BU393 outline 2021 PDF

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BU393 outline 2021 BU393 outline 2021...

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Course Syllabus Business 393 Financial Management II Department of Business, School of Business and Economics, Waterloo Campus Fall 2021 1. Instructors, contact information and announcements

Jin Wang

Thomas Marta

Anne Dyhrberg

Usman Hayat Paquita Freire

Sections /Schedule (EST) A2 TT 11:30-12:50PM A4 TT 10:00-11:20AM A7 MW 11:30-12:50PM B1 TT 8:30-9:50AM

Email [email protected]

A6 A8 B6

MW 8:30-9:50AM MW 11:30-12:50PM MW 10:00-11:20PM

[email protected]

B2 B3 B5 A1 A3 A5

MW 8:30-9:50AM MW 10:00-11:20AM MW 11:30-12:50PM TT 11:30-12:50PM TT 10:00-11:20AM TT 8:30-9:50AM

[email protected]

B4 B7

MW 10:00-11:20AM MW 8:30-9:50AM

[email protected]

[email protected]

To contact your professor please use his/her WLU email address. Emails to the MyLS accounts won’t be replied. All announcements, class content and information , tests, Zoom sessions and grades will be displayed through MyLS Course Home page. 2. Prerequisites BU283 Financial Management I

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3. Textbook Required Stan Eakins and William McNally. Corporate Finance (Canadian Edition) v2.1 . Flatworld 2021. ISBN(Digital): 978-1-4533-3879-7. You can buy a digital subscription and homework access by following this link: https://practice.flatworldknowledge.com/c/HW-AFA267 A printed version is available for an additional fee. It can be purchased through the Flatworld web site and will be shipped directly to you. The textbook required for this Course is not registered under the DTA program, nor is the purchase of codes at the Bookstore. Computers Zoom video conferencing platform will be used in every class. Students should have access to a computer with camera, microphone and a spreadsheet software. 4. Course Description BU393 focuses primarily on the analysis of long-term financial management decisions. It is the second of two pre-requisites to all other finance courses. The course covers 3 main topics: i) capital budgeting ii) corporate valuation and iii) common financial management activities. Capital budgeting focuses on evaluation of new project ideas. The tools presented in this topic will provide the students the ability to evaluate the financial impact of a project and its added value for the company. Corporate valuation, involves the study of formal estimation techniques for the market value of corporations. The last part of the course explores three very common corporate activities: payout policy (dividends and repurchases), mergers and acquisitions and determination of capital structure. 5. Teaching Method: The class will be held online through the Zoom video conferencing platform. Using the course homepage on MyLearningSpace, you should be able to find a “Zoom Meetings” heading in the top menu bar (along with “Content”, “Grades”, etc.). This heading will take you to a schedule of meetings which you can join at specified start times (often during the assigned lecture slot). NOTE: before you can join your class meetings you must FIRST activate your Laurier Zoom account. To do this, go to https://zoom.wlu.ca and click on 'Sign In' then use your Laurier username and password to login. This will activate your account.

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All classes will be synchronous (live), and class sessions won’t be recorded. For students in different time zones, they will be allowed to attend to any of the other sections available this term previous instructor approval. To get the most out of this course you should approach each week as follows. Before the start of a topic, you should complete the assigned readings. To motivate you to do this, there is an introductory (online) homework based on these readings. We will provide a set of slides for each topic and they will be discussed in class. We will focus also in solving examples and exercises. Extra marks may be rewarded for participation Additionally, practice homework will be available for all topics. The practice homework should be completed after each topic is covered in class (see the schedule below for coverage and due dates). Important: Some of the material and examples covered in class are NOT included in the Textbook, thus attendance to sessions is highly recommended. 6. Grading Scheme The course follows the grading scheme in the table below.

Introductory homework Practice homework Midterm Exam Final Exam Total Mark

Mark Breakdown 5% 20% 35% 40% 100%

In addition, instructors can give up to 5% extra-credit marks for class participation on top of the 100% total mark. These extra marks are not mandatory, and they will be given along the term as a reward for class participation at discretion of the instructor. Each instructor will provide more details of how these points can be obtained. 6.1

Introductory and Practice Homework

Introductory and Practice homework will be delivered through the Flatworld platform. The introductory homework has to be completed before the lectures and after reading the corresponding chapter. The practice homework may require in-class discussion before they can be satisfactorily completed. Homework questions are multiple choice and fill-in-the-blank with unlimited attempts. The fillin-the-blank questions are mostly numerical and algorithmically generated (each student has the same questions but with different numbers). The students will have the chance to check if the answers are correct or incorrect before submitting, except for the multiple choice questions.

