COLUMBIA UNIVERSITY

Industrial Engineering & Operations Research

CORPORATE FINANCE FOR ENGINEERS

IEOR 4003
Fall 2017

Mudd, room 833, Thursday 7:00-9:30PM

Professor: Maya Waisman, PhD

Office: Mudd, room 318
Telephone: 212-854-2987
Email: mw3175@columbia.edu (best way to reach me)
Office Hours: Thursdays 5:00-6:30PM.

Required Materials: 1) Fundamentals of Corporate Finance, Ross, Westerfield, and Jordan,

Alternate 9th, 10th or 11th ed., McGraw-Hill/Irwin.

2) A financial calculator with an “IRR” function (Hewlett-Packard or

Texas Instruments BA II Plus).

3) Lecture notes available on courseworks.

4). Solutions to practice problems/exams – available on courseworks.

Prerequisites: Probability and Statistics at the level of SIEO W3600 or SIEO W4150,
and Deterministic Models at the level of IEOR E3608 or IEOR E4004,
or instructor permission.

Course Description: Corporate Finance for Engineers covers many decisions a firm makes
that may affect its finances, most importantly, what long-term
investments should the firm take on, how to get the long-term
financing to pay for these investments, and how to manage the firm’s
everyday financial activities. This course also covers the process of
raising capital in public security markets, and how corporate managers
make dividend payment decisions. We will learn how to estimate the
cost of capital, how to calculate the value of a public firm, and cover
accounting based financial analysis.

Course Objectives: Upon completion of this course, students should be able to:

1) Demonstrate an ability to adapt the discounted cash flows approach

to handle corporate financial decisions.

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2) Develop deeper understanding of three major financial decisions -
capital budgeting, capital structure and working capital decisions.

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 3) Demonstrate basic understanding of how corporations raise
capital and what factors affect corporate dividend policy.

Course Format: Class meetings will consist of lectures, discussions and analysis of
financial problems. We will discuss new theories and concepts and
work on numerical examples based on the lecture notes provided
on courseworks and will solve additional problems in class before
each test. Students are expected to have finished all assignments
before class.

All electronic devices must be turned off or put on vibration mode

during class except laptops that you are using to take notes.

You need to attend class regularly, follow the lecture and take notes
in order to do well in this class. Students are responsible for all the
material and assignments presented in class. If you miss a class or
if you are late, you are expected to get the notes, handouts, and
find out about the announcements made from your classmates.

Exams/Grading: The final grade will be based on two closed-book exams (one
midterm and one final), in-class participation, homework
assignments and/or closed-book conceptual quizzes. You are only
allowed to bring a single, two-sided page of notes to each exam. A
financial calculator is also required for the exams. Except for a
verifiable family or medical emergency, there will be no make-up
for any exams.

My general exam philosophy is that there will be a few surprises

about the questions you get on the test, but to not allow an
excessive amount of time to think about how to approach each
problem. This helps to ensure that the students who study the most
get the best grades. Students who do not put serious study time will
probably be pressed for time in my tests.

To do well on the exams I give you the following advice. A good

portion of exam questions will be mathematical problems. Your
best indication of exam problems will be from your homework
assignments, practice exams, suggested problems and solutions I
will post online, problems we solve together in class and
occasional comments I make in class (for example, “pay special
attention to question 4, chapter 12”). It is very important to solve
all of the mathematical problems by yourself. If you can solve all
the homework problems and other problems I work through during
class, you will do very well on the mathematical part of the exams.

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 Some exam questions will be conceptual in nature. For these, class
discussions and class notes, along with reading the book chapters
are the best indicators.

There will be several homework assignments and/or quizzes

throughout the semester. I will regularly list suggested problems
that you should work out, and also provide solutions. You are
responsible for doing them, and I will go over many of them in
class. The only way to do well on tests is to practice. Answers for
most practice problems will be distributed.

The breakdown of the final grade is as follows:

Midterm 35%
Final 40%
Homework/Quizzes 15%
Participation 10%
Total 100%

Academic Integrity and Discipline:

Students are expected to abide by the University Code of Conduct

and maintain the highest standards with regard to honesty, effort
and performance. Discipline will be enforced rigorously. A student
who falsifies or copies an assignment, term paper or examination
will be subject to failure in the course involved. Dishonest
behavior also includes, but is not limited to, using unauthorized
material in an examination, and aiding or permitting another
student to copy an assignment, term paper or examination. Such
behavior is subject to the same penalty as copying. Depending on
the circumstances, evidence of dishonest scholarship may well lead
to expulsion from the University. Student appeal procedures are on
file in the deans’ offices and are published in the student
handbooks of the various colleges of the University.

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 Tentative Schedule

Lecture Date Topic Reading

1 9/7 Introduction to Corporate Finance Ch. 1

2 9/14 Financial Statement Analysis Ch. 3

3 9/21 Long-term Financial Planning Ch. 4

4 9/28 Investment Criteria Ch. 9

5 10/5 Capital Budgeting Ch. 10

10/12 No lecture – Professor attending a national conference

6 10/19 Capital Budgeting; Review Ch. 10

10/26 Midterm (Chapters 3, 4, 9, 10)

7 11/2 Dividend Policy; Raising Capital Ch. 17, 15

8 11/9 Stock Valuation Ch. 8

9 11/16 Bond Valuation Ch. 7

11/23 No lecture – Thanksgiving recess

10 11/30 Cost of Capital Ch.14

11 12/7 Financial Leverage and Capital Structure Policy Ch. 16

Final Exam (Chapters 7, 8, 14, 15, 16, 17)