FNCE30002 Subject Outline PDF

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FNCE 30002 Corporate Finance SUBJECT GUIDE

Semester 1, 2017

Prepared by Dr Hae Won (Henny) Jung

Department of Finance Faculty of Business and Economics

Subject Outline Introduction I would like to extend a warm welcome to all Corporate Finance students. This is, in my opinion, the most interesting subject that you will ever study at the University of Melbourne. I have no doubt that if you work hard, attend all of your classes, and engage with your lecturer, tutors, and colleagues whenever necessary, you will find this subject not only intellectually interesting but highly rewarding in whatever future path your professional career takes you. I hope you will learn a lot from undertaking this subject and it will contribute and consolidate your life-long interest in the world of finance.

Subject Aims This subject extends the analysis of capital budgeting, capital structure, dividend policy and corporate risk management to the treatment in Business Finance. Topics include the effect of the dividend imputation system of taxation on dividend policy, capital structure and capital budgeting; a comprehensive analysis of corporate acquisitions and restructuring; a detailed examination of alternative funding mechanisms including leases and hybrid securities; and a discussion of current issues of interest in Australian corporate finance.

Prescribed References Peirson G, Brown R, Easton S, Howard, P and S Pinder, Business Finance, 12th edition, McGraw-Hill. If you have the 11th edition, then you do not need to buy another copy. But you will be responsible for reconciling any differences in content, question/problem numbering, and referencing between the two versions.

Learning Outcomes Subject Objectives and Generic Skills

To view the subject objectives and the generic skills you will develop through successful completion of this subject, please see the University Handbook: https://handbook.unimelb.edu.au/view/2017/FNCE30002

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Pre-requisites FNCE20001 Business Finance and one of ECOM20001 Introductory Econometrics, ECON20003 Quantitative Methods 2, MAST20005 Statistics, 620-270 Applied Statistics, MAST20004 Probability, MAST20006 Probability for Statistics, 620-261 Introduction to Operations Research (2008 or earlier), MAST20018 Discrete Maths and Operations Research or MAST20029 Engineering Mathematics.

Academic Staff Contact Details Subject Coordinator/Lecturer Contact Details Dr. Hae Won (Henny) Jung Room 11.050, The Spot building Email: [email protected] Phone: 03 9035 8641 Office hours: Wednesday 5:30pm – 6:30pm (except for exam and non-teaching weeks); Pre-MST and pre-final exam consultations will be announced on LMS during the semester.

Tutor Contact Details Head Tutor: Shane Putri Gotama (email: [email protected]) Other Tutors Vee Vien Tan (email: [email protected]) Edouard Lyndt (email: [email protected]) Steve Cheng Liu (email: [email protected]) William Chen (email: [email protected]) Yiqin Gu (email: [email protected]) Jueyi Guo (email: [email protected]) Yudong Zheng (email: [email protected]) Jenny Tak (email: [email protected]) Jiwon Bae (email: [email protected]) Jiawei Zheng (email: [email protected]) Online Tutors Angela Yu (email: [email protected]) Yue Yang (email: [email protected]) Tutorial and consultation times will be available from LMS.

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Email Protocol Please note that academic staff is only able to respond to student emails coming from a University email address. Please do not use personal email addresses such as Yahoo, Hotmail or even business email addresses. Emails from non-University email addresses may be filtered by the University’s spam filter, which means that we may not receive your email. All correspondence relating to this subject will only be sent to your University email address. Note that you must first activate your University email address before you can send or receive emails at that address. You can activate your email account at this link: http://accounts.unimelb.edu.au/. While academic staff endeavors to address queries received via email, it is more appropriate to resolve substantive questions during lectures and tutorials and during normal consultation hours. With this in mind, you are fully encouraged to attend all lectures and tutorials and familiarize yourself with the consultation hours offered by the lecturer and tutors in this subject.