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The fill-in-the-blank questions on Flatworld are very sensitive as to the format and accuracy of your answers. Please read the instructions for each question, because they tell you how to format your answer. Please be careful with rounding. If your answer is wrong due to the fact that it is not formatted as the question requests, then you will not get a mark for that answer. Do not include any symbols in your answers (i.e., $ or %). If you include a symbol, you will not get a mark. Homework mark 𝑘

𝐼𝑛𝑡𝑟𝑜𝑑𝑢𝑐𝑡𝑜𝑟𝑦 ℎ𝑜𝑚𝑒𝑤𝑜𝑟𝑘 𝑚𝑎𝑟𝑘 = ( )*100 𝑁 𝑘 𝑃𝑟𝑎𝑐𝑡𝑖𝑐𝑒 ℎ𝑜𝑚𝑒𝑤𝑜𝑟𝑘 𝑚𝑎𝑟𝑘 = min ( , 1) ∗ 100 𝑁 − 10 Where k is the number of points earned and N is the total number of possible points. Notice that for the practice homework we allow for 10 questions to be wrong or incomplete. For example, if there are 160 questions and you answer 120 correctly, then your practice homework mark is 120/(160-10) = 80% . The 10 subtracted questions (in the denominator) are ‘gimme’ marks, so you can miss up to 10 questions without penalty. The maximum mark is 100. The homework schedule is the following:

START Sep 09 Sep 09 Sep 17 Sep 17 Sep 17 Oct 4 Oct 4

INTRODUCTORY HOMEWORK DUE TITLE Sep 19 Intro: Ch. 9 Sep 19 Intro: Ch 11 Sep 26 Intro: Ch. 10.1 , 10.2 & 10.5 Oct 3 Intro: Ch. 10.3 & 10.6 Oct 17 Intro: Ch. 10.4 Oct 19 Intro: Ch. 14.1, 14.3 Oct 24 Intro: Ch. 17.1, 17.2 & 17.3

Oct 18

Nov 7

Intro: Ch. 13.1 - 13.4

Nov 14

Oct 18 Nov 8

Nov 16 Nov 23

Intro: Ch. 20 Intro: Ch. 12.1 - 12.5

Nov 28

Nov 8

Nov 30

Intro: Ch. 19.1 - 19.3

Dec 8

DUE

PRACTICE HOMEWORK TITLE

Oct 3

CB Techniques & WACC

Oct 24

Expansion and Replacement Projects. Refinements Sales & F/S Forecasting. Free Cash Flow & DCF Dividends, Repurchases & Splits M&A Capital Structure

In case of discrepancies, the dates and times in Flatworld are official With so many deadlines, there are many events that might cause you to miss a deadline. For example, your home internet connection might fail, your computer might break, you might sustain a sports injury, you might have a health problem or a family emergency. Regardless of the reason, no extensions will be given to students who cannot complete an assignment on time. The 10 ‘gimme’ marks (described above) are provided to mitigate the loss associated with one of these

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events. No additional gimme marks will be provided. To reduce the risk that a problem interferes with completing homework, you should start the assignments well before the deadlines. 6.2

Midterm and Final Exam Name Midterm Final

Date Oct 30 TBA

Time 11:30 am TBA

Duration (mins) 90 90

The midterm and the final exam will be delivered through MyLearningSpace. More information on the content and procedures for each evaluation will be provided closer to each assigned date. The Final Exam is not cumulative however several techniques learned before Midterm Exam may be required. Questions in the exams will cover material in the Textbook, but also material covered in class, and assigned homework. Students can prepare for the exam by solving Textbook questions and all questions covered in the class slides. Both midterm and final exam questions will be a mixture of multiple choice, true/false and fill-inthe-blank problems. There will be no deferred mid-term exam under any circumstances. Students unable to write the mid-term must provide the instructor with documented evidence of illness, family emergency or other sufficient reason. Vacation plans are not considered sufficient reason. If no evidence is provided, a grade of zero will be given for the midterm. If such evidence is produced, the weight will be transferred to final exam for which students will be required to complete an additional exam component (with additional time). Requests for a deferred FINAL examination must be made by filing a petition using the process and form described here: https://students.wlu.ca/academics/exams/deferred-exams.html https://students.wlu.ca/academics/exams/assets/documents/lazaridis-petition-form.pdf

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7. Schedule and Readings Class

