Managerial Finance

MGMT 518
EagleVision Home Blended EV - MMT
Course Syllabus
Credit Hours:

3 Credits

Academic Term:

OCT 2015 (2327) Dates of term: 19 October, 2015 20 December 2015

Meetings:

Wednesday: 06:00 PM 09:45 PM; ET

Location:

Eagle Vision Home - Blended

Instructor:

Dr. Joanne J. Nesbitt

Office Hours:

Office hour policy: 5:00 to 6:00 PM MT Wednesday

Telephone:

321-917-4259

E-mail:

jnesbitt@erau.edu

Course Description:
This course focuses on the theoretical and practical approaches to effective financial
management. Planning, analyzing and controlling investment and short and long term
financing are examined for decision making purposes. Emphasis is placed on the
application of these methods in business settings. Topics include investment (capital
budgeting, risk and diversification), financing (debt and equity), payouts (dividends and
other payouts) and financial derivatives (options and futures).
Prerequisites: Satisfactory completion of Business Foundation courses, and/or
permission of the Graduate Program Chair.

Course Goals:
1.
Develop an understanding of financial markets and the general environment in
which business operates.
2.

Develop an understanding of the qualitative and judgmental factors of financial

decision-making under conditions of uncertainty.
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3.

Develop the skill to use modern quantitative methods in a structured procedure

for reaching a financial decision.

4.

Equip the business manager with the capability of evaluating the financial impact
of a business decision under conditions of risk.

5.

Develop economic intuition used in the financial decision making process.

LEARNING OUTCOMES:
Upon successful completion of this course, the student will be able to:
1.

Evaluate financial ratios.

2.

Apply time value of money.

3.

Apply concepts of security valuation to value stocks and bonds.

4.

Apply appropriate analytical techniques to investment opportunities (i.e.

discounted cash flow (DCF), internal rate of return (IRR), net present value
(NPV)).

5.

Describe the cost of capital and its determinants.

6.

Analyze simple portfolios using modern portfolio theory (MFT).

7.

Describe the effects of taxes on calculating cash flows and the determination of
capital structure.

8.

Evaluate firm payout policies.

9.

Discuss the use of financial derivatives to manage risk.

10.

Analyze simple applications of financial derivatives.

11.

Produce a concise research report of an investment opportunity by applying the

various concepts and analytical techniques from the course.

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Required Course Materials:

Corporate Finance
Edition: 10th
Year: 2013
Textbook
ISBN: 978-0078034770
Author: Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe
Publisher: McGraw-Hill
Publication Manual of American Psychological Association - (APA)
Edition: 6th
Year: 2010
Manual
ISBN: 9781433805615
Author: American Psychological Association
Publisher: American Psychological Association
Grading Policy:
Course Grade Scale

Evaluation Items & Weights

90 100%

Discussion/Participation

10%

80 89%

Quizzes

10%

70 79%

Problem Sets

20%

< 69%

Group Problems

20%

Midterm

20%

Final Paper

20%

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UNDERGRADUATE
Grade
90 - 100
80 - 89
70 - 79
60 - 69
Below 60

Grade
A (Superior)
B (Above Average)
C (Average)
D (Below Average)
F (Failure)