Lectures and Tutorials Lecture Times Wednesday 3.15pm – 5.15pm: Old Arts-122 (Public Lecture Theatre - PLT) Thursday 11.00am – 1.00pm: The Spot-B01 (Copland Theatre)

Lecture and Tutorial Schedules This section provides a timetable of lectures and tutorials for the entire semester. Lecture Week Beginning

Lecture Topic

Tutorials

1

Raising capital: Equity (Textbook Chapter 9)

No tutorial

2

Raising capital: Debt and Leases* (Textbook Chapters 10.1-10.5 and 15)

Tutorial 1

Number Week 1 (27 February) Week 2 (6 March)

4

Week 3 (13 March)

3

Issues with WACC and capital structure policy (Textbook Chapters 12, 13 and 14.6)

Tutorial 2

Week 4 (20 March)

4

Payout policy (Textbook Chapter 11)

Tutorial 3

Week 5 (27 March)

5

Guest lecture 1 (TBA) Advanced topics in capital budgeting: Assessing mutually exclusive projects with different lives (Textbook Chapters 6.4-6.5)

Tutorial 4

Week 6 (3 April)

6

Advanced topics in capital budgeting: Sensitivity, breakeven and decision tree analyses (Textbook Chapters 6.6-6.7)

Tutorial 5

Mid-semester test to be held during lecture hours

No tutorial

Week 7 (10 April)

Week 8 (24 April)

7

Advanced topics in capital budgeting: Real options (Textbook Chapter 18)

Tutorial 6

Week 9 (1 May)

8

Analysis of takeovers: Part 1 (Textbook Chapter 19)

Tutorial 7

Week 10 (8 May)

9

Guest lecture 2 (TBA) Analysis of takeovers: Part 2 (Textbook Chapter 19)

Tutorial 8

Week 11 (15 May)

10

Guest lecture 3 (TBA) Corporate restructuring (Textbook Chapter 19)

Tutorial 9

Week 12 (22 May)

11

Risk Management

Tutorial 10

*Lecture 2 will be delivered by Robert Manolache (PhD candidate in Finance) as part of the department’s PhD training. Lecture slides will be placed under the heading “Lectures and tutorials” on the LMS page for this subject prior to each lecture. Lectures (except for some guest lectures) will be recorded and available after each lecture through Lecture Capture. However, it is definitely important to attend each lecture for your learning experience, and lecture recordings should only be used as a revision tool.

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Tutorials Tutorials will commence in the second week of the semester. Please find the schedule of tutorials in the above table. There will be 10 regular tutorials you are required to attend throughout the semester. Please note that there will be no regular tutorials in Week 1 and Week 7 (MST week). Tutorial assignments x x x x

x x

Only the answers of Part B questions will be collected and marked in each tutorial. 1% will be awarded if a genuine and reasonable attempt has been made to answer the question set for that week. This is an individual piece of assessment and any cases of collusion or plagiarism will be treated seriously. All answers must be handwritten (and not photocopied) and handed in at the beginning of class. Once the tutor begins discussing part B, no submissions will be accepted. Also, you are not allowed to take a photo of the answers the tutor shows during the class and release them to others. Late submission or submission without attendance will be accepted only when an extension is granted from the faculty. Make a photocopy of the work and bring it along to the class for your own reference as we will be going through the work during class and your submitted handwritten copy will be retained by the tutor.

Assignment extensions Requests for an assignment http://go.unimelb.edu.au/yh9n

extension

should

be

submitted

here:

Before completing this form, please read the Assignment Extension Guidelines regarding acceptable reasons for requesting an extension Late submission of an assignment is permitted only where an extension has been granted only by the faculty, not by your lecturer or tutor (please submit your extension request through this link http://go.unimelb.edu.au/yh9n). If the extension request is granted, you are encouraged to attend another tutorial that you can attend in that week, but you need to submit your assignment to your own tutor as only your tutor can report your tutorial marks. It is your responsibility to report the confirmation of your extension request and submit your assignment to your tutor. Attendance requirement Here are a number of examples of what could occur and the related outcomes: 1. You attend 8 tutes and submit 8 pieces of work but only 4 pieces are judged to represent a genuine and reasonable attempt at the task – tutorial mark 4/10. 2. You attend every tute but fail to hand in any work that represents a genuine and reasonable attempt at the task – 0/10.

