CORPFIN 7101 - Managerial Finance
North Terrace Campus - Trimester 3 - 2018
General Course Information
Course Code CORPFIN 7101 Course Managerial Finance Coordinating Unit Business School Term Trimester 3 Level Postgraduate Coursework Location/s North Terrace Campus Units 3 Contact Up to 3 hours per week Available for Study Abroad and Exchange Y Restrictions Available for Graduate Certificate, Graduate Diploma in Business Administration and Masters of Business Administration, Master of Business Administration (12) students 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: Fred McDougall
The full timetable of all activities for this course can be accessed from Course Planner.
Course Learning OutcomesOn successful completion of this course, students will be able to:
1. Explain the financial goal governing a firm’s financial decisions.
2. Apply various valuation models to value long-term debt, preference shares and ordinary shares.
3. Explain the importance, role and techniques of capital budgeting in a firm.
4. Understand risk and return, diversifiable and non-diversifiable risk and asset pricing models.
5. Understand how to determine the cost of capital of a firm.
6. Explain the effects of financial leverage , and the factors underlying the selection of target capital structures.
7. Discuss theories and issues related to dividend policy.
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) Deep discipline knowledge
- informed and infused by cutting edge research, scaffolded throughout their program of studies
- acquired from personal interaction with research active educators, from year 1
- accredited or validated against national or international standards (for relevant programs)
Objectives 1-7 Critical thinking and problem solving
- steeped in research methods and rigor
- based on empirical evidence and the scientific approach to knowledge development
- demonstrated through appropriate and relevant assessment
Objectives 1-7 Teamwork and communication skills
- developed from, with, and via the SGDE
- honed through assessment and practice throughout the program of studies
- encouraged and valued in all aspects of learning
Objectives 1-7 Career and leadership readiness
- technology savvy
- professional and, where relevant, fully accredited
- forward thinking and well informed
- tested and validated by work based experiences
Objectives 1-7 Intercultural and ethical competency
- adept at operating in other cultures
- comfortable with different nationalities and social contexts
- able to determine and contribute to desirable social outcomes
- demonstrated by study abroad or with an understanding of indigenous knowledges
Objectives 1-7 Self-awareness and emotional intelligence
- a capacity for self-reflection and a willingness to engage in self-appraisal
- open to objective and constructive feedback from supervisors and peers
- able to negotiate difficult social situations, defuse conflict and engage positively in purposeful debate
Required ResourcesThe text for this course is:
Ross S., Westerfield R. and Jordan B., Fundamentals of Corporate Finance, 11th edition, 2016, McGraw Hill, ISBN 978-0-07-786170-4
Students will need to become familiar with the use of a financial calculator in this course. A financial calculator will have time value of money function keys that include; PV, FV, N, I/Y, PMT. Any financial calculator or financial calculator app can be used in this course. However, only the Sharp EL738F financial calculator will be shown in relevant course materials. Also, a range of financial calculator apps, some free, can be downloaded to tablets and smart phones.
The following books cover much the same material as the above textbook but can provide a somewhat different perspective on the topics covered in this course as well as country relevant material.
Ross, S. Bianchi, R. Christensen, M. Drew, M, Westerfield, R. and Jordan, B., Fundamentals of Corporate Finance, 6th ed, 2014, McGraw Hill, (Australian edition)
Berk, J., Demarzo, P., Harford, J., Ford, G. and Finch, N., Fundamentals of Corporate Finance, 1st ed., 2011, Pearson.
Brealey, R. and Myers, S., Principles of Corporate Finance, McGraw- Hill (latest edition).
Damodaran, A., Corporate Finance, Theory and Practice, John Wiley and Sons Inc. (latest edition).
Peirson, G., Brown R., and Howard, P., Essentials of Business Finance, McGraw- Hill (latest edition).
Petty, J., Keown, A., Scott Jr, D., Martin, J.,,Burrow, M., Martin, P. and Nguyen, H..Financial Management, Pearson (latest edition)
Regularly reading of business newspapers is strongly recommended. The University library has FACTIVA, a database of business newspaper articles. Bloomberg is a good free source of articles on the internet. Subscribing to “Thoughts from the Frontline” and “Outside the Box” from Mauldin Economics is highly recommended (free subscription at http://www.mauldineconomics.com/). For those who like longer reads “Things That Make You Go Hmmm...”, from the same website is also recommended.
Online LearningImportant messages, PowerPoint slides on each topic, solution to assigned questions and problems, and other materials relating to the course will be placed on MyUni throughout the trimester. MyUni can be found at (www.myuni.adelaide.edu.au).
Learning & Teaching Activities
Learning & Teaching ModesIn this course a mix of learning methods, including topic presentations, interactive discussion, the solving of assigned questions and problems on a weekly basis, and sharing of business experiences and observation is used.
The information below is provided as a guide to assist students in engaging appropriately with the course requirements.Weekly classes are 3 hours long. Students should allocate up to eight hours per week of study time to do appropriate readings, solving set questions, problems, and assignments in addition to attendance at scheduled class sessions.
Learning Activities Summary
Topic Topic Detail Textbook Chapter 1 Introduction: Issues in Corporate Finance - scope and activities of corporate finance, role of the corporate finance manager, key goal of financial management, the agency problem, and relationships with financial markets R, W & J, 11th ed., Chapter 1 2 Valuation Principles:- introduction to time value of money, present values; single and multiple cash flows R, W & J, 11th ed. Chapters 5 & 6 3 Bond Valuation – interest rates, introduction to bonds, valuation of bonds
Share Valuation – alternative valuation models
R, W & J, 11th ed., Chapters 7 & 8 4 Valuation and the Firm – NPV, IRR and other investment rules: 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. R, W & J, 11th ed., Chapter 9 5 Capital Budgeting and Analysis: applying NPV and IRR to different investment proposals; analysis of results R, W & J, 11th ed., Chapters 10 & 11 6 Risk and Return - measurement of historical returns on assets and portfolios; lessons from history; capital market efficiency; expected return on assets and portfolios; diversification and risk; systematic and unsystematic risk; Security Market Line and the Capital Asset Pricing Model. R. W & J, 11th ed., Chapters 12 & 13 7 Cost of Capital - cost of equity capital, cost of preference share capital, cost of debt capital; weighted average cost of capital (WACC) and investment decisions; divisional and project required returns. R, W & J, 11th ed., Chapter 14 8 Capital Structure and Leverage - types of long term capital, Modigliani and Miller capital structure propositions, effects of corporate taxes, effects of financial distress, optimal capital structure and practical financing decision making R, W & J, 11th ed., Chapter 16 9 Dividend Policy- dividend payments; relevance of dividend policy; low payout ratio versus high payout ratio; alternative theories; dividend imputation; bonus issues and share splits R, W & J, 11th ed., Chapter 17
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 Task Weighting Learning Outcome Assignment 1 20% Assignment 2 20% Final Exam
(2 hour exam)
60% Total 100%
Two assignments are required to be completed on an individual basis and submitted at the relevant class.
There will be a 2.0 hour open book exam. Students are permitted to bring a financial calculator, a tablet or other device with a financial calculator app installed to the exam. You can bring in a laptop 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: www.adelaide.edu.au/policies/700/
SubmissionPresentation of Assignments:
The preferred format for submission of assignments is email. Assignment s should be submitted to Professor Fred McDougall (firstname.lastname@example.org). Please 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.
Return of Assignments
Assignments will be returned a week after submission
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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