Principles of Finance 350

Syllabus

SHELDON B. LUBAR SCHOOL OF BUSINESS

Lecture 404 is Tues/Thurs at 8:30-9:20 AM (33278) in Lubar Hall S151

Lecture 405 is Tues/Thurs 12:00-12:50 AM (33279) in Lubar Hall N140
Fall Semester 2011, 3 credits

INSTRUCTOR: Richard D. Marcus, Ph.D.is an Associate Professor of Business and the Chair of the LSB Executive Committee

OFFICE: S430F in Lubar Hall. My mailbox is also on the fourth floor of Lubar Hall

OFFICE HOURS: Tuesdays and Thursdays from 11:00AM - noon in Lubar Hall S430F and by appointment.

TELEPHONE: 414-229-4103 (office) or 414-228-7731 (home)

E-mail: marcus@uwm.edu

HOMEPAGE: https://pantherfile.uwm.edu/marcus/www/

PRINCIPLES OF FINANCE 350: Examines the fundamentals of financial management, asset/liability valuations, risk and return, investment analysis, sources and uses of funds, cost of capital, and cash management. Prerequistes are soph st; Econ 103(P) & 104(P); Bus Adm 201(P) or 207(P); Bus Adm 210(P) or 211(P).

TEXTBOOK and CONNECT FINANCE: The following are required components to complete this course: Ross, Westerfield, and Jordan: Essentials of Corporate Finance 7th © 2011 McGraw-Hill, as well as McGraw-Hill’s Connect Technology. McGraw-Hill’s Connect is a web-based assignment and assessment solution required for this course. Connect is designed to assist you with your coursework based on your needs. As outlined in this syllabus, assignments will make up a significant portion of your overall course grade. The most economical way to get access to both Connect and an electronic version of the textbook is purchase Connect-Plus for $74.75. (See Registration for Connect below to purchase either Connect-Plus or Connect). If you have a book or share a book, you will still need Connect, Connect can be purchased for $45. A new textbook with with Connect in it already is available in the bookstore for $174.30. A used textbook is available for $120.25, but you must also go online to get Connect for $45, for a total of $165.25.

REGISTRATION FOR CONNECT: To register for Connect, please visit the appropriate Lecture 404 or 405 given below in the links under “ACCESS TO CONNECT” and click the blue “Buy Connect" to register for CONNECT-only or clicke the blue "Buy Connect Plus" to purchase an electronic version of the textbook. Connect "access codes" are packaged with a new textbook at no additional cost. Alternatively, Connect can also be purchased online at our section’s Connect web address. In both cases, you should gi to the the lecture in which you are enrolled: http://connect.mcgraw-hill.com/class/r_marcus_350_fall_2011_lecture_404 is the web address for the 8:30 AM Lecture 404. Or go to: http://connect.mcgraw-hill.com/class/r_marcus_350_fall_2011_lecture_405 is web address for the noon Lecture 405. When you purchase Connect online, you will have the option of purchasing Connect or Connect Plus. Connect Plus gives you access to the full textbook, which is both searchable and printable. NOTE: You can register in Connect and have access without a code for three weeks.

SUPPORT AND TIPS FOR CONNECT: If you have any issues while registering or using Connect, please contact McGraw-Hill’s CARE TEAM through http://www.mhhe.com/support . Our course examines Chapters 1-15. To avoid problems related to unexpected technical issues, you are advised not to wait until the last moment to complete assignments. Please review your “Student Quick Tips” for further support.

FINANCIAL CALCULATOR: You will need a financial calculator of your own choosing. My recommendation is Texas Instruments BAII Plus or the professional version. The textbook is designed for use of either HP-10B or TI BA II Plus Financial Calculators. Either the TI or HP are fine with me.

EXAMINATION AND HOMEWORK WEIGHTS: There will be two midterm examinations and one final. Each exam is worth 25% of the class. We will also have homework assignments that will constitute 25% of the points that are completed on Connect Finance from McGraw-Hill.