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3. You email a scanned copy of your work to the tutor because you can’t make the tutorial – 0 marks awarded – unless your extension request is confirmed by the faculty. 4. You have a friend pass the work to the tutor on your behalf – 0 marks awarded. 5. You attend another tutorial where you submit an original copy of the required work without having obtained an extension – 0 marks awarded. Tutorial Marks Your marks for the tutorial work will be reported by your tutor and post ed on LMS every month. It is your responsibility to check your marks. If you have any issues with the marks entered it is your responsibility to bring it to your tutor’s attention ASAP. Please sort out any issues with your tutor as soon as the marks go up on LMS – Don’t leave it till the end of semester as there will be no changes in tutorial marks after 5pm on 2 June (Friday). In short – to be awarded a mark each week you need to submit an original handwritten copy of the part B question at the beginning of your assigned tutorial and then remain present throughout the tutorial. Please note that the answers of Section B questions will not be released (which is an implicit rule for this particular subject). The Section B questions will be discussed in tutorials and will form a very important basis for your understanding of the topic and also provide a guideline for the lecturer in setting examination questions. It is therefore very important that you attend tutorials and involve yourself in the discussion of these questions.

Online Tutor The Online Tutor allows you to direct questions to your tutor/lecturer via LMS. The Online Tutor can be accessed 24 hours a day, 7 days a week. Online tutors will attempt to answer your question within 24 hours. Your questions and the tutor’s answers can be accessed by all students in the subject, allowing everyone to benefit from the question and answer. Importantly, your identity will not be revealed to other students. Even if you don’t want to ask a question, you can still view existing questions and answers. Note that the Online Tutor is not designed to replace attendance at tutorials, but rather to complement the tutorial process. Also, simple questions that can be answered by referring to the prescribed readings will not usually be answered. You can access the Online Tutor via the Online Tutor link, located in the navigation menu of this subject’s LMS page.

Assessment Assessment Overview Your assessment for this subject comprises the following:

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Assessment Task

Individual or Group

Due

Weighting

Mid-semester exam

Individual

Assessment period

20%

On-going assessment

Individual

Each tutorial

10%

End-of-semester exam

Individual

Assessment period

70%

*To pass this subject, students must pass the end of semester examination.

Exam Policy The University requires that you are available for the entire examination period. Please see the University's Principal Dates website for full annual calendar. Supplementary exams will not be provided in cases of absence during the examination period unless the absence is due to serious illness or other serious circumstances and a Special Consideration application is submitted and approved.

Special Consideration As a student, you may experience extraordinary or unusual circumstances, or ongoing circumstances that adversely affect your academic performance. The University has policies in place to support students who are experiencing academic disadvantage. For more information, see the Special Consideration website. If you require alternative exam arrangements (AEA), please contact the following: x x

For Mid-semester examinations, Department of Finance by email at: [email protected] For End of semester examinations, Central examinations department by email at [email protected]

Plagiarism and Collusion Plagiarism (failure to cite your sources correctly and completely) and collusion (unauthorised collaboration with another person to prepare an assessment task) are considered academic misconduct and attract severe penalties. More information, including practical advice to students, is available on the University’s Academic Honesty and Plagiarism website. The Library and Academic Skills also provides excellent resources to help you reference correctly.

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Assignment Extension Note again that requests for an assignment extension should be submitted here: http://go.unimelb.edu.au/yh9n Before completing this form, please read the Assignment Extension Guidelines regarding acceptable reasons for requesting an extension

Information on Calculators in Examinations Effective from 1 January 2017, the approved calculator for all subjects is the Casio FX82 (any suffix). No equivalent models of calculators will be permitted in exams. You are required to purchase your own calculator and are responsible for ensuring your calculator is in good working order with fresh batteries. You are no longer required to get an "approved" sticker put on your calculator from Stop 1 or your faculty/graduate school. Instead the examination invigilators will conduct spotchecks during examinations to ensure the correct calculators are being used.

Academic Skills Academic Skills offers a range of workshops and resources to help you with study skills including researching, writing and referencing, presentation skills and preparing for exams.

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