Week 1Financial Markets, Interest Rates, &Security Returns 5 (5-1), (5-2), (5-3), (5-8)Week 2Jan. 22 Topic 1: Using & Modifying AccountingWeek 3Week 4Risk & Return Basics 6 (6-1), (6-2), 6-3), (6-10), (6-15),Capital Asset Pricing Model (CAPM) (6-17ss), 7 (pp. 262-272)Week 6Week 7Replacement DecisionsWeek 8Topic 4: Financial Structure &Dividend DecisionsWeek 9Week 11Week 12Course Summary & ReviewWeek 13UNIVERSITY OF COLORADO CORPORATE FINANCE Leeds School of Business MBAC 6060, Section 802 (EvMBA) Prof. Ronald W. Melicher Spring, 2003 Office: Room 462 W--06:00-09:00 PM; BUS 218Office Hours: W & Th--01:30-03:00 PM, E-Mail: [email protected] & by Appointment Phone No. 303-492-3182Course Description:Analyzes the implications of modern finance theory for the major decisions faced by corporate financial managers. Develops the basic skills necessary to apply financial concepts to the various problems faced bya firm. Includes capital budgeting, capital structure, long-term financing, short-term financial management, and financial planning topics. Prereq., MBAC 6020.Course Objective:The primary objective is to develop an understanding and working knowledge of how finance practices, techniques, and theories are currently applied in business. Students should acquire the analytical finance skills, insights, and theories needed to make sound (viewed in a risk-return framework), value-enhancing financial management decisions. Required Textbook:1. Brigham, Eugene F., and Michael C. Ehrhardt, Financial Management: Theory and Practice, Tenth Edition (Harcourt College Publishers, 2002).Optional Reference Textbooks:1. Brealey, Richard A., and Stewart C. Myers, Principles of Corporate Finance, Seventh Edition (McGraw-Hill Irwin, 2003).2. Ross, Stephen A., Randolph W. Westerfield, and Jeffrey F. Jaffe, Corporate Finance, Sixth Edition (McGraw-Hill Irwin, 2002).Suggested Selected General Readings (When You Have the Time During Your MBA Program):1. Bernstein, Peter L., Capital Ideas: The Improbable Origins of Modern Wall Street (Free Press, 1992); and Against the Gods: The Remarkable Story of Risk (John Wiley & Sons, 1996).2. Dent, Harry S., Jr., The Great Boom Ahead (Hyperion, 1993); and The Roaring 2000s, (Simon & Schuster, 1998).3. Siegel, Jeremy J., Stocks for the Long Run, Second Edition (McGraw-Hill, 1998).4. Schiller, Robert, Irrational Exuberance (Princeton University Press, 2000 & Broadway Books, 2001).Assignments:Students will have individual textbook reading and problem assignments, as well as group assignments. While you may work on problem assignments with others, most individuals learn best by working the problems individually (and, of course, you are on your own when taking the learning exercises or exams). The “mini cases” are to be group-prepared efforts. We will use either the assigned study/support groups, or form new groups, for “group” assignments. Members of each group also will have at least one oral presentation responsibility on a mini case during the semester. Each mini case write-up and analysis must be the group’s own effort and product. No portion is to be extracted from previously prepared analyses or solutions. Students also are responsible for current examples of financial management in practice as reported in Business Week, Fortune, and the Wall Street Journal.Grading Procedures:The final grade will be based on two “learning exercises” or exams (mid-term = 30% and final = 30%, fora total of 60%); “mini case” write-ups and the oral presentation (30%); and class participation (10%). The “learning exercises” will be primarily in the form of a series of problems similar to the ones assigned and/or covered in class. In addition, each learning exercise will have an objective portion. The learningexercises will be closed book and closed notes. However, students may bring a one-page (two-sided) formula sheet, as well as a financial calculator, to the exams. COURSE OUTLINE:Brigham & Ehrhardt (B&E) TextDate Topic Chapters & Other Assignments Week 1Jan. 15 Course Introduction 1 Financial Markets, Interest Rates, & Security Returns 5 (5-1), (5-2), (5-3), (5-8)Week 2Jan. 22 Topic 1: Using & Modifying Accounting Data for Managerial DecisionsFinancial Statements & Cash Flows 2 (2-15)Evaluating Operating & Financial Performance 3 (3-16), (3-17ss)Week 3Jan. 29 Managerial Decision-Making Concluded Mini Case 1 (Chs. 2 & 3)Long-Term Financial Planning 4 (14-1), (14-6)Additional Funds Needed 4 (14-11ss)Week 4Feb. 5 Financial Planning Concluded Mini Case 2 (Ch. 4)Topic 2: Risk, Return & Valuation of Securities Risk & Return Basics 6 (6-1), (6-2), 6-3), (6-10), (6-15), Capital Asset Pricing Model (CAPM) (6-17ss), 7 (pp. 262-272)Week 5Feb. 12 Financial Mathematics & Bond Valuation 8 (8-8, (8-11), 9 (9-6), (9-7), (9-13)Stock Valuation10 (10-2), (10-3), (10-5), (10-18), (10-22ss)Week 6Feb. 19 Securities Valuation Concluded Mini Case 3 (Ch. 6)Topic 3: Investment DecisionsCapital Budgeting Basics: Evaluating 13 (13-8), (13-11), (13-29ss) Cash FlowsWeek 7Feb. 26 Learning Exercise 1Cash Flow Estimation: Expansion & 14 (14-4), (14-6) Replacement DecisionsWeek 8Mar. 5 Risk Analysis & Real Options 14 (14-9), (14-11), 15Topic 4: Financial Structure & Dividend DecisionsCost of Capital 11 (11-8), (11-13), (11-15)Week 9 Mar. 12 Investment Analysis Concluded Mini Case 4 (Ch. 14)2The Target Capital Structure 16 (16-3), (16-8), (16-9ss)Adjusting Financial Capital Costs 17 (17-1)Dividend Policy 18 (18-3), (18-8)Week 10Mar. 19 Financial Policies Concluded Mini Case 5 (Ch. 16)Topic 5: Firm Valuation Estimation & RestructuringValuing the Enterprise or Entity 12 (12-1), (12-4)Week 11Mar. 26 Mergers & AcquisitionsValuing a Merger Target’s Equity 26 (26-4), (26-6)Role of Investment Banking 19Week 12Apr. 2 Business Firm Valuation Concluded Mini Case 6 (Ch. 26)Financial Distress 25 (25-1)Course Summary & ReviewWeek 13Apr. 9 Final ExamNote: “ss” refers to a spreadsheet-based problem contained on the text’s student