NYU Stern School of Business

Undergraduate College

FINC-UB.0007.004 (C15.0007): CORPORATE FINANCE

Spring 2013

Instructor Details

Professor Ashwini K. Agrawal

aagrawal@stern.nyu.edu

Thurs 9:30-11 am and by appointment

KMC 9-75

 

Eric Cohen

edc285@stern.nyu.edu

Mon 4:30-5:50 pm, Wed 1-2:30 pm, and by appt

KMC 2-80

 

Daniel Gilmore

dpg244@stern.nyu.edu

Tues 12-1:30, Thurs 4:30-5:50 pm, and by appt

KMC 2-90

 

Course Meetings

TR, 2:00pm to 3:15pm

KMC 3-90


Midterm Exam: Thursday, March 14, 2:00 pm - 3:15 pm, KMC 3-90

Final Exam: Tuesday, May 21, 2:00 pm - 3:50 pm, KMC 3-90

Schedule exceptions
    Class will not meet on:
    Class will meet on:

 

Course Description and Learning Goals

This is an introductory course in corporate finance. The course has three main objectives:

1) Develop an understanding of the tools used to make investment decisions

2) Understand the basic issues involved in financing decisions

3) Learn how to value a business and understand how investment and financing decisions are related.

Emphasis will be placed on appreciating the limitations and challenges that are faced when applying the theoretical framework of corporate finance to real world problems. 

 

Course Pre-Requisites

The prerequisite for this class is a passing grade in Foundations of Financial Markets. Therefore, it is expected that students will be comfortable with the following topics: time value of money, discounted cash flow analysis, risk-return trade-off, diversification, valuation of bonds and stocks, Capital Asset Pricing Model (CAPM).

 

Course Outline

The course is divided into 8 lecture notes.  We will need about 2-4 classes for each lecture note, depending on the length of the lecture note and the number of questions raised during class.  This is a preliminary outline for the course. 

 



Topic

Lecture Note

Book Chapter (BMA 9th Ed.)

Investment Decisions

 

 

   Net Present Value

1

2.1, 3.1-3.3

   Rules for Making Investment Decisions

2

6.1-6.4, 7.3

   Real Options

3

11.4, 23.2-23.4

   Cash Flow Analysis

4

7.1, 7.2, 11.2-11.3

   Cost of Capital

5

9.2-9.3, 10.1-10.3

 

Financing

 

 

   Capital Structure

6

18.1-18.4, 19.1-19.3

 

 

Valuation

 

 

   Valuation using DCF (WACC vs. APV)  

7

20.1-20.4

   Valuation using Multiples

 

 

The course schedule is subject to change (please follow the announcements in class and on Blackboard).  If time permits, we will also cover miscellaneous topics such as corporate governance. 

 

Required Course Materials

Lecture Notes (required):

We will use lecture notes. The booklet with the lecture notes will be distributed in the second class. The lecture notes contain gaps in material which we will fill out together during class.

 

Case Studies (required):

There will be three case studies for the course.  They are available for purchase from the NYU bookstore.                 

                

Textbook (recommended, but not required):

The lecture notes are self-contained. Thus, no textbook is required. For those of you who wish to use a textbook in addition to the class notes, I recommend that you use:

Berk, Jonathan and Peter DeMarzo, Corporate Finance, 2010, Prentice Hall.   

and/or

Brealey, R. A., S.C. Myers, and F. Allen, 2010, Principles of Corporate Finance, 9thedition, McGraw-Hill.

The lecture notes are mostly based on Brealey Myers and Allen, and the relevant chapters are indicated in the course schedule. This textbook can be used as background reading for those of you who wish to read ahead of the lecture or dig deeper into the material.  However, in terms of the questions that will be asked in the exams, all the relevant material is contained in the lecture notes.

The textbooks are available for purchase at the NYU bookstore or online.  

Calculator