Managerial Finance Course Outline - Apr. 2018 - Sheraton PDF

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Arab Academy for Science and Technology Graduate School of Business Course Title: Managerial Finance. Instructor: Youssef Youssef, DBA. Instructor of Investment & Finance, Graduate School of Business, Arab Academy for Science and Technology. Email: [email protected]

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Description & Course Objective:

Finance is the study of how we allocate resources over time and under uncertainty. The main objective of this course is to provide the student with the fundamental and practical aspects of managerial finance. The course designed for candidates who had not studied finance in any other discipline; therefore, it starts from the definition of finance and the managerial finance, sources of finance, different forms of organizations, financial market markets. The course provides the students with the essential finance calculations for the time value of money and risk measures. The course also illustrates how to value securities and the variables that affect the valuation process. It also provides the student with the theoretical fundamentals of capital budgeting, and capital budgeting techniques. It also provides the students with the required calculation for the cost of each source of finance and the weighted average cost of capital. The course ends with the analysis of financial statements with the especial emphasis on how to interpret each group of ratios. II.

Intended learning objectives:

By the end of each chapter, the student will be able to achieve the below learning outcomes: CHAPTER ONE: Overview of Financial Management and the Financial Environment  Define corporate finance.  Understand the functions of financial manager.  Know the different forms of business organizations.  Understand the relationship between finance other topic (i.e.: Accounting & economics).  Know the different sources of finance.  Understand the short and long-term financial needs.  Understand the difference types of financial markets.  Understand the main goal of the firm & the reason of the agency problem.

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Arab Academy for Science and Technology Graduate School of Business CHAPTER Four: Time Value of Money  Calculate the future value (FV) or present value (PV) of a single sum of money.  Calculate either the interest rate or period for single-sum problems.  Calculate the FV and PV of an annuity or annuity due.  Calculate the payments, interest rate, or period for an annuity and annuity-due.  Calculate the value, cash flow, or interest rate in a perpetuity problem.  Calculate the FV and PV of a series of uneven cash flows.  Adapt all calculations to other-than-annual compounding periods.  Compute the solution for various problems that are involving the time value of money. CHAPTER FIVE: Bonds, Bond Valuation & Interest Rate  Understand the basic characteristics of the bonds, & the different types of bands.  Understand who issues bonds & the reason of having finance through bonds rather than other financial institutions.  Calculate the value of the bond.  Understand the factors affecting the value of the bond.  Understand how the value of the bond change over time. CHAPTER Six: Risk, Return, & the Capital Asset Pricing Model  Calculate the holding period return & yield.  Understand the difference between the arithmetic mean and geometric mean, Indicate which form of mean is superior for investment comparison.  Calculate the expected return, variance and standard deviation of returns, & the coefficient of variation for an investment.  Understand how to choose between different investments alternatives using this statistical analysis.  Calculate the return & risk of a given portfolio.  Understand the relationship between the risk & return.  Understand the capital asset price model & the Beta coefficient calculation. CHAPTER SEVEN: Stocks, Stock Valuation & Stock Market Equilibrium  Identify different types of Stocks (i.e.: Preferred & Common stocks) further to understand the rights of each type.  Estimate the value of a stock using difference valuation techniques.  Identify the factors affecting the value of stocks.  Understand the difference between the market stock price and the intrinsic value from a financial decision prospective.  Understand the efficient market hypothesis. Youssef Youssef, Managerial Finance

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Arab Academy for Science and Technology Graduate School of Business CHAPTER NINE: The Cost of Capital  Understand the sources of finance, how it could affect the structure of the organization.  Define and calculate the component cost of each source of finance (i.e.: debt, equity, bonds, etc.).  Calculate a firm’s weighted-average cost of capital.  State the factors that affect the cost of capital. CHAPTER TEN: The Basics of Capital Budgeting  Define capital budgeting.  Describe the steps that are used in security analysis.  Discuss the similarities between capital budgeting and security valuation.  Calculate the discounted cash flow for a capital project and compute the net present value (NPV).  Select investment proposals by ranking them using the NPV method.  Calculate the payback period, discounted payback period, NPV, internal rate of return (IRR), and modified IRR (MIRR) and discuss their use in ranking projects and for deciding whether to include them in the capital budget or not.  Discuss the rationale for ranking projects using the NPV approach.  Describe the relative advantages and disadvantages of the NPV, payback period, & IRR methods. CHAPTER ELEVEN: Cash Flow Estimation and Risk Analysis  Distinguish between cash flows and accounting profits.  Define the following terms and indicate their relevance to capital budgeting: incremental cash flow, sunk cost, opportunity cost, externality, and cannibalization.  Define an expansion project.  Define replacement project analysis.  Classify initial investment outlay, operating cash flows over a project’s life, and terminal-year cash flows and compute each for an expansion project and a replacement project.

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Arab Academy for Science and Technology Graduate School of Business III.

Sources and Reading:

Textbook: Financial Management, Brigham, E.F. and P.R. Davis, 13th ed. Thomson South-Western, 2009. Students should keep abreast with financial and economic news as well as attempt to relate business world applications to the theory presented in class and the textbook. Students must take notes during class work since some subjects covered in the classes are not in the textbook as they relate to the Egyptian context. The Wall Street Journal, Financial times, Economist, CNBC Arabia, and BBC Business news are key financial resources that should be checked regularly by students as well as the many other financial resources available via the internet. www.wsj.com/public/us www.bbc.com/news/business www.ft.com www.economist.com www.egyptse.com www.mubasher.info www.fra.gov.eg/jtags/efsa_ar/index.jsp IV.

Instructor’s Policy: A. Instructor’s Methodology:   

Lectures. Class Discussions. Questions and problem from the text as well as an additional practical case assignment.

B. Grade Distribution:     

Participation Mid-Term Exam Final Exam Course Work and Assignment TOTAL

10 % 30 % 40 % 20 % 100 %

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