MANAGEMT 7101NA - Managerial Finance
Ngee Ann Academy - Trimester 2 - 2014
General Course Information
Course Code MANAGEMT 7101NA Course Managerial Finance Coordinating Unit Business School Term Trimester 2 Level Postgraduate Coursework Location/s Ngee Ann Academy Units 3 Prerequisites MANAGEMT 7100NA Course Description This course introduces you to the world of modern finance, especially to the financial operations of business. It covers the concepts of time value of money, asset valuation, risk and return paradigm, capital budgeting, financing, and payout decisions, and derivatives. Upon completion, students will be able to value bonds and stocks, estimate asset returns according to their risk characteristics, choose projects that maximize shareholder's wealth using a wide range of analytical tools. They will also develop a good understanding on how firms finance their capital expenditure on their investment and the levels of dividends and other payouts for their shareholders. Finally, students will gain a basic understanding on derivatives such as options and futures, and apply them for sound risk management practices.
Course Coordinator: Chris Howland
The full timetable of all activities for this course can be accessed from Course Planner.1st Intensive
1:00pm - 2:00pm Introduction: Issues in Corporate Finance – scope and activities of corporate finance, role of the corporate finance manager, key goal of financial management. Chapter 1. up to section 1.6 and Chapter 2 Session 2
2:45pm - 4:15pm The "Time Value of Money" – Compound Interest & Annuities. Chapter 5. Session 3
4:30pm - 6:00pm The "Time Value of Money" – Perpetuities & Effective Annual Interest Rates. Chapter 5. Session 4
6:15pm – 7:45pm Valuation of Bonds & Shares – Valuation of Fixed return securities. Chapter 6. Session 5
9:00am - 10:30am Valuation of Bonds & Shares – Valuation of Variable return securities. Chapter 6. Session 6
10:45am - 12:30pm NPV & IRR - Net Present Value & Internal Rate of Return. Chapter 7. Session 7
1:30pm - 3:00pm Alternative Project Metrics – Project Decision Making Metrics. Chapter 7. Session 8
3:15pm - 4:30pm Capital Budgeting - various capital budgeting criteria, application of criteria to investment proposals, advantages and disadvantages of each criterion. Chapters 8 & 9. Session 9
7:00pm - 8:15pm Capital Budgeting - determination of relevant cash flows for investment analysis & the effects of corporate taxes on cash flows. Chapters 8 & 9. Session 10
8:30pm - 10:00pm Questions and Answers to review course to date and regarding the first assignment.
1:00pm-2:30pm Review of first assignment. Risk, Return - benefits (&limits) of diversification. Chapters 10 & 11. Session 12
2:45pm - 4:15pm Risk, Return & the "Efficient Market Hypothesis" - benefits (&limits) of diversification, beta of stocks, three forms of market efficiency. Chapters 10 & 11. Session 13
4:30pm - 6:00pm Cost of Capital - cost of equity capital, cost of preferred stock capital, cost of debt capital. Chapter 17. Session 14
6:15pm – 7:45pm Cost of Capital – Weighted Average Cost of Capital (WACC). Chapter 17. Session 15
9:00am - 10:30am Capital Structure and Leverage- types of long term capital, Modigliani and Miller capital structure decision. Chapter 19. Session 16
10:45am - 12:30pm Capital Structure and Leverage- Modigliani and Miller capital structure decision with the effects of corporate taxes, effects of financial distress. Chapter 19. Session 17
1:30pm - 3:00pm Dividend Policy – Distribution to shareholders in dividends and share repurchases. Chapter 18. Session 18
3:15pm - 4:30pm Derivatives & Options in Corporate Finance – Options and risk management. Chapter 20. Session 19
7:00pm - 8:15pm Derivatives & Options in Corporate Finance – Options and risk management, real options, hedging. Chapter 20. Session 20
8:30pm - 10:00pm Questions and Answers to review the course, the second assignment & the exam
Course Learning OutcomesThe objectives of this subject are to provide students with:
- Explain the financial goal governing a firm’s decisions.
- Apply various valuation models to value long-term debt, preference shares and ordinary shares.
- Explain the importance, role and techniques of capital budgeting in a firm.
- Understand risk and return, diversifiable and non-diversifiable risk and asset pricing model.
- Understand how to determine the cost of capital of a firm.
- Explain operating and financial leverage, and implications for the target capital structure.
- Discuss theories and issues related to dividend policy.
- Understand the principles of and trade-offs associated with the use of hedging.
University Graduate Attributes
This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:
University Graduate Attribute Course Learning Outcome(s) Knowledge and understanding of the content and techniques of a chosen discipline at advanced levels that are internationally recognised. Objectives 1-8 The ability to locate, analyse, evaluate and synthesise information from a wide variety of sources in a planned and timely manner. Objectives 1-8 An ability to apply effective, creative and innovative solutions, both independently and cooperatively, to current and future problems. Objectives 1-8 Skills of a high order in interpersonal understanding, teamwork and communication. Objectives 1-8 A proficiency in the appropriate use of contemporary technologies. Objectives 1-8 A commitment to continuous learning and the capacity to maintain intellectual curiosity throughout life. Objectives 1-8
Required ResourcesThe text for this course is:
Ross S., Christens M., Drew M., Bianchi R., “Fundamentals of Corporate Finance”, Sixth Edition, 2013, McGraw Hill, 9780071013192
Online LearningImportant messages, topic notes, power point slides, case studies and other materials relating to the course will be placed on MyUni throughout the course. MyUni can be found at (www.myuni.adelaide.edu.au)
Learning & Teaching Activities
Learning & Teaching ModesManagerial Finance is offered as a 2 x 3 day intensive program and uses a mix of learning methods.
The course is based on interactive discussion regarding the solving of a set of class exercises and the implications of the results when applied to business applications.
The information below is provided as a guide to assist students in engaging appropriately with the course requirements.Students should allocate approximately eight hours per week of study time to do appropriate readings, project work and assignments in addition to attendance at scheduled lecture sessions.
Weekly classes are 3 hours long. You can expect to spend about twice the amount of time preparing for each class compared to the lecture times. Assignments and exam preparation will demand additional concentrated periods of non-classroom study on your own. As a rough indication, you could expect to spend in the order of 120 hours of study time to complete the course, of which 36 hours would be in class.
Learning Activities SummaryTopics 1 to 5 will be covered in the first intensive, topics 6 to 10 in the second intensive.
Topic Topics and Sub-topics 1 Introduction: Issues in Corporate Finance - scope and activities of corporate finance, role of the corporate finance manager, key goal of financial management 2 Valuation Principles and NPV:- introduction to time value of money and net present value 3 Bond Valuation – interest rates, introduction to bonds, valuation of bonds
Share Valuation – alternative models
4 Valuation and the Firm – NPV, IRR and other rules 5 Capital Budgeting - various capital budgeting criteria, application of criteria to investment proposals, advantages and disadvantages of each criteria, determination of relevant cash flows for investment analysis, effects of corporate taxes on cash flows. 6 Risk and Return - measurement of expected return and risk volatilities for individual assets and portfolios of assets, Capital Asset Pricing Model. 7 Cost of Capital - cost of equity capital, cost of preferred stock capital, cost of debt capital, weighted average cost of capital (WACC) 8 Capital Structure and Leverage - types of long term capital, Modigliani and Miller capital structure decision, effects of corporate taxes, effects of financial distress 9 Dividend Policy – Distribution to shareholders in dividends and share repurchases 10 Derivatives & Hedging – the reduction of cash flow uncertainty and therefore the cost of capital through the use of hedging.
Specific Course RequirementsAccounting for Managers
The University's policy on Assessment for Coursework Programs is based on the following four principles:
- Assessment must encourage and reinforce learning.
- Assessment must enable robust and fair judgements about student performance.
- Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
- Assessment must maintain academic standards.
Assessment Weighting Assignment 1 25% Assignment 2 25% Final Exam (2.5 hours exam) 50%
Two assignments are required to be completed on an individual basis
There will be a 2.5 hour open book exam. A financial calculator, an IPad, tablet or other device with a financial calculator app installed is recommended. You can bring in a PC only to use an Excel spread sheet, but for no other purpose (the spreadsheet must be blank at the start of the exam).
Students need to attain an average of fifty percent (50%) across all the individually assessed items, considered as a whole, in order to pass the course.
For information on the University’s Assessment for Coursework Programs Policy refer to:
Assessment Related Requirements
Statutory obligations in Singapore are such that attendance in person is a compulsory condition of passing a course. Our specific requirements are that students must attend at least 80% of class sessions to be graded for that course. For these purposes each intensive weekend is defined as comprising 5 sessions with 2 on each of Saturday and Sunday and 1 on Monday evening.
No information currently available.
SubmissionPresentation of Assignments:
The preferred format for submission of assignments is email.
Please must retain a copy of all assignments submitted.
Please attach an ‘Assignment Cover Sheet’, which is signed and dated by you before submission. Alternatively state in your email submission of the assignment that the work is wholly your own work, you have not colluded with nor plagiarised another student’s work.
Lecturers can refuse to accept assignments, which do not have a signed acknowledgement of the University’s policy on plagiarism.
Late Assignment Submission:
Students are expected to submit their work by the due date to maintain a fair and equitable system. Extensions will generally only be given for medical or other serious reasons. All requests for extensions must be emailed to the lecturer in charge of the course before the due date. Each request will be assessed on its merits. A late assignment (without prior arrangement) will be penalised by a 5% mark reduction for each day that it is late.
Grades for your performance in this course will be awarded in accordance with the following scheme:
M10 (Coursework Mark Scheme) Grade Mark Description FNS Fail No Submission F 1-49 Fail P 50-64 Pass C 65-74 Credit D 75-84 Distinction HD 85-100 High Distinction CN Continuing NFE No Formal Examination RP Result Pending
Further details of the grades/results can be obtained from Examinations.
Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.
Final results for this course will be made available through Access Adelaide.
The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.
SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.
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This section contains links to relevant assessment-related policies and guidelines - all university policies.
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