WELCOME TO

FINANCE 254
Corporate Financial Management
The First Day Agenda
 Meet the Fin 254 “braintrust”
 Course Administrative Overview
 Top 10 List
 What is corporate finance
 The goal of the firm
 10 Principles of Financial Management
 Things you should know from Chapter 1
The Finance 254 “Braintrust”

 Lecturer/Coordinator: Prof. Mike Dyer

 Teaching Assistants:
 Fernanda Toros
 Ronald Stauber
 Taie Wang
 Lisa Hewgill
 Kangwoo Lee
 Minqling Li
 Martin Maurer
 Seth Patel
Required Class Materials
 Textbook: Financial Management, Principles and
Applications, 9th Edition by Keown, Scott, Petty, and
Scott.
 Finance 254 Syllabus Book by yours truly in campus
bookstores.
 Texas Instruments BAII Plus financial calculator ($5
rebate card at front of your book!)
 Included with the textbook: 15-week Wall Street
Journal (print and online versions) subscription.
Follow the registration instructions from card wrapped
outside the back cover of the textbook. The WSJ
people will be here Wednesday.
Important Internet Addresses
 Course Website:
http://www.cba.uiuc.edu/~mdyer/fin 254.htm
 Syllabus and Lecture Notes
 Assignments Posted Here
 Textbook Website:
http://myphlip1.pearsoncmg.com/student
 Select Financial Management 9th edition by
Keown
Contacting Prof. Dyer
 Office: 328J DKH
 Telephone: 244-7807 (voice mail available)
 Office Hours:
 3-5Monday & Wednesday, and 1-3 Thursday
 e-mail: dyer1@uiuc.edu

 TA office hours will be announced this week

The Nitty Gritty
Grade Breakdown
 420 points from 3 exams: 140 points each
(with optional final)
 36 multiple choice questions: 15 questions worth 4
points each, 16 problems worth 5 points each.
 Formula sheets will be given at the end of each
exam.
 100 points from 4 homework sets
 posted on Website on Assignments Page
 1st assignment posted next week.
Exam Dates
 #1, Monday, Feb. 18 (Chapters 1, 14, 5, 6, &
2)
 7-9 pm, Conflict 3-5 pm
 #2, Thursday, March 28* Change from
syllabus book (Chapters 3,4, 7, & 8)
 7-9 pm, Conflict 3-5 pm
 #3, Monday, April 29(Chapters 9, 10, 12, 21,
& 22)
 7-9 pm, Conflict 3-5 pm
 Optional final exam dates:
 Saturday,
May 4: 9-11 am
 Wednesday, May 8: 1:30-3:30 pm
Assignment Due Dates

 All are due in your  Feb. 1 Homework 1

TA’s mailbox in 340 Due
Wohlers Hall by 4 PM  Feb. 8 Homework 2
on the below dates Due
and must be typed.  Mar. 8 Homework 3
 Assignments 1 & 2 are Due
20 points each, and  Apr. 19 Homework 4
Assignment 3 & 4 are Due
30 points each.
 Late assignments are
 Can be done in groups accepted with 50%
of four if all group penalty through the
members have the following Wednesday.
same TA.
Miscellaneous Items
 Textbook problems assigned in syllabus will
not be graded, but you are responsible for
knowing how to do them.
 Solutions to all assigned textbook problems
are in the back of syllabus.
 Lecture Note Powerpoint files will be posted
on the Fin 254 Website in “Syllabus and
Lecture Note” section generally prior to first
lecture on a chapter.
 Helpful textbook items: online study guide
and questions at MyPhlip website. Register at
http://myphlip1.pearsoncmg.com/
TOP
10
LIST
Chapter 1 Things To
Know
 What is finance?
 The goal of the firm
 Advantages and disadvantages of different
business organizations
 Soleproprietorship and partnerships
 Corporations

 How corporations raise money (carries over

into Chapter 14)
 10 Principles of Financial Management
What is Corporate Finance?
 In the simplest sense: involves what
assets a company should invest in and
how to raise cash to finance these
investments in order to maintain and
maximize economic value.
 Where does a company get cash to run
and finance its business?
Goal of the Firm
 The primary goal is shareholder wealth
maximization.
 This means:
 Maximizing Firm Value (market price per
share of common stock x number of
outstanding shares)
 Maximizing stock price.
What Determines Shareholder
Value?
 Managerial decisions affecting:
 Expected cash flows.
 Timing of cash flows.
 Riskiness of cash flows.
 In other words, stock price = risk-adjusted
present value of future expected cash flows.
 Financial managerial decisions include capital
structure, dividend policy, working capital
management, and investment strategies.
Why not Profit Maximization?
 Ignores timing of cash flows.
 Ignores risk (or uncertainty) of cash
flows.
 Financial Management
Principles or Axioms
 1) Risk - return trade-off
 2) Time value of money
 3) Cash - not profits - is king
 4) Incremental cash flows count
 5) The curse of competitive markets
 6) Efficient capital markets
 7) The agency problem
 8) Taxes bias business decisions
 9) All risk is not equal
 10) Ethical dilemmas are everywhere in
finance
Key Financial Decision
Making Rule
 Finance is concerned with raising cash to
invest in assets that are expected to generate
future cash flows
 Net Present Value (NPV) = present value of
future expected cash flows - initial outlay.
 A firm that follows the practice of investing in
positive NPV assets will increase shareholder
wealth & firm value.
 This idea ties together most of the 10
Principles or Axioms together neatly.