CORPORATE FINANCE
Spring, 2007
PROFESSOR: Mengxin Zhao, Ph.D. C.F.A.
OFFICE: C403
OFFICE HRS:
E-MAIL: mzhao@bentley.edu or mengxin.zhao@gmail.com
COURSE OBJECTIVES
To emphasize and expand on the modern fundamentals of financial theory
To develop the ability to apply financial analysis and planning techniques in
solving financial problems
To practice and engage in the presentation, exchange, and synthesis of ideas
To efficiently and effectively locate, read, and use information in the financial media, on electronic information systems, and in the Trading Room.
Course Descriptions
This course provides a framework for analyzing the major types of investment and financing decisions made by firms. We start with investment decisions and then move to an understanding of how firms decide between alternative sources of financing their investments. We also examine the concept of risk and return and learn how to estimate the cost of debt, the cost of equity and the weighted average cost of capital. A thorough understanding of the topics covered in this course is important for the success of careers in investment banking, consulting, and corporate management.
TEXT BOOK Principles of Corporate Finance, Brealey, Myers, & Allen; Irwin McGraw-Hill, 8th Edition.
Additional readings will be assigned throughout the semester.
DETERMINATION OF GRADES
Assignments 15%
Case 25%
Final Examiniation 60%
ATTENDENCE
Attendance is crucial to the understanding of the materials. Class Attendance and Participation are strongly encouraged. If you have to miss the class, please review the notes, discuss with your classmates and ask me for help.
ASSIGMENTS/CASES AND QUIZZES
Assigments/Cases and Quizzes will be announced one week in advance. It is your responsibility to inquire about any announced quizzes and assigments if you miss class. I will give you instruction and guidelines for cash analyses.
FINANCIAL CALCULATOR
It is necessary that students have a calculator to use throughout the course. Financial calculator would be ideal. It can solve uneven cash flow, NPV, and IRR problems. Excel spreadsheet have the similar functions as financial calculators. I will be using the Texas Instruments BA II plus calculator and excel spread sheet.
COURSE OUTLINE
This outline provides a general plan for the course; deviations may be necessary.
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Topic
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Chapter (s) in BM
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Week 1
1st. Class
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Course Overview
Time Value of Money
Bond and Stock Valuation
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Chapters 1,
2 ,& 3
4
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Week 1
2nd. Class
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Risk and Return
Corporate Finance and Market Efficiency
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Chapters 7 & 8
13, Additional Readings
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Week 2
1st. Class
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Financial Analysis and Planning
Capital Budgeting
(basics)
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Chapter 29
5 & 6
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Week 2
2nd. Class
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Capital Budgeting and Risk
Practical Problems in Capital Budgeting
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Chapter 9
10, 11, & 12
Assign Case # 1
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Week 3
1st. Class
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Case Discussion
Overview of Corporate Financing
Cost of Capital
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Chapter 14 & 15
Notes
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Week 3
2nd. Class
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Free Cash Flow and Firm Valuation
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Notes
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Week 4 1st. Class
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Dividend Policy
Capital Structure
Case Assigned
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Chapter 16
17 & 18
Case
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Week 4 2nd. Class
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Capital Structure (continued)
Financing and Valuation
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17 & 18
Chapter 19
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Week 5 1st. Class
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Short-term financing (overview)
Leasing
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Chapter3 30 & 31
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Week 5 2nd. Class
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Mergers, Corporate restructuring
Bankruptcy
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Chapters 32 & 33
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Week 6 1st. Class
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Corporate governance around the world
Concluding remarks
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Chapter 34 & 35
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Week 6
2nd. Class
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Review, Exam
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**I do reserve the right to modify the syllabus during the semester if any situation accurs.