MGMT 413 – Advanced Corporate Finance

Syllabus

Spring 2021

Section 1 Class  4:30 pm - 5:20 pm MWF Jerry S Rawls Hall-3058

Section 2 Class  3:30 pm - 4:20 pm MWF Jerry S Rawls Hall 3058

Instructor…………………………  M. Deniz Yavuz

Office: …………………………...  KRAN 439

Office Hours: ………………….  No physical office hours due to COVID-19. Online office hours will be announced prior to each quiz and final exam.

Course Overview

M413 focuses on financial analysis and decision-making of corporate managers. This course will provide you with the basic principles of corporate finance that can be used to deal with real life problems faced by financial managers. I expect you to 1) learn the basic theory extremely well and 2) be able to apply your knowledge to unfamiliar situations. You have to work hard to achieve the first goal and even harder for the second one. Some of the concepts we will learn are: financial planning, capital investment decisions, relation between risk and return, portfolio theory, capital structure, and valuation. See the preliminary schedule below.

Course Logistics

Participation is not required and all in person sessions will also be broadcasted real time and recorded to watch later for your convenience. For students who want to attend in person classes, due to social distancing requirements, we will follow a flipped (hybrid) class structure. This means that each student can come to the class once a week (Monday or Wednesday). You will be informed beforehand which session you can attend. If you want to attend sessions in person you have to attend the session you are assigned. Friday sessions will be online for everyone. Quizzes and Final Exam will be online during assigned time.

Course Materials:

Ø Text: No required textbook. The recommended textbook for the courses is Corporate Finance by Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, and Bradford Jordan, 12th or newer edition, published by McGraw-Hill Irwin Publishing.  In the course outline readings from the textbook are designated (RWJ&J).  New or used copies of the textbook are available at the nearby campus bookstores or can be ordered online.

Ø  Packet:Uploaded to Brightspace.    

 o   I will post course materials such as presentation slides, example quiz questions, solutions etc. to Brightspace after the class. All sessions will also be recorded.

Ø Software/web resources.

o   Word Processor (i.e. MS Word)

o   Microphone and Webcam 

o   Zoom

Ø Brightspace page: You can access the course via Brightspace. It is strongly suggested that you explore and become familiar not only with the site navigation, but with content and resources available for this course.

Quiz: There are three online quizzes. No quiz makeup will be provided. If you miss a quiz for a valid reason provided prior to the exam, quiz points will be assigned to your final exam. If you fail to show up for any quiz without a  valid excuse, you will receive a grade of zero.

Final Exam: The final exam is also online and cumulative. In rare cases [documented severe illness], a final exam makeup will be provided otherwise you grade for missing the final exam will be zero.  

Homework:I encourage you to collaborate online on solving problems, however you have to understand the solution and write your own copy. Homework must be handed in on time; no credit will be given for late homework.  You are expected to hand in all assignments. The primary goal of the homework is not to evaluate you.  The main point of homework is to help you learn by ensuring that you prepare for class and think about the material. Some homework questions simply ask you a fact from the case to encourage everyone to read the case. Homework’s will be generously graded. If you submit something reasonable you will get 1 and 0 otherwise.  Homework questions will be solved/discussed in class or solutions will be posted to Brightspace.

Participation: There is no grade for participation. If you miss a class watch the recorded video to catch up.

Course Grade:

o   Quiz 1                            20%

o   Quiz 2                            20%

o   Quiz 3                            20%

o   Final exam                      25%

o   Homework                      15%

How to Study Cases

We are going to learn most concepts through covering cases and problems. All cases are included in the 413 Class Packet. Make sure that you read the cases before class and submit homework about the case.

See additional information on Classroom Safety Guidance, Purdue Protect Plan and other resources available for students at the end of the syllabus.


   Date

   Topic

   Assignments

   1/20(W)

   Introduction

   Review Syllabus (Online see Brightspace for Zoom meeting information)

   1/22 (F)

   Law of one price, no arbitrage rule

   Case Assignment: Anomalies: The Law of One Price in Financial Markets

   No hmwrk.

   1/25, 1/27 (M-W)

   Financial Planning

   Reading Assignment: Financial Planning

   Case Assignment: West Point Supply, Inc case. Read the case and try to answer questions in Session 1.

   Homework (pls submit): Describe the terms of the loan that WPS barrowed from Welles Forgo Bank & Trust

   Supplemental Reading:

   12th edition:  Pp. 1-12 and pp. 20-35 (RWJ&J)

   11th edition:  Pp. 1-12 and pp. 20-34 (RWJ&J)

   10th edition:  Pp. 1-12 and pp. 20-34 (RWJ)

   1/29 (F)

   Financial Planning

   Reading Assignment: 

   1)Implicit Cost of Trade 

   2) WSJ article: Putting the Squeeze on Working Capital

   Case Assignment: West Point Supply, Inc case. Read the case and try to answer questions in Session 2.

   No Hmwrk.

   Supplemental Reading:

   12th edition: Pp. 42-56 and pp. 61-65 (RWJ&J)

   11th edition:  Pp. 44-56 and pp. 63-67 (RWJ&J)

   10th edition:  Pp. 44-56 and pp. 63-67 (RWJ)

   2/1- 2/3 (M,W)

   Projecting financing needs of a growing company

   Case Assignment: Big Boy Gear, Inc case Read the case and try to answer questions in Session 1.

   Homework (pls submit): Describe the terms of purchases of products from manufacturers.

   Supplemental Reading:

   12th edition: Pp. 42-56 , pp. 61-65 and pp. 68-70 (RWJ&J)

   11th edition:  Pp. 44-56, pp. 63-67, and pp. 67-70 (RWJ&J)

   10th edition:  Pp. 44-56, pp. 63-67, and pp. 67-70 (RWJ)

   2/5 (F)

   Long Term Financial Planning

   Case Assignment: Big Boy Gear, Inc case

   Read the case and try to answer questions in Session 2.

   2/8, 2/10 (M,W)

   Quiz 1

   Financial Planning

   Online same time with your regular day and session

   Please attend the zoom session. You will be provided with the exam file (Microsoft Word) at Brightspace. You will have to answer questions and submit through Brightspace.

 

   2/12 (F)

   Advanced Financial Planning: Projecting Seasonal Funds

   Case Assignment:  Holiday Lights Case: Read the case and try to answer questions in the case.

   No homework for today.

   Supplemental Reading:

   12th edition:  Pp. 795-813 (RWJ&J)

   11th edition:  Pp. 799-810 and pp. 816-818 (RWJ&J)

   10th edition:  Pp. 804-815 and pp. 821-822 (RWJ)

   2/15 2/17

   (M, W)

   Online  Wednesday is reading day. Wednesday session will be held on Friday

   Time Value of Money/Stock Valuation

   Case Assignment: Problem Set #1 & Problem Set 2

   Homework (pls submit): Set #2  Q2

   Supplemental Reading:

   12th edition:  Pp. 270-285 (RWJ&J)

   11th edition:  Pp. 273-288 (RWJ&J)

   10th edition:  Pp. 273-287 (RWJ)

   2/19(F)

   Time Value of Money/Stock Valuation

   Only for students that are in the Wednesday attendance group.

   2/22, 2/24 (M,W)

   NPV and Alternative Investment Decision Methods

   Case Assignment: Problem Set #3

   Supplemental Reading:

   12th edition:  Pp. 133-157 (RWJ&J)

   11th edition:  Pp. 135-154 (RWJ&J)

   10th edition:  Pp. 135-154 (RWJ)

   2/26(F)

   Capital Budgeting: Capital Investment Analysis

   Reading Assignment: Capital Investment Analysis.

   Case Assignment: Problem Set #4

   Homework (pls submit):  Problem Set #4: Q 1

   Supplemental Reading:

   12th edition:  Pp. 171-192 (RWJ&J)

   11th edition:  Pp. 171-188 and pp. 190-195 (RWJ&J)

   10th edition:  Pp. 171-189  and 190-195 (RWJ)

   3/1, 3/3

   (M,W)

   Capital Budgeting: Incremental Cash Flows / Machine Replacement

   Case Assignment:

   1) Rappach & McBride Company, Inc.

   Porter & Alexander Auto Corporation

   3/5 (F)

   Capital Budgeting: Make vs. Buy decision

   Case Assignment: Sharon Pipe, Inc.

   Homework (pls submit): Why do sales people want to produce 10-12 inch pipe internally?

   2) 

   3/8,3/10

   (M,W)

   Capital Budgeting in a Complex Setting

   Case Assignment: Sweet Treats Corporation

   Homework (pls submit): Why the various members of capital budgeting committee seems to be against the Lo-Cal Project?