Corporate Finance Homework – Chapter 4

Corporate Finance2 CreditsBU. 231. 620. 62Thursday 6pm – 9pm, 10/18/2012–12/13/2012Fall2, 2012Columbia, Columbia Center, 218| Instructor Shabnam Mousavi Contact Information Phone Number: (410)234-9450 E-mail Address: [email protected] edu Office Hours Monday/Thursday 10am-noon Required Text and Learning Materials (1) Berk, J. and P. DeMarzo. 2007. Corporate Finance. 2nd Edition. Pearson, Addison-Wesley with MyLab access. The ISBN is 0-13-295-040-5. (2) Lecture Notes. The lecture notes will be posted weekly on Blackboard, before class. 3) MyFinanceLab: All homework and quizzes are posted on MyFinanceLab. Instructions available at the end of this syllabus. Course ID: mousavi28617 Blackboard Site A Blackboard course site is set up for this course. Each student is expected to check the site throughout the semester as Blackboard will be the primary venue for outside classroom communications between the instructors and the students. Students can access the course site at https://blackboard. jhu. edu. Support for Blackboard is available at 1-866-669-6138.
Course Evaluation As a research and learning community, the Carey Business School is committed to continuous improvement. Therefore each student must complete the course evaluation as part of the continuous improvement process. Information on how to complete the evaluation will be provided near the end of the course. Disability Services Johns Hopkins University and the Carey Business School are committed to making all academic programs, support services, and facilities accessible.
To determine eligibility for accommodations, please contact the Carey Disability Services Office at time of admission and allow least four weeks prior to the beginning of the first class meeting. Students should contact Rachel Hall in the Disability Services office by phone at 410-234-9243, by fax at 443-529-1552, or email: carey. [email protected] edu. Important Academic Policies and Services * Honor Code * Statement of Diversity and Inclusion * Tutoring * Carey Writing Center * Inclement Weather Policy

Students are strongly encouraged to consult the Johns Hopkins Carey Business School Student Handbook and Academic Catalog and the School website http://carey. jhu. edu/syllabus_policies for detailed information regarding the above items. Course Description The goal of this course is to analyze the major decisions of a corporation. The course deals primarily with a firm’s investment and financing decisions and the firm’s interaction with capital markets. Topics include valuation of future cash flows and risk, capital budgeting, capital structure theory, and pay-out theory.
Course Overview About 90% of total revenues in the US economy are generated by corporations. Understanding decision-making within a corporation, whether it is about the choice of investment or about how to raise capital to finance a specific investment, is fundamentally important to understand the key players in today’s economy. This course provides the tools to understand efficient decision-making within a corporation by employing the notion of absence of arbitrage (i. e. , the Law of One Price), namely the fundamental principle shaping all aspects of modern finance.
While my goal cannot be to make you expert managers in eight weeks, you will be able to evaluate important corporate decisions coherently within the framework of the no-arbitrage principle. Student Learning Objectives for This Course All Carey graduates are expected to demonstrate competence on four Learning Goals, operationalized in eight Learning Objectives. These learning goals and objectives are supported by the courses Carey offers. For a complete list of Carey learning goals and objectives, please refer to the website http://carey. jhu. edu/LearningAtCarey/LGO/index. html. The learning objectives for this course are: . You should be able to price future certain (and uncertain) streams of income. 2. You should be able to use effectively valuation methods when making capital-budgeting decisions. 3. You should recognize the financial and strategic implications of alternative corporate financing decisions in different environments. 4. You should recognize the financial and strategic implications of alternative corporate pay-out decisions in different environments. 5. You should understand agency problems in the context of corporate financing and pay-out decisions and their ethical implications. Attendance Policy