Library:
The Jack R. Hunt Library, located on the Daytona Beach Campus, is the primary library for all
Worldwide Campus students.
Web: http://library.erau.edu
Phone: (800) 678-9428 (ext. 6947) or (386) 226-7656
(Voicemail is available after hours)
Hours: Monday - Friday, 8:00 a.m. - 5:00 p.m. EST
Email: http://library@erau.edu
Research Paper (20% of your course grade):
This course requires the student to prepare and submit during week 08 a Research paper on thea
topic relating to Corporate Finance. Student should remember that the nature of the class is
applying the methodology learned in class and its application and the focus of the paper should
revolve around this theme. Papers that do not address this topic, but focus instead on other
important, but irrelevant business issues will not grade well. The paper should have 08-10 pages
of content and prepared using APA 6th Edition standards. Writing should show college level
work. Don't forget the basics; spelling, grammar, and format. . It is a requirement for all students
in his or her class to access the Hunt Library or a comparable college-level local library and
perform research. The results of this research can be used for the research paper.
The research paper is due on the 09th week (shown on the Course Schedule). The paper must be
turned in before you will be allowed to take the final examination.
All papers/projects submitted for grading in this course will be submitted to
safeassign.com - http://www.safeassign.com/.
A paper/project that is turned in late will be downgraded 5 pts. for each week the paper is
late. (One day, -1; two days; -2; and three days through seven days, -3.5.).
This paper is worth 20% of your final grade. This is a large portion of your overall grade
and you need to treat it as such.
Assignments, Discussion Board Participation:
All assignments will be completed in a professional manner and on time, unless prior
arrangements have been made with the professor. Blackboard assignments (if required) are
graded with class participation. This course includes weekly activities, each of which may have
grade points associated with them. Unless prior arrangements have been made with the
instructor, students are expected to participate each week, according to the course schedule. This
is especially important with regards to discussion activities. Weekly discussions typically include
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both an initial posting and one or more substantive replies.

Note: Proper etiquette has to do with keeping it simple by using proper English and
proper spelling spell check works well in Blackboard.
Week 5: November 18, 2015 Midterm Exam: The exam covers material from chapters 1, 2, 3,
4, 5, 6, 8, 9, 10 and 11. The exam is published in week/module 5 and should be weighted to 20
percent of the grade. Questions will be randomly selected from a test bank and will consist of
short answer and quantitative questions. For some questions students will need to upload files in
order to show their work.
Week 8: Final Paper: The paper will apply various concepts students will study throughout
the course. Students may want to work on this throughout the course and apply the concepts
studied as the course progresses. The final paper should be weighted at 20 percent of the final
grade.
Week 9: Options Strategy Quiz: This quiz requires students to apply and/or structure various
option strategies. The quiz is from a relatively large pool of questions. The quiz is automatically
graded. This quiz could be combined with other quizzes with all quizzes being incorporated into
a quiz portion of the course or if the instructor wishes the quiz could be a standalone grade
weighted at no more than 5 percent of the total grade. The quiz covers material from chapters 22
and 25.
Suggested Topics:
Course Policies:
Embry-Riddle is committed to maintaining and upholding intellectual integrity. All students,
faculty, and staff have obligations to prevent violations of academic integrity and take corrective
action when they occur. The adjudication process will include the sanction imposed on students
who commit the following academic violations, which may include a failing grade on the
assignment, a failing grade for the course, suspension, or dismissal from the University:
1. Plagiarism: Presenting as ones own the ideas, words, or products of another.
Plagiarism includes use of any source to complete academic assignments without proper
acknowledgement of the source. All papers submitted for grading in this course will be
submitted to safeassign.com - http://www.safeassign.com/ where the text of the paper is
compared against information contained in the safeassign.com database. Papers
submitted will be included in the safeassign.com database and become source documents
for the purpose of detecting plagiarism.
2. Cheating: A broad term that includes the following:
a.
Giving or receiving help from unauthorized persons or materials during
examinations.
b.
The unauthorized communication of examination questions prior to, during, or
following administration of the examination.
c.
Collaboration on examinations or assignments expected to be individual work.
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d.

Fraud and deceit, that include knowingly furnishing false or misleading

information or failing to furnish appropriate information when requested, such as
when applying for admission to the University.
3. APA 6th edition format is the ERAU Worldwide standard for all research projects.
Disability and Special Needs:
ERAU is committed to the success of all students. It is a University policy to provide reasonable
accommodations to students with disabilities who qualify for services. If you would like to
request accommodations due to a physical, mental, or learning disability, please contact the
Worldwide Campus Disability Support Service Office at (888) 292-5727 or via email
wwdss@erau.edu or worldwide.disability.support.services@erau.edu.
Topic 1:

Introduction to Corporate Finance and Financial Ratios

Est. Hrs. 4.0

Learning Outcomes
1.
2.
3.
4.
5.
6.

Topic 2:

Identify the three main questions addressed in finance

Describe why cash flow is important.
Discuss the principal agent problem (note: not assessed in current structure
of module)
Analyze financial ratios
Compare and contrast firms using financial ratios
Define various terms related to corporate finance, financial statements,
cash flow and financial statement analysis

Time Value of Money and Applications of TVM

Est. Hrs. 10.0

Learning Outcomes
1.
2.
3.
4.
5.
6.

Topic 3:

Define terms related to discounted cash flow

Calculate discounted cash flows for a variety of cash flows (i.e. single
period, annuity, perpetuity)
Calculate EAR and APR
Calculate NPV
Calculate IRR
Define terms related to various investment rules

Stock and Bond Valuation

Est. Hrs. 5.0

Learning Outcomes
1.
2.

Define terms related to bond valuation

Define terms related to stock valuation
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3.
4.
Topic 4:

Value bonds
Value equities

Risk, Return and Capital Structure

Est. Hrs. 5.0

Learning Outcomes
1.
2.
3.
4.
5.
6.
7.
8.
Topic 5:

Discuss long term returns of various financial assets

Calculate various parameters used to measure and quantify risk
Explain the capital asset pricing model (CAPM)
Calculate statistical parameters for portfolios
Apply the capital asset pricing model (CAPM)
Calculate the weighted average cost of capital (WACC)
Understand the determinants of beta
Estimate the cost of capital for a given case

Making Capital Investment Decisions

Est. Hrs. 5.0

Learning Outcomes
1.
2.
3.
Topic 6:

Define terms related to making capital investment decisions

Calculate cash flows for a project
Make correct investment decision for a project using net present value

Capital Structure and Payout Policy

Est. Hrs. 5.0

Learning Outcomes
1.
2.
3.
4.
5.
6.
7.
8.

Explain MM proposition I.
Explain MM proposition II.
Calculate the value of an un-levered and levered firm.
Describe how potential bankruptcy costs decrease firm value.
Explain the case for debt financing.
Discuss how firms determine dividend policy
Discuss good and bad reasons for paying or not paying dividends
Define terms related to dividends

9.

Calculate various aspects of changes in stock price and other factors as

they apply to dividend policy.
Describe the use of stock repurchases and dividend payouts.

10.
Topic 7:

Options, Futures and Risk Management

Est. Hrs. 5.0

Learning Outcomes
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1.
2.
3.
4.

Understand options and option payoffs

Define terms related to derivatives
Quantify profits and losses from various hedging strategies
Apply basic hedging strategies

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Course Schedule:
Week Topics
1 Oct. Introduction, Review
21,
Syllabus, Introduction
2015
to Corporate Finance
and Financial Ratios
2
Valuation and Capital
Oct.
Budgeting
28,
2015
3
Valuation and Capital
Nov. 4,
Budgeting Risk
2015

L/O
1

Activities
Readings: Chapter 1, 2 and 3
Homework Assignments: Module 1 in
Canvas

1, 2, 3

Readings: Chapter 4, 5 and 6

Homework Assignments: Module 2 in
Canvas

3, 4, 5,
8

Readings: Chapter 7, 8 9, 10, 11, 12

and 13
Homework Assignments: Module 3 and
4 in Canvas

4
Nov.
11,
2015
5
Nov.
18,
2015
6
Nov.
25,
2015
7
Dec. 2,
2015

No class Veterans Day

8
Dec 9,
2015

Classes are extended 25 minutes for

each class to make up for this missed
session

Mid-term Exam
Capital Structure and
Dividend Policy

5, 8, 4

Readings: Chapter 14, 15 and 16.

Homework Assignments: Module 5 in
Canvas

Capital Structure and

Dividend Policy

5, 6, 8

Readings: Chapter 17, 18 and 19

Homework Assignments: Module 6 in
Canvas

Long-term financing

6, 7, 8

Readings: Chapter 20 and 21

Homework Assignments: Module 7 in
Canvas

Options, Futures and

Corporate Finance

9, 10

Readings: Chapter 22 and 23

Homework Assignments: Module 8 in
Canvas

9
Dec.16
2015

Amro
Saud

1 - 11
Final Paper

Digitally signed by Amro

Saud
DN: cn=Amro Saud, o=ERAU,
ou, email=sauda1@erau.edu,
c=US
Date: 2015.10.14 16:11:22
-04'00'

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