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Business 170 fundamentals of Financial Management rev: 7/29/2010

Business 170 fundamentals of Financial Management rev: 7/29/2010. Today. Roll call Professor Introduction

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Business 170 fundamentals of Financial Management rev: 7/29/2010

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  1. Business 170fundamentals of Financial Managementrev: 7/29/2010

  2. Today • Roll call • Professor Introduction • Class Introduction-teaching plan, grading details, on-line days, due dates-Tools: MyFinanceLab (incl. financial calculator help), Desire2Learn, Excel Basics- Picture requirement- What we will cover • Video: The Balance Sheet Barrier • Study Groups: YOUR Financial Statements Exercise

  3. Class Time • USUALLY Run the class without a formal break from 1:30 to 3:55 in order to a) enforce NO eating policyb) to maximize attendance • Both contribute to maximizing student performance on quizzes • However, we will take breaks in certain classes • You CAN use computers for CLASS purposes but may be kicked out if you are browsing the web or e-mailing • Team problem solving and problem explanation are part of many classes (and add points)

  4. Office Hours • Physical Office Hours ONLY on Wednesdays- 12:20 to 1:20: Please arrive no later than 10 min before end. • On Line Office Hours Anytime- On-line by appointment or scheduled sessions via Elluminate • Professor lives 150 miles away

  5. Guest Speakers • I have invited some industry people to talk to the class about- How they evaluate and hire candidates- What they expect business graduates to know- How Excel is used in the entry jobs at their companies • If they happen I will announce the dates

  6. Green Sheet Items • You NEED TO download and read the Green Sheet DETAILS = TERMS. • Key ITEMS include= Strict Quiz/Exam Policy (MUST be taken when given). Summary follows= Daily Schedule (also on calendar) • On-line Homework is listed on MyFinanceLab • Excused work make-up day (only with doctor’s note and similar)

  7. Topic Quizzes/Final Exam • Based on student feedback of 2-3 Chapters being “too much” for midterms, this semester there will be 6 Topic Quizzes instead of 2 midterms. The dates are shown on the schedule. • Each 15-20+ minute (class) Quiz will have an in-class closed book component of about 5 to10 questions and problems (not M/C or T/F) and a “take-home” open materials Excel Problem on MyFinanceLab. • Comprehensive Final Exam which will be given at 12:15 to 2:30 pm on the Exam Day, will consist of 30 to 50 Questions/Problems. You will be allowed one small Index Card of notes. It has to be readable without magnifying readers or glass.

  8. Quiz/Policy • Quizzes/final exam must be taken on the day given barring serious extenuating circumstances. • Lowest 2 scores will be dropped. • If, AFTER you have missed 2 quizzes, which will be dropped as “0’s”, you miss a quiz, the average % earned on the other 3 quizzes will be applied to that quiz ONLY upon presentation of applicable proof of approved reason. (You should avoid missing quizzes) • If you miss more than 3 quizzes you get “0” for all the missed quizzes. There are no make-ups.

  9. Final Exam Policy • If you have taken all 6 quizzes and have averaged 90% or more for the 4 that count and have completed all other work satisfactorily, you will be exempted from the Final • If you miss the final for an approved reason but have completed all other work, you will receive the average % of the quizzes you have taken for the final, as long as you have taken at least 4 of them. • A make up exam may be offered at the professor’s sole discretion ONLY if a dire situation warrants it. • ONLY, if you remain in the hospital on the make up day (after all other finals) , will an “Incomplete” even be considered an option.

  10. Serious Extenuating Circumstances And Proof Required • Only the following items count as a serious extenuating circumstance- Hospitalization or being treated in the emergency room at the time of the quiz/exam- Death in the IMMEDIATE family (spouse, child, father, mother, grandparent who lives with you)- A governmentally dictated appointment that cannot/should not be re-scheduled (this has to be cleared ahead of time) • Proof required for these-Original or certified copy of admission document showing the date/s -Death certificate and proof of relationship-Original appointment letter

  11. Excuses NOT Approved (borrowed mostly from Dr Black) • Incarceration, being kidnapped, being locked out of house • Traffic congestion, blown tires, parking problems, traffic school, jury duty (full time students are excused) • Going on vacation, getting married, being a wedding attendant, death of non-immediate family member in or out of the US. • Working overtime, oversleeping, being hung over • Taking multiple exams on the same day • Showing up at the wrong time, day or place • Just not adequately prepared to take an exam • These are some examples of illegitimate excuses which will NOT be approved. And, yes, students have tried in the past.

