Recommended: Arthur J. Keown, John D. Martin, J. William Petty, and David F.
Scott, Jr, (KMPS) Financial. Management: Principles and Applications, 10th ...
Minnesota State University Moorhead FINC 446 Financial Decision Making 1. Course Information: Instructor Prerequisite Meeting Days / Time Location Office / Phone Home Phone Office Hours E-mail Website
School of Business Spring, 2008
Dr. Olgun Fuat Sahin FINC 441 TH / 10:30am – 11:45am CB 210 CB 204H / (218) 477-4664 (701) 866-2937 MWF: 09:30am – 11:45am, TH: 03:00pm – 04:45pm or by appointment
[email protected] or
[email protected] www.mnstate.edu/sahin/
2. School of Business Mission Statement: We provide a quality undergraduate business learning experience designed to prepare students for successful and responsible careers. Our qualified faculty engages in instructional, applied and basic research while serving the community. 3. Course Description: “This course moves away from textbooks to learning the skills and issues involved in the financial management of a corporation through academic and professional articles. Several important concepts of financial management are applied to real-life situations through the use of case problems. These cases provide insights into some of the problems a firm faces and how they can be addressed.” Cases that will be covered relate to following aspects of corporate financial management: financial analysis and forecasting, estimation of cost of capital, corporate investment decisions, capital structure policy and financing, mergers and acquisitions, and hedging. 4. Course Objectives: Primary objective of this course is to provide you an opportunity to evaluate corporate finance problems and help you develop practical analytical skills and ability to discuss alternative course of actions. Secondary objective is to improve effective written and oral communication skills. 5.
Required Material: • Required: Robert F. Bruner, Case Studies in Finance: Managing for Corporate Value Creation, 5th Edition, McGraw-Hill Primis, 2008. (Please note that this is a custom book.) • Recommended: Arthur J. Keown, John D. Martin, J. William Petty, and David F. Scott, Jr, (KMPS) Financial Management: Principles and Applications, 10th Edition, Prentice Hall, 2005. Available at reserves in the library together with student study guide. • Recommended: Richard A. Brealey and Stewart C. Myers, Principles of Corporate Finance, 8th Edition, McGraw-Hill Irwin, 2006. • Recommended: Mark Grinblatt and Sheridan Titman, Financial Market and Corporate Strategy, 2nd Edition, McGrawHill Irwin, 2002.
6.
Grading:
A-Cases: Points for each case indicated on the table below. Some of these cases have to be prepared in groups and therefore you should form a group as soon as possible. Please turn in the names of the group members (no more than 5) at the beginning of our second meeting. There is a file on the class web site on how to prepare case reports. You can also find excel data files of some of the cases on the website for your analysis. You should discuss cases with your group members and classmates whenever you can. I expect individual case reports to be completely your own work and team case reports to be contributed equally by members. At the end of the semester you will have an opportunity to evaluate team members for each team case report. Based on member evaluations of contribution, I will make an adjustment to scores that will be bound by m 10% for each member. You will have total points of 100 × Number of Students in your group except yourself. You will distribute all of these points among the members, but you cannot give to any single member less than 90. This evaluation will be made for each group work turned in. B-Participation and Attendance: Participation and attendance are worth 300 points. Attendance points total 100. You are awarded these points in advance. I will take attendance in every class. You are required to attend classes on time and regularly. You may be absent for no more than four class periods without any consequences. Absence beyond four class periods will cause an 8-point loss each time. If you cannot come to the class due to unforeseen circumstances, you should contact me as soon as possible. Your preparation and participation are very important for this class. 1
C-Grading Scale: Lower Upper Lower End 1233 1370 90% 1096 1232 80% 959 1095 70% 822 958 60% 0 822 0% Please Note: Addition or exclusion of cases will change above scale.
Grade A B C D F
7. Academic Integrity: The following is taken from the student handbook at Minnesota State University Moorhead: “The University expects all students to represent themselves in an honest fashion. In academic work, students are expected to present original ideas and give credit for their ideas of others. The value of a college degree depends on the integrity of the work completed by the student. When an instructor has convincing evidence of cheating or plagiarism, the following actions may be taken: assign a failing grade to the assignment in question, or assign a failing grade for the course in which the student cheated. For informational purposes, instructors may choose to report the offense, the evidence, and their action to the Dean of their College, or the Vice President for Academic Affairs. If the instructor (or any other person) feels the seriousness of the offense warrants a different or additional penalty, the incident may be reported to the Student Conduct Committee through the Student Development Office. The Student Conduct Committee will follow procedures set out in the Student Conduct Code. After its review of the case, and a fair and unbiased hearing, the Student Conduct Committee may take disciplinary action if the student is found responsible (see Student Conduct Code for details). A student who has had a course grade reduced by an instructor because of cheating or plagiarism, and who disputes the instructor's finding, may appeal the grade using the Course Grade Appeal Policy, which states that the student must prove the grade was arbitrary, prejudicial, or in error.” 8. Disability Access Statement: Students with disabilities who believe they may need an accommodation in this class are encouraged to contact Greg Toutges, Coordinator of Disability Services at 477-5859 (Voice) or 1-800-627-3529 (MRS/TTY), CMU 114 as soon as possible to ensure that accommodations are implemented in a timely fashion. 9. Miscellany: Students are responsible for understanding the course policies and requirements as expressed in this syllabus, as well as those policies and requirements announced in class. Instructor reserves the right to change parts of this syllabus as circumstances necessitate.
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10. Course Timetable1: Week Tuesday January 8, 2008 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
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Thursday January 10, 2008 Introduction January 17, 2008 Case 4 January 24, 2008 Case 6 January 31, 2008 Case 7 February 7, 2008 Case 14 February 14, 2008 Case 16 February 21, 2008 Case 19 February 28, 2008 Case 22 March 6, 2008 Spring Break, No Class March 13, 2008 Case 26 March 20, 2008 Case 29 March 27, 2008 Case 35 April 3, 2008 Case 37 April 10, 2008 Case 45 April 17, 2008 Case 49 April 24, 2008 Case 50 May 1, 2008 Group Evaluation Form Due by 12:00pm
January 15, 2008 Case 1, 4 January 22, 2008 Case 6 January 29, 2008 Case 7 February 5, 2008 Case 12 February 12, 2008 Case 16 February 19, 2008 Case 19 February 26, 2008 Case 22 March 4, 2008 Spring Break, No Class March 11, 2008 Case 26 March 18, 2008 Case 28 March 25, 2008 Case 30 April 1, 2008 Case 37 April 8, 2008 Case 45 April 15, 2008 Case 48 April 22, 2008 Case 49 April 29, 2008 Case 50
Course Timetable is subject to change. 3
11. List of Cases from Bruner, Suggested Readings, Points, and Additional Information on Cases: Case # 1 4 6 7 12 14 16 19 22 26 28 29 30 35 37 45 48 49 50
Name Warren E. Buffett, 2005 The Battle for Value, 2004: FedEx Corp. vs. United Parcel Service, Inc Krispy Kreme Doughnuts, Inc The Body Shop International PLC 2001: An Introduction to Financial Modeling
Topic Basics Value Creation Financial Modeling Financial Modeling
Reading KMPS 1, 5, 6 KMPS 2, 13 KMPS 2, 3, 4 KMPS 2, 3, 4
Data File N N N Y
Notes Report Report Report Report
Work I T I I
Points 50 50 80 80
"Best Practices" in Estimating the Cost of Capital: Survey and Synthesis Coke versus. Pepsi, 2001 The Boeing 7E7 Compass Records Genzyme / Gel Tex Pharmaceuticals Joint Venture JetBlue Airways IPO Valuation An Introduction to Debt Policy and Value
Cost of Capital Cost of Capital Cost of Capital Capital Budgeting Capital Budgeting IPO Capital Structure
KMPS 12 KMPS 12 KMPS 12 KMPS 9 - 11 KMPS 9 - 11 KMPS 14 KMPS 15, 16
N Y Y N Y Y Y
Read Report Report Report Report Report Report
N/A T T T T T T
N/A 50 50 50 50 80 50
Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluating Strategies The Wm. Wrigley Jr. Company: Capital Structure, Valuation, and Cost of Capital Merton Electronics National Railroad Passenger Corporation ("Amtrak"): Acela Financing General Mills’ Acquisition of Pillsbury from Diageo PLC
Capital Structure Capital Structure Risk Management Financing Tactics M&A
KMPS 15, 16 KMPS 15, 16 KMPS 21, 22 KMPS 24 KMPS 23
N Y N Y N
Read Report Report Report Report
N/A I T T I
N/A 80 80 80 80
M&A M&A M&A
KMPS 23 KMPS 23 KMPS 23
N Y Y
Read Report Report
N/A I I
N/A 80 80
Hostile Takeovers: A Primer for the Decision Maker General Electric's Proposed Acquisition of Honeywell The Hilton-ITT Wars
Reading => KMPS = Keown, Martin, Petty, Scott Data File => Y = Yes, N = No Work => I = Individual, T = Teamwork M&A = Mergers and Acquisitions Note: Some cases may not be covered or additional cases may be assigned if needed.
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