Class attendance is mandatory. Each student should read the assigned materials and give careful thought to background information prior to each class session. Having done so will not only facilitate class discussion, it will also lighten your workload because the lectures are much easier to follow after the readings have been digested. Assignments Course grades will be based on 3 quizzes (Dates on MyFinanceLab), homework assignments, and a final exam. The quizzes will be available on MyFinanceLab. A maximum of one quiz can be missed. If a quiz is missed, additional weight (10%) is put on the final exam. Missing a quiz only means “not sitting for it. ” For example, it does not mean “discarding an unfavorable grade ex-post. ”) Homework assignments will be posted each week on MyFinanceLab. You can work on these in groups but you do not have to do so, if you so choose. After due date no points will be given for a homework. The final exam will be about 3-hour long. It will be closed-book. A two-sided (A4) self made consolidation-sheet will be allowed. Evaluation and Grading Assignment| Learning Outcome| Weight| 3 quizzes| 1-5| 10% each| Assignments| 1-5| 20%| Final exam| 1-5| 50%|
Important notes about grading policy: The grade for good performance in a course will be a B+/B. The grade of A- will only be awarded for excellent performance. The grade of A will be reserved for those who demonstrate extraordinarily excellent performance. The grades of D+, D, and D- are not awarded at the graduate level. Grade appeals will ONLY be considered in the case of a documented clerical error. Tentative Course Calendar *The instructor reserves the right to alter course content and/or adjust the pace to accommodate class progress. REMARK1: no class on 11/22, and 11/29- Thanksgiving
REMARK2: Online material including quizzes, activities, and practices are designed on MyFinanceLab; Always check your MyFinanceLab for assignments; You are responsible for completing online requirements and submitting your work before deadlines. Pre-course readings: Chapters 1 and 2 of Berk and DeMarzo. If you cannot read these chapters for the first class, it is important that you do so for the second class. Week| Content| Reading| 1| (1) Valuing cash flows (2) Net present values| Chapters 3 and 4| 2| * Fundamentals of capital budgeting| Chapter 7| | Quiz1: see dates on MyFinanceLab (1) Debt and equity financing (2) Modigliani-Miller| Chapter 14| 4| (1) Debt and taxes (2) The cost of bankruptcy (3) Optimal capital structure: the trade-off theory (4) Agency costs: time-permitting| Chapters 15 and 16| 5| Quiz2: see dates on MyFinanceLab * Information and pay-out policy| Chapter 17| 6| no class| Online quizzes and assignments (on MyFinanceLab/Blackboard, beyond homework) for minimum total of 3 hours distributed through semester| 7| Quiz3: see dates on MyFinanceLab * More on capital budgeting (with leverage and market imperfections) (1) Risk and return (2) Systematic versus idiosyncratic risk (3) Evaluating the cost of capital| Chapter 18 Chapter 10 and Chapter 12| 8| Final Exam, in Class| Comprehensive| ————————————————- Copyright Statement Unless explicitly allowed by the instructor, course materials, class discussions, and examinations are created for and expected to be used by class participants only. The recording and rebroadcasting of such material, by any means, is forbidden. Violations are subject to sanctions under the Honor Code. MyLab / Mastering Student Registration Instructions To register for BU. 231. 620. 62. FA12: 1. Go to pearsonmylabandmastering. com. 2. Under Register, click Student. 3. Enter your instructor’s course ID: mousavi28617, and click Continue. 4.
Sign in with an existing Pearson account or create an account: · If you have used a Pearson website (for example, MyITLab, Mastering, MyMathLab, or MyPsychLab), enter your Pearson username and password. Click Sign In. · If you do not have a Pearson account, click Create. Write down your new Pearson username and password to help you remember them. 5. Select an option to access your instructor’s online course: · Use the access code that came with your textbook or that you purchased separately from the bookstore. · Buy access using a credit card or PayPal. · If available, get 17 days of temporary access. (Look for a link near the bottom of the page. ) 6. Click Go To Your Course on the Confirmation page. Under MyLab / Mastering New Design on the left, click BU. 231. 620. 2. FA12 to start your work. Retaking or continuing a course? If you are retaking this course or enrolling in another course with the same book, be sure to use your existing Pearson username and password. You will not need to pay again. To sign in later: 1. Go to pearsonmylabandmastering. com. 2. Click Sign In. 3. Enter your Pearson account username and password. Click Sign In. 4. Under MyLab / Mastering New Design on the left, click BU. 231. 620. 62. FA12 to start your work. Additional Information See Students > Get Started on the website for detailed instructions on registering with an access code, credit card, PayPal, or temporary access.