MIDTERM EXAM DATES: The midterms for 350 are combined exams for both Lectures 404 and 405. The first midterm is on Friday, September 30, 2010 from 2-4PM and covers Chapters 1-5 for 60 points. The second midterm is on Friday November 4, at 2-4PM (Rooms TBA) and covers Chapters 6-10 for 60 points. The final covers Chapters 11-15. Professor Marcus provides a list of key financial formulas attached to the midterms and finals. Students will bring their own financial calculator to the exams.

FINANCE CONNECT ASSIGNMENTS: There are 15 assignments (10 graded and 5 are ungraded). Each of the ten graded assignments is worth 6 points for a total of 60 points. The questions are "algorithmic" so that each student gets different numbers for problems. The assignments have unlimited number of attempts to retake up to the due dates listed in the "Daily Schedule of Lectures, Discussion Sections, and Connect Assignments" appearing below. There is no penalty for retaking the assignment. I permit that you can print of the assignment, but you must enter your answers on the website. When you retake an assignment, only those that you got wrong will have to be reworked to improve your score on the assignment.

FINAL EXAM: Lecture 404 and 405 have a Combined Final on Saturday, December 17 at 7:30-9:30 AM. The final covers Chapters 11-14 for 60 points.

GRADES: Grades will be based on the total points earned on midterm 1, midterm 2, the final, and the scores received on the graded assignmnets in CONNECT FINANCE. The maximum possible points for the semester is 240 points. There are no "extra credit" points available. Typically, students who amass points at (or above) the median score will be considered for earning a B or better. Those who are in the lower half will be considered for scores of B- or lower. Scores will be posted on Desire2Learn at: http://d2l.uwm.edu/.

TEACHING ASSISTANTS: We have two outstanding Teaching Assistants. They are Dave Mateljan (E-mail: mateljan@uwm.edu) and Dave Wenzel (E-mail: dawenzel@uwm.edu). Dave Mateljan is TA for Discusssions 601, 602, 607, 608, and 610. Dave Wenzel is TA for Discusions 603, 604, 605, 606, and 609.

TA OFFICE, PHONE NUMBER, and OFFICE HOURS: Dave Mateljan and Dave Wenzel's office is S445 in Lubar Hall. Their office phone number is 414-229-6337. Dave Mateljan's office hours each week are on Tuesdays from 1-3 PM; Dave Wenzel's office hours each week are on Thursdays from 9:30-11:30 AM.

CLASSROOM POLICIES: UWM has long-standing policies on academic misconduct, sexual harassment, discrimination, adding, dropping, withdrawal, repeating classes, and changes of grade. These policies are available at: https://pantherfile.uwm.edu/marcus/www/policies.html.

SPECIAL NEEDS: If anyone has a need for note-taking or testing assistance, please feel free to discuss this with me early in the semester. Slide presentations are available weekly in class and will be available on D2L.

SOCIAL CONNECTIVITY: Financial announcements of stock splits, leverage buyouts, and dividend changes occur daily. Some will be highlighted for special attention. These can appear on Facebook walls or as text messages using Twitter. Students will be invited to like a fan page that for both of Professor Marcus' 350 classes. It is called UWMFinance350 and the same name in Twitter. Links to these locations are on the NAVIGATION line on D2L site for our class. You can view the messages sent by clicking either Facebook or Twitter. You can click the like "thumps up" icon in Facebook or click follow in Twitter to have it sent to your own page or phone.

OBJECTIVE: To understand the everyday financial activities of collecting from customers and paying suppliers, finding long-term financing to pay for investments, and deciding which investments offer the greatest promise. These are issues sometimes called Financial Management, but they are duties of a financial manager. Financial managers who do these tasks well reduce the risk of financial distress and increase the opportunities for growth and profits.


Daily Schedule of Lectures, Discussion Sections, and Connect Assignments

Labor Day is Monday, September 5: The university is closed.

WEEK 1: Lecture #1 on Tuesday, September 6: Chapter 1- Introduction to Financial Management

Discussion 1: Wednesday, September 7: Demo and Intro to Connect Finance, D2L links to Facebook and Twitter for UWMFinance350.

