Northeastern State University

College of Business and Technology

Department of Finance

INSTRUCTOR:

Dr. Michael F. Toyne Office: PA 109

Office Hours: MWF 9:00 - 10:00, MW 11:00 - 12:00, W 4:30 - 5:30, T Th 11:00 - 12:00.

Telephone: (918) 456-5511 ext. 2908 FAX: (918) 458-2337 E-mail: toyne@nsuok.edu

Personal web page: http://arapaho.nsuok.edu/~toyne/

COURSE TITLE AND NUMBER: CLASS DAYS AND TIME:

FIN 4433 - Finance Seminar MWF 1:00 - 8:50

PREREQUISITES:

FIN 4183, Senior Standing

CATALOG DESCRIPTION OF COURSE:

Emphasis on application of finance concepts to real world problems using case studies with heavy reliance on spreadsheet models. Cases will cover financial analysis and forecasting; working capital management; capital budgeting; determination of optimal capital structure; leasing; and other issues of topical interest.

COURSE PURPOSE:

The primary purpose of this course is to bridge the gap between controlled textbook problems and the realities of financial decision making that confront financial practitioners on a daily basis. The most important issue addressed relates to how we can make financial decisions based on uncertain information and explain our decisions to other members of our organization in an effective manner. It therefore follows that both computational and communication skills will be emphasized in the course.

EXPECTED COURSE OUTCOMES:

Upon completion of the course, students should be competent at performing the following functions.

using spread sheet technology where applicable.

1. Use basic financial analysis tools to make financial based decisions.

2. Develop and understand a forecast of a firm’s need for or surplus of capital.

3. Understand the issues involved with a firm’s choice of capital structure and the impact of capital structure on the risk and value of the firm.

4 Be able to estimate a firm’s weighted average cost of capital, understand the value of this information and the role of that information in the capital investment decision.

5. Form the basis for a capital investment decision using various forms of capital budgeting models.

6. Develop basic measures of project risk and be able to interpret and communicate this information to others.

7. Make a basic buy verses lease decision.

8. Understand the critical ethical issues facing corporations and the impact those issues have on corporate values.

INSTRUCTIONAL MATERIALS:

1. Intermediate Financial Management, Brigham and Daves, 8 ^h edition, Thompson Southwestern Press.

2. A Financial Calculator.

http://arapaho.nsuok.edu/~toyne/Prin3213.htmlINSTRUCTIONAL PROCEDURES:

The course consists of a series of lectures, discussions of journal articles, case studies, and problem solving sessions. Student interaction is encouraged and enhances the learning process.

Tentative Course Content - Fall 2007

I. Review of Basic Financial Tools and Models

A. Key Question:

1. Do you remember Time Value of Money?

B. Readings:

1. Chs. 4 and 5

Exam 1

II. The Financial Environment

A. Key Questions:

1. What is the primary goal of financial management? How is that goal met?

2. Can firms successfully pursue that goal and operate ethically?

3. Are you ready for the “Real World”?.

B. Readings:

1. “Career Paths of Corporate CFOs and Treasurers”

2. "What does a graduate need? Conflicts in CFO and Student Opinions"

3. "Corporate Ethics and Shareholder Wealth Maximization"

4. Ch. 1

C. Case study - Ethics

III. Market Efficiency and Behaviorism

A. Key Questions:

1. Are markets truly efficient?

B. Readings:

1. “Reflections on the Efficient Market Hypothesis: 30 Years Later”

2. “The Case for Portable Alpha”.

C. Case study - Market Efficiency

IV. Risk and Risk Taking

A. Key Questions:

1. How do we measure and explain risk.

2. How useful is Beta and standard deviation?...really.

3. What are some alternatives to Beta and Standard Deviation?

- Break-even analysis

- Sensitivity Analysis

- Scenario Analysis

B. Readings:

1. Chs. 2 and 3

V. Financial Forecasting

A. Key Questions:

1. Given a sales forecast, what is a firm's expected need for or surplus of capital?

B. Case study - Financial Forecasting (Multi Period) - 50 Points

VI. Valuation

A. Key Question:

1. How is value determined?

B. Readings

1.“ How do Professional Investors Value Stock?”

2. Chs. 6 and 10.

C. Case study - Valuation - 75 Points

VII. Capital Budgeting

A. Key Questions:

1. What are the various analysis techniques? Which are best? When are they appropriate?

2. How do we estimate future cash flows?

3. How do we deal with an unknown terminal value?

B. Readings:

1. “What do Practitioners Want?

2. Chs. 11 and 12, Parts of Chs. 6 (EVA) and 13 (Real Options)

D. Case Study - Capital Budgeting - 75 Points

VIII. Capital Structure Theory and Practice

A. Key Questions:

1. Given a financial forecast, what is the best way to raise needed funds or distribute a surplus and what are the implications of the decision?

