be blank at the start of the exam).

Students need to attain an average of fifty percent (50%) across all the individually assessed items, considered as a whole, in order to pass the course.

For information on the University’s Assessment for Coursework Programs Policy refer to:
www.adelaide.edu.au/policies/700/

Assessment Related Requirements

Attendance

Statutory obligations in Singapore are such that attendance in person is a compulsory condition of passing a course. Our specific requirements are that students must attend at least 80% of class sessions to be graded for that course. For these purposes each intensive weekend is defined as comprising 5 sessions with 2 on each of Saturday and Sunday and 1 on Monday evening.

Assessment Detail

No information currently available.

Submission

Presentation of Assignments:

The preferred format for submission of assignments is email.
Please must retain a copy of all assignments submitted.
Please attach an ‘Assignment Cover Sheet’, which is signed and dated by you before submission. Alternatively state in your email submission of the assignment that the work is wholly your own work, you have not colluded with nor plagiarised another student’s work.
Lecturers can refuse to accept assignments, which do not have a signed acknowledgement of the University’s policy on plagiarism.

Late Assignment Submission:

Students are expected to submit their work by the due date to maintain a fair and equitable system. Extensions will generally only be given for medical or other serious reasons. All requests for extensions must be emailed to the lecturer in charge of the course before the due date. Each request will be assessed on its merits. A late assignment (without prior arrangement) will be penalised by a 5% mark reduction for each day that it is late.

Course Grading

Grades for your performance in this course will be awarded in accordance with the following scheme:

M10 (Coursework Mark Scheme)
Grade	Mark	Description
FNS		Fail No Submission
F	1-49	Fail
P	50-64	Pass
C	65-74	Credit
D	75-84	Distinction
HD	85-100	High Distinction
CN		Continuing
NFE		No Formal Examination
RP		Result Pending

Further details of the grades/results can be obtained from Examinations.

Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

Final results for this course will be made available through Access Adelaide.

Student Feedback

The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.
Student Support
Policies & Guidelines
This section contains links to relevant assessment-related policies and guidelines - all university policies.
Fraud Awareness

Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student’s disciplinary procedures.

The University of Adelaide is committed to regular reviews of the courses and programs it offers to students. The University of Adelaide therefore reserves the right to discontinue or vary programs and courses without notice. Please read the important information contained in the disclaimer.

Authorised by:	Deputy Vice-Chancellor and Vice-President (Academic)
Maintained by:	Course Outlines Administrator