Lecture #2 is on Thursday, September 8: Chapter 2 - Financial Statements, Taxes, and Cash Flows.

Sunday, September 11: Due date for the first Finance Connect assignment. This assignment is ungraded from Chapter 1 .


WEEK 2: Lecture #3 on Tuesday, September 13: Chapter 2 (continued) - CFFA or Cash Flow From Assets

Discussion 2: Wednesday, September 14: OCF and CFFA problems (problems 19-21, pages 46-47).

Lecture #4 on Thursday, September 15 Chapter 3 - Working with Financial Statements (with an emphasis on ratio analysis).

Sunday, September 18: Due date for the second assignment Finance Connect assignment from Chapters 2 & part of chapter 3. This assignment is graded, but you have multiple times to take it before the deadline.


WEEK 3: Lecture #5 on Tuesday, September 20: Chapter 3 (continued) - The Du Pont Identity

Discussion 3: Wednesday, September 21: TAT (Total Asset Turnover from pages 59-60 and problem 22 on page 87) and Du Pont Identity questions.

Lecture #6 on Thursday, September 22: Chapter 4 Introduction to Valuation (BYC = Bring Your Calculator!)

Sunday, September 25: Due date for the third Finance Connect assignment from Chapter 3 and Chapter 4. This assignment is graded.


WEEK 4: Lecture #7 on Tuesday September 27: Chapter 5 - Discounted Cash Flow Valuation (BYC)

Discussion 4: Wednesday, September 28: TVM (Time Value of Money) from end of Chapter 4 and some from Chapter 5 on uneven Cash Flows using your financial calculator: selected Questions and Problem from page 153-157 - BYC (bring your calculator!) HINT: Do all the worked problems on page 604-606 (textbook Appendix D) for TI BA II Calculators and HP-10B Calculators.

Lecture #8 on Thursday, September 29: Chapter 5 (continued) - Effective Annual Rates (EARs), Perpetuities, Midterm 1 Overview.

Friday, September 30 by 2PM is also the due date for the fourth Finance Connect ungraded assignment based on Chapter 5 as a great review also for Midterm 1.

Friday, September 30 is our COMBINED MIDTERM #1, Room TBA at 2-4 PM and BYC! Midterm 1 covers Chapters 1-5 for both lectures 404 and 405.

WEEK 5: Lecture #10 on Tuesday, October 4: Chapter 6 - Interest Rates and Bond Valuation

Discussion 5: Wednesday, October 5: Return of Midterm #1, Answers to Midterm #1, and "The five keys to bond valuation"

Lecture #11 on Thursday, October 6: Chapter 6 (continued) More Bond Features and Types

Sunday, October 9: Due date for fifth Finance Connect assignment from Chapter 6. This assignment is graded.


WEEK 6: Lecture #12 on Tuesday, October 11: Chapter 7 - Equity Markets and Stock Valuation

Discussion 6: Wednesday, October 12: DGM -The Dividend Growth Model and selected problems from Questions and Problems pages 225-227.

Lecture #13 on Thursday, October 13: Chapter 7 (continued) Preferred Stocks, Primary Markets, and Secondary Markets for Equities

Sunday, October 16: Due date for sixth Finance Connect assignment from Chapter 7. This assignment is graded.


WEEK 7: Lecture #14 on Tuesday, October 18: Chapter 8 - NPV is Net Present Value and IRR is Internal Rate of Return

Discussion 7: Wednesday, October 19: NVP and IRR using Excel and on calculators, and selected problems form page 259

Lecture #15 on Thursday, October 20 Chapter 8 (continued)- Capital Budgeting and Capital Rationing Issues

Sunday, October 23: Due date for seventh assignment from Finance Connect from Chapter 8. This assignment is graded.


WEEK 8: Lecture #16 on Tuesday, October 25 Chapter 9 - Making Investment Decisions

Discussion 8: Wednesday, October 26: Calculating project Operating Cash Flows (OCF) examples from Page 296.

Lecture #17 on Thursday, October 27 Chapter 9 (continued) - Sensitivity Analysis of Capital Projects and Managerial Options

Sunday, October 30: Due date for eighth Finance Connect assignment based on Chapter 9. This assignment is graded.


WEEK 9: Lecture #18 on Tuesday, November 1: Chapter 10 - Lessons from Capital Market History

Discussion 9: Wednesday, November 2: Arithmetic versus Geometric Returns and selected problems from pages 334-335

Lecture #19 on Thursday, November 3: Chapter 10 (continued) Capital Market Efficiency and review for Midterm #2

Friday, November 4 by 2PM be sure to do the ninth assignment from Finance Connect based on Chapter 10, but this assignment is ungraded.

Friday, November 4 at 2-4PM COMBINED MIDTERM #2, Room TBA and BYC! Midterm 2 covers Chapters 6-10.

WEEK 10: Lecture #20 on Tuesday, November 8: Chapter 11 - Risk and Return

Discussion 10: Wednesday, November 9: How a beta is estimated, and selected problems from pages 371-373.

Lecture #21 on Thursday, November 10: Chapter 11 (continued) - The Security Market Line and CAPM (The Capital Asset Pricing Model)

Sunday, November 13: Due date for the tenth Finance Connect assignment from Chapter 11. This assignment is graded.


WEEK 11: Lecture #22 on Tuesday, November 15: Chapter 12 - The Cost of Capital

Discussion 11: Wednesday, November 16: Review of the WACC (Table 12.1 on page 389) and selected problems

Lecture #23 on Thursday, November 17: Chapter 12 (continued) - Some methods for finding the cost of capital for projects not similar to the whole firm

Sunday, November 21: Due date for the eleventh Finance Connect assignment from Chapter 12. This assignment is graded.


WEEK 12: Lecture #24 on Tuesday, November 22: Chapter 13 - Leverage and Capital Structure

No Discussion 12: University is closed on Wednesday, November 23.

Thanksgiving is on Thursday, November 24 - School is Closed on Wednesday and Thursday. This is a good time to feast on turkey, catch up on skipped chapters in your finance textbook, and to watch the Green Bay Packers defeat the Detroit Lions at 11:30 am at Ford Stadium.

Sunday, November 27: Due date for Twelth Finance Connect assignment from Chapter 13. This assignment is ungraded.


WEEK 13: Lecture #25 on Tuesday, November 29: Chapter 13 (continued) - An Optimal Capital Structure?

Discussion 13: Wednesday, November 30: The difference between a Workout and a Bankruptcy; and selected problems from pages 433-435.

Lecture #25 on Thursday, December 1: Chapter 14 - Dividends and Dividend Policy

Sunday, December 4: Due date for Thirteenth Finance Connect assignment from Chapter 13 and Chapter 14. This assignment is graded.


WEEK 14: Lecture #25 on Tuesday, December 5: Chapter 14 (continued) - Stock Dividends and Stock Repurchases

Discussion 14: Wednesday, December 6: Stock Splits and Reverse Stock Splits and a few questions from pages 463-465

Lecture #26 on Thursday, December 8: Chapter 15 - Raising Capital

Sunday, December 11: Due date for our fourteenth Finance Conncect assignment from Chapters 14 and 15. This assignment is graded.


WEEK 15: Lecture #27 on Tuesday, December 13: Chapter 15 (continuted) - Costs of Issuing Securities and Debt,and Overview of Final

Discussion 15: Wednesday, December 14: Dutch auction underwriting of an IPO and review questions for the final

Thursday, December 13: This is the University Study Day. No classes.

Saturday, December 17: Due date for fifteenth Finance Connect assignment from Chapter 15. This assignment is ungraded, and is practice for the final.

Finals Week is December 16-23. Our Final is on Saturday, December 17 at 7:30 AM-9:30 AM.

COMBINED Final Exam - both lecture 404 and 405 is on Saturday, December 17 at 7:30 AM - 9:30 AM. The rooms are TBA.

Scores and grades will be posted on D2L at http://d2l.uwm.edu/ and an email notice will be sent when grades have been reported on PAWS.