T-R

M-W

Topic

Learning Objective

Readings

1

S9

S 13

Outline

Introduction

2

S 14

S 13

CB

CB Techniques. No MIRR

Ch. 9

3

S 16

S 15

CB

CB Techniques. No MIRR

Ch. 9

4

S 21

S 20

CB

Weighted Average Cost of Capital

Ch. 11

5

S 23

S 22

CB

Weighted Average Cost of Capital

Ch. 11

6

S 28

S 27

CB

Estimating Cash Flows & Expansion Projects

Ch. 10.1 , 10.2, 10.5

7

S 30

S 29

CB

Estimating Cash Flows & Expansion Projects

Ch. 10.1 , 10.2, 10.5

8

O5

O4

CB

Replacement Projects, Expected NPV, Decision trees, Real Options

Ch. 10.3 & 10.6

9

O7

O6

CB

Replacement Projects, Expected NPV, Decision trees, Real Options

Ch. 10.3 & 10.6

O 11-15

O 11 – 15

10

O 19

O 18

CB

11

O 21

O 20

Valuation

12

O 26

O 25

Valuation

13

O 28

O 27

CB

Midterm Review

14

N2

N1

Valuation

DCF Valuation

15

N4

N3

Valuation

In-Class Valuation practice

16

N9

N8

Distributions

Dividends

Ch. 13.1, 13.2

17

N 11

N 10

Distributions

Dividends & Repurchases

Ch. 13.3

18

N 16

N 15

Distributions

Repurchases & Splits

Ch. 13.3 & 13.4

19

N 18

N 17

M&A

M&A: Valuation, Pricing & NPV

Ch. 20

20

N 23

N 22

M&A

M&A: Valuation, Pricing & NPV

Ch. 20

21

N 25

N 24

Capital Structure

Measures of Leverage

Ch. 12.1

Effect of Leverage

Ch. 12.2

22

N 30

N29

Capital Structure

23

D2

D1

Capital Structure

24

D7

D6

Final Exam review

D8

Class canceled

Reading week CB Refinements, projects with Unequal Lives

Ch. 10.4

Sales Forecasting and

Ch. 14.1

F/S Forecasting

Ch. 14.3

Adv. F/S Forecasting

Ch. 17.1

Free Cash Flow

Ch. 17.2

M&M (no tax/with tax) Static Trade-off Model

Ch. 17.3

Ch. 12.3, 12.4, 12.5

M&M with a fixed D/V

Ch. 19.1,

Leverage and Systematic Risk

Ch. 19.2 & 19.3

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8. Academic Help If you are stuck on a problem (or idea), then you can get assistance from your instructor or qualified instructional assistants. In order to obtain an efficient and satisfactory help, it is important that you submit: i. ii. iii.

The original text of the question. A description of what you don’t understand (or think is incorrect). Your work in order to see your thinking process. For example, your work should show the equations that you are using to solve the problem, a description of your solution approach (if necessary) and the values that you are plugging into the equation(s).

Instructor assistance By email or through Zoom office hours Additional Instructional assistance Instructor assistants (IA) are available for the course, they are former students with a good understanding of the course material. IA will offer in-person drop in labs and online assistance, where students can ask questions or clarification about the material covered in class. Attendance to the labs is not mandatory. The labs schedule and location is the following: Mon 5:30-6:50 PM – SB105 Tues 7:00-8:20 PM – SB105 Wed 5:30-6:50 PM – SB105 Thu 7:00-8:20 PM – SB105 Friday 9:00AM – 10:20AM – REMOTE (More information to come) 9. Flatworld Support Contact Flatworld Customer Service team through the blue live chat logo at the bottom right of your screen, call them at 877-257-9243, or email [email protected]. 10. University and Course Policies NOTE: Students with disabilities or special needs are advised to contact Laurier’s Accessible Learning Centre for information regarding its services and resources. Students are encouraged to review the University Undergraduate Calendar for information regarding all services available on campus. If you are unsure what resources are appropriate for you or require any assistance with any type of academic issues, contact the Central Academic Advising Office at http://www.wlu.ca/academicadvising. Academic Misconduct: Wilfrid Laurier University uses software that can check for plagiarism. Students may be

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required to submit their written work in electronic form and have it checked for plagiarism. You are reminded that the University will levy sanctions on students who are found to have committed, or have attempted to commit, acts of academic or research misconduct. You are expected to know what constitutes an academic offense, to avoid committing such offenses, and to take responsibility for your academic actions. For information on categories of offenses and types of penalty, please consult the relevant section of the Undergraduate Academic Calendar. If you need clarification of aspects of University policy on Academic and Research Misconduct, please consult your instructor.

Intellectual Property The educational materials developed for this course, including, but not limited to, lecture notes and slides, handout materials, examinations and assignments, and any materials posted to MyLearningSpace, are the intellectual property of the course instructor. These materials have been developed for student use only and they are not intended for wider dissemination and/or communication outside of a given course. Posting or providing unauthorized audio, video, or textual material of lecture content to third-party websites violates an instructor’s intellectual property rights, and the Canadian Copyright Act. Recording lectures in any way is prohibited in this course unless specific permission has been granted by the instructor. Failure to follow these instructions may be in contravention of the university’s Code of Student Conduct and/or Code of Academic Conduct and will result in appropriate penalties. Participation in this course constitutes an agreement by all parties to abide by the relevant University Policies, and to respect the intellectual property of others during and after their association with WLU Laurier University."

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