2. What are the issues involved in raising or distributing capital?

3. Is their an optimal capital structure? Does anybody really care?

4. What is the impact of capital structure change on the firm's cost of capital.

B. Readings:

1. "What managers think of capital structure theory"

2. "The Dividend Puzzle”

3. "Best practices in estimating the cost of capital: survey and synthesis"

4. Chs 9, 14, 15, and 16.

C. Case Study - Cost of Capital Estimation - 50 Points

IX. International Impact on Finance

A. Key Questions: What are we going to do in this section?

B. Readings: “I don’t know, but I’m working on it.”

C. Case study - International Finance - Maybe

STUDENT PERFORMANCE ACTIVITIES:

Attendance:

Students desiring to receive the maximum benefit from the course should attend class regularly. A seating chart will be used and attendance will be monitored. If a student misses 6 classes a grade of F will be assigned.

Additional Notes:

If a student elects to drop the course after November 6^th, a designation of withdrawn passing (W) will only be assigned if all course requirements up to the official date of withdrawal have been completed and your average test scores are equal to or greater than 60% of available points. If you choose to drop the course be sure to follow university procedures to officially drop the course. This is not done through the instructor. It requires a trip to the basement of the Administration Building. Be sure to maintain documentation that proves you dropped the course.

ASSIGNMENT DUE DATES:

Performance in the Finance Seminar is enhanced significantly by completing homework assignments prior to the start of class on the day they are due. If a project is handed in after the class, the score on the project will be reduced by 11% of the maximum value. Projects will not be accepted after graded projects have been returned.

STUDENT EVALUATION:

- One exam (150 points)

- Case studies (250 Points)

- Class Participation

Letter grades will be awarded using the following schedule

360 - 400 A

320 - 359 B

280 - 319 C

240 - 279 D

< 240 F

In order to respect the privacy of student information, grades will not be disclosed or discussed via the Internet or over the phone. Students wishing to receive final grade information in advance of the University’s normal grade report must present, in person, a self addressed card or envelope with postage to the instructor prior to the end of the course.

AMERICANS WITH DISABILITIES ACT COMPLIANCE:

If any member of the class feels that they have a disability and needs special accommodations of any nature, the instructor will work with you and the University Office of Student Affairs to provide reasonable accommodations to ensure that you have a fair opportunity to perform in this class. Please advise the instructor of such a disability and the desired accommodations at the first class.

INCLEMENT WEATHER POLICY:

The following are basic premises for the inclement weather policy at Northeastern State University:

1. Classes are expected to be held if at all possible.

2. It is the students responsibility to receive the information when weather is questionable.

3. Neither students nor faculty are expected to risk life or limb.

4. Faculty members are obligated to hold classes if the University if not closed, unless the faculty member is unable to get to campus.

Policy:

During times of inclement weather, decisions concerning day classes will be made by 6:00 a.m. in order for the media to be notified and for students to receive the announcement before they leave home. Decisions concerning night classes will be made by 3:00 p.m. The following media will be notified regarding closing of the campus:

Radio Station: Television Station:

KRMG 740 AM Tulsa KJRH Channel 2 Tulsa

KAYI 107 FM Tulsa KOTV Channel 6 Tulsa

KTLQ 1350 AM Tahlequah KTUL Channel 8 Tulsa

KEOK 102 FM Tahlequah KFSM Channel 5 Fort Smith

KBIX 1490 AM Muskogee Cable Channel 96 Tahlequah

KMMY 97 FM Muskogee

KVOO 1170 AM Tulsa

The automated attendant message on (918) 456-5511 will be modified to include information concerning campus operations during inclement weather.

APPENDIX A

Case Study Report Format

Philosophy: The most important part of each project is your presentation of the results of your analysis. If you can’t communicate your findings, then your work has no value.

1. Each report should begin with one paragraph which establishes the purpose of the project and summarizes your procedures, findings, and conclusions. This is often referred to as an executive summary.

2. The next section should provide the details of your procedural methods and findings. In this section you should discuss subsequent tables, charts, or spreadsheet output. Every chart, table, and piece of computer output attached to your report should be identified and its purpose and value established. Use this discussion to develop your conclusions or any recommendations. Do not assume that the reader of your report will look at piles of computer output and develop their own conclusions. The last paragraph in this section should contain a restatement of your conclusions.

3. Tables, charts, and spreadsheet output should follow and be clearly marked. Do not attach piles of computer output under the assumption that a reader will be impressed by volume. Do attach and clearly label every piece of data that you need in order to establish the findings and conclusions of your study.