Course Abstract

Brandeis University International Business School Financial Modeling I (1) Online Only – Spring 2016

Course Abstract This course acquaints students with financial modeling by having them calculate the values of various companies and projects under different market and financial conditions by forecasting its cash flows. Once students complete this course, they will understand finance for what it is - the sum total of quantitative analysis, judgment, understanding of various industries and markets, timing, and cleverness. Most importantly, students will become comfortable in making quantitative assessments under conditions of extreme uncertainty.

Course Delivery This course is online. As such, the professor will be available for extended hours working with students. In exchange, students are expected to be motivated and disciplined. Every week, the course will have:  Online office hours - to answer questions on the material and discuss other topics individually or in groups. I label these OH. Please use the following URL: https://brandeis.bluejeans.com/9783947318  Online office hours by appointment – may be done any day/time that works  Case analyses - students work alone or in groups of two

The days/times of the above will be as follows: Sun. Mon. Tue. Wed. Thur. Fri. Sat. 10-11 10-11 Morning OH OH 12 12 Case Graded Afternoon analyses cases due returned 10-11 10-11 10-11 10-11 Night OH OH OH OH

TA Rustom Dalal is the on-campus course TA and may be reached at [email protected] . The hours are by appointment only.

Course FAQs 1. Who should be taking this course? Students concentrating in finance should take this course. This course provides the foundation for doing quantitative valuations. The fact that the course is online should not limit students. That said, students taking this online-only course should be motivated and disciplined. They may use the IBS network to access the course.

2. What are the pre-requisite courses? Accounting and Corporate Finance are pre-requisites for this course. If students are taking corporate finance concurrently, the professor’s permission will be required. 3. What skills will be developed in this course? After completing this course, students should be able to develop sophisticated financial models. Students should also be comfortable with the basic mathematics underlying these models and understand their strengths and weaknesses.

4. What are the basic requirements/workload? Workload is high. The course philosophy is that finance is a mind game and those that have been steeled through rigorous work will have an advantage – the self-confidence of having a thorough training under conditions of great uncertainty.

Materials for the Course The cases for the course may be purchased at: https://cb.hbsp.harvard.edu/cbmp/access/43780557

Additional readings will be posted on Latte.

Grading Students may work alone or in groups of two. I must approve each group. All case analyses will be submitted electronically. The final grade will be based on the following:  Case analyses (80%)  Class participation (20% - considers oral as well as online written contributions)  Please note that lack of class participation and, for that matter, quality class participation will result in a final grade no higher than a B.

All case analyses will be returned the day following their submission. Final grades will be posted the day following the last case submission.

Disabilities If you are a student with a documented disability on record and wish to have a reasonable accommodation made for you, please advise.

Academic integrity You are expected to be familiar with and to follow the University’s policies on academic integrity (see http://www.brandeis.edu/studentlife/sdje/ai/). Instances of alleged dishonesty will be forwarded to the Office of Campus Life for possible referral to the Student Judicial System. Potential sanctions include failure in the course and suspension from the University. Brandeis University International Business School Financial Modeling I (1) Online Only – Spring 2016

Week Topics Activities 1  Introduction Readings/Videos (read and understand before  Discounted cash flows watching each reading’s video):  Seasonality and  Brazilians Build, Trade “Maid Routes” forecasting  Introduction to CF Valuation Methods  Pro forma statement  Using APV: A Better Tool for Valuing Operations preparation  Case: Toy World, Inc.  Profitability vs. risk Optional enrichment material: and liquidity  Industry metrics: Airlines  Balance sheet forecasting 2  Discount rate Case/Video (read before watching video): methodologies  Globalizing the Cost of Capital and Capital Budgeting at AES Optional enrichment material:  Valuation of Frequent Flyer Miles 3  Capital budgeting Case/Video (read before watching video):  Debt and equity  Friendly Cards financings Optional enrichment material:  Acquisitions  Valuation of a vaccine: Merck’s valuation of the  Consolidations Human Papilloma Virus vaccine 4  Comparables Case/Video (read before watching video): valuation  Boston Beer  Cash Flow valuation Optional enrichment material:  Exponential growth  Pricing the rights to pollute

5  Pricing the rights to Case/Video (read before watching video): pollute  Acid Rain: The Southern Company  Industry regulation Optional enrichment material:  Optionality in  How is an athlete’s contract valued? contracts 6  Valuing an athlete and Case/Video (read before watching video): a team  Tottenham Hotspur plc – case preparation  Pricing in uncertain Optional enrichment material: markets  Valuing companies in the internet space

7  Wrap-up and  Summation and reflection reflection  Answer student questions