University of California Berkeley, Extension Spring 2011 Instructor: Patricia Muscatelli pmuscatelli@earthlink.

net Course Overview

Basic Corporate Finance X430.1 Syllabus

This course provides an introduction to the basic principles of financial theory and management. Topics that will be covered include: Overview of financial management and the financial environment Calculating the time value of money and the use of present and future value in a business environment Analysis of financial statements and ratios Introduction to capital budgeting Introduction to the risk/return relationship and the Capital Asset Pricing Model Valuation of bonds and stocks Introduction to financial planning and cash flow analysis Time will be given in each class to discuss events that are currently happening in the financial world. Course Materials Text: Moyer, McGuigan & Kretlow, Contemporary Financial Management, 11th Edition, South-Western Cengage

Course Requirements All reading assignments must be completed prior to class. Individual homework problems must be typed and turned in at the beginning of the class in which they are due. Late assignments will not be accepted. Each class will include case discussions and problem solving in small groups. Participation in these activities will be counted as part of your grade. Participation points lost because of absence from class may not be "made up". Please bring a financial calculator to each class. Students are encouraged to share experiences that relate to the evening's topics with the class. There is a team presentation and paper (see attached sheet) due in session nine. There will be a mid-term and final exam. While calculators may be used, no computers or cell phones are permitted during exams. There will be no make-up exams for missed tests. Academic Ethics: When you enroll in a course, you join an academic community in which each person makes the commitment to behave with academic integrity and to accept the civil and civic responsibility that assure the freedom of expression of the community members. Policies related to student conduct are spelled out in the UC Berkeley Extension Code of Student Conducts. Inquiries regarding the policy should be directed to the Dean of UC Berkeley Extension. This information also is available on the web at http://students.berkeley.edu/uga/conduct.asp. Plagiarism: Plagiarism is defined by the Berkeley Campus Office of Student Life as a form of Academic Dishonesty, violating the Berkeley Campus Code of Student Conduct which defines plagiarism as follows: "Plagiarism is defined as the use of intellectual material produced by another person without acknowledging its source. This includes, but is not limited to:

(a.) Copying from the writings or works of others into one's academic assignment without attribution, or submitting such work as if it were one's own; (b.) Using the views, opinions, or insights of another without acknowledgment; or (c.) Paraphrasing the characteristic or original phraseology, metaphor, or other literary device of another without proper attributions." Plagiarism is a serious violation of academic and student conduct rules and is punishable with a failing grade and possibly more severe action. Grading Class Participation Team Project Individual Homework Mid-term Exam Final Exam 5% 25% 20% 25% 25%

Letter grades will be determined using the following guidelines: 94 - 100% = A 90 - 93% = A86 - 89% = B+ 82 - 85% = B 78 - 81% = B74 - 77% = C+ 70 - 73% = C 66 - 69% = C62 - 65% = D+ 58 - 61% = D <57% = F

Course Outline Date/Topics 1/03 - Objective of the firm Capital Allocation Financial Markets Financial Institutions 1/10 - Financial Statements Trend Analysis Ratio Analysis 1/24 - Time Value of Money Present Value Future Value Perpetuities Uneven Cash Flows Loan Amortization 1/31 - Capital Budgeting Net Present Value Internal Rate of Return Other Decision Criteria 2/07 - Midterm Exam 2/14 - Bonds/Stock: Characteristics Valuation Yields Chapters 7 and 8 P 7 page 354 P 11 page 355 Required Reading Chapters 1 and 2 Homework*

Chapter 3

Q 2 page 23 Q 5 page 48 P 5 page 91 P 20 page 98

Chapter 5

Chapter 10

P 10 page 165 P 13 page 165 P 21 page 166 P 26 page 167

2/28 - Risk/Return RelationshipChapter 6 Risk in a Portfolio Context Calculating Betas Introduction to CAPM 3/07 - Financial Planning Cash Flow Analysis Financial Forecasting 3/14 - Group Presentations Final exam review 3/21 - Final Exam Chapter 4

P 3 page 252 P 10 page 253 P 1 page 283 P 4 page 283 P 1 page 216 P 7 page 217

Group Paper Q 3 page 122 P 5 page 125

*Homework is due on the date indicated. P stands for problem, Q stands for question.

Basic Corporate Finance Group Project

Each team will select a publicly traded company headquartered in the United States. From the company's web site, retrieve the following audited financial statements for the last three full years (be sure that you do not pick up quarterly or partial year data): Income Statement Balance Sheet Cash Flow Statement Each team will prepare a 15 - 20 minute presentation and a 7 - 10 page paper on their chosen company. The presentation and paper will include the following topics:

A brief history of the company and the products or services the company provides A common size analysis of the income statements and balance sheets A trend analysis of the cash flow statements A ratio analysis for each year using at least two ratios from each of these categories: liquidity, profitability, debt management, asset management and market value (see page 136 of text) A discussion of your opinion of the financial health of the company based on the results of the common size, trend and ratio analysis Using the results of your analysis of the company, make a recommendation as to whether or not this company's stock would be a good investment. Clearly discuss the aspects of your analysis that led you to the buy or no buy conclusion.

Be prepared to answer questions from the rest of the class on your analysis and recommendation.