  12. Missed MyFinanceLab work make-up day • A large percent of your grade is based on doing the work as I believe doing the work allows you to excel on the quizzes and final exam • If, for a valid reason you cannot complete the on-line StudyPlan/HW/Quizzes/Practice Sessions, an on-line work make up period will be offered in early December.

  13. Textbook & MyFinanceLab & Financial Calculator • Custom Book using Berk, et al “Fundamentals of Financial Management” • MyFinanceLab access code is included • Total estimated cost $53 • MyFinanceLab LICENSE alone $40 • E-chapters/book also available through MyFinanceLab • On Amazon book with license is $165 • Financial Calculator is required even for non-Finance majors (you will thank me later as you will be able to finish the exams easily/will get much better grade)

  14. 170 Standard Curriculum • Overview of Finance and Value of Firm • Financial Statements (FS) and their analysis • Time Value of Money (TVM) • Bond Valuation (application of TVM) • Capital Budgeting (application of TVM and FS) • Stock Valuation (application of TVM and FS) • Risk Return – “No free lunch”, Diversification • Cost of Capital (function of risk) • Focus on CORPORATE financial management, not Individual’s INVESTMENT perspective

  15. Learning Process • Read the Chapter/s AHEAD of CLASS!!!! • Lecture/videos on concepts and calculations • Calculation examples- Whiteboard- Excel- Financial Calculator (help from MyFinanceLab) • MyFinanceLab Study Plan • MyFinanceLab HW and Chapter Quizzes • On-line Sessions: calculation practice • 15-20 minute 5-10 question/problem TOPIC Quizzes in Class (closed book) + Excel Take home

  16. Grading Summary

  17. Grading

  18. Teaching Plans • The following slides summarize when each topic is being covered from Intro to in class Quiz • The Chapters should be read before the topic is covered in class • Only one topic has 2 chapters and they are intimately related to one another

  19. Financial Statements and Analysis

  20. Time Value of Money

  21. Bond Valuation & Intro To Capital Budgeting

  22. Capital Budgeting in depth

  23. Stock Valuation 1 and 2

  24. Risk Return, WACC & Rest of Semester

  25. Maximize Shareholder Wealth (Stock Price). Avoid Agency Conflicts Ch 1 (Berk) Ch 2Balance SheetIncome Statement Cash Flow Statement Analysis & ImplicationsDuPontMD&A Statement of Stockholder Equity Accounting GAAP History FinanceForecasting CFFuture Ch 3 & 4 Time Value ofMoney Forecasted Free Cash Flows Required Rate of ReturnRisk Return Ch 11Cost of Capital (WACC) Ch 12 Bonds Ch 6 Stocks Ch9- Dividends- Free Cash Flow Forecast Ch 8 Capital Budgeting Decisions Forecasted Project Free Cash Flows and Required Rate Decision Criteria (NPV, IRR)

  26. Determinants Of A Firm’s Value Sales Revenue Operating Costs and Taxes Req NewInv in Ops FinancingDecisions InterestRates CompanyRisk MarketRisk Free Cash Flow =NOPAT – Net New Inv WACC =Wd*kd*(1-T)+WeKe Value of Firm = Sum of Discounted Free Cash Flows =FCF1/(1+WACC)^1+FCF2/(1+WACC)^2+……….+FCFn/(1+WACC)^n

  27. Due Dates: These will be on calendar in MyFinanceLab and/or Desire2Learn (picture)

  28. Due Dates (continued)

  29. So, for first 3 weeks • For September 1: Reading onlyMUST get BOOK & LicenseChapter 1: OverviewChapter 2: Financial Statements • For September 8 (or earlier)Your picture on Desire2LearnFinancial Statement Study Plan in MyFinanceLab • For September 15 (or earlier)Financial Statements Homework and Quiz in MyFLRead Ch 3 & 4 on Time Value of MoneyTime Value of Money Study Plan in MyFL

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