Lemoyne-Owen College

LeMoyne-Owen College ADCF 406A Corporate Investments Fall 2011

Instructor: Yolandrea Y. Clark Office Room: GH 4th Floor Room 408 Office Phone: 901.619.4843 Office Hours: Appointment only Email Address: [email protected]

Syllabus

Texts: Foundations of Financial Management 14th Edition Block, Hirt, and Danielsen ISBN: 978-0077454432 Casebook to accompany Foundations of Financial Management ISBN: 978-0077316174 Study Guide and Workbook to Accompany Foundations of Financial Management ISBN: 978-0077316266

Course Objectives: Each student is expected to grasp the concepts delineated by chapter below. Each objective will be reviewed in detail in class.

Week One Chapter 9 Time Value of Money

LO1. Money has a time value associated with it and therefore a dollar received today is worth more than a dollar received in the future.

LO2. The future value is based on the number of periods over which the funds are to be compounded at a given interest rate.

LO3. The present value is based on the current value of funds to be received.

LO4. Not only can future value and present value be computed, but other factors such as yield (rate of return) can be determined as well.

LO5. Compounding or discounting may take place on a less than annual basis such as semiannually or monthly.

Week Two

Chapter 10 Bond Valuation

LO1. The valuation of a financial asset is based on the present value of future cash flows.

LO2. The required rate of return in valuing an asset is based on the risk involved. LO3. Bond valuation is based on the process of determining the present value of interest payments plus the present value of the principal payment at maturity

LO4. Preferred stock valuation is based on the dividend paid and the market required return

LO5. Stock valuation is based on determining the present value of the future benefits of equity ownership.

Week Three

Chapter 11 Cost of Capital

LO1. The cost of capital represents the weighted average cost of all of the sources of financing to the firm.

LO2. The cost of capital is normally the discount rate to use in analyzing an investment.

LO3. The cost of capital is based on the valuation techniques from the previous chapter and is applied to bonds, preferred stock and common stock.

LO4. A firm attempts to find a minimum cost of capital through varying the mix of its sources of financing.

LO5. The cost of capital may eventually increase as larger amounts of financing are utilized.

Week Four

Chapte 12 Capital Budgeting

LO1. A capital budgeting decision represents a long-term investment decision.

LO2. Cash flow rather than earnings is used in the capital budgeting decision.

LO3. The payback method considers the importance of liquidity, but fails to consider the time value of money.

LO4. The net present value and the internal rate of return are generally the preferred methods of capital budgeting analysis.

LO5. The discount or cut-off rate is normally the cost of capital.

Week Five

Review and Final

Attendance Policy: In accordance with college policy, classroom attendance is required. The following standard will be applied:

1. If unexcused absences total 15% of the regularly scheduled class meetings, the instructor has the authority to lower the final grade by one letter. 2. If unexcused absences total 20% of the regularly scheduled class meetings, the instructor has the authority to give a failing grade.

3. Five tardies—arrival to class five minutes after class has begun—will equal one unexcused absence.

Classroom Procedures:

Students are expected to be in class at 6:00 p.m. and prepared to stay until 10:00 p.m. The quiz will handed out at 6:15 p.m. and the students will be given 30 minutes to complete the quiz. The class is primarily a lecture format with questions and conversation encouraged. Breaks will be given at the discretion of the professor.

Assignments and Submission Requirements:

Assignments Students will be given assignments in each class based on material covered. If the student misses class, he or she is responsible for getting information missed.

Quizzes and Examinations A quiz is given each class. A comprehensive final exam is given during the 4th class and due at the beginning of the 5th class. The final exam accounts for 60% of your grade.

Participation

Students are expected to show and contribute to class discussions. Participation accounts for 10% of your overall grade.

Assessment: The Final Exam is a take home exam. It will be distributed during the 4th class and due at the beginning of the 5th class. The Final is 60% of your final grade.

A quiz is given each class. The quizzes count for 30% of your grade.

Policies Related to Students with Disabilities: If you need course adaptations or accommodations because of a disability, if you have emergency medical information to share, or if you need special arrangements in case the building must be evacuated, please make an appointment with Jean Saulsberry, Director of Student Development, as soon as possible at (901) 435-1727. The Student Development Office is located in the Alma C. Hanson Student Center, Room 208.

Evaluation: Grade Scale: All exams/quizzes are written. 90-100 A 80-90 B 70-80 C 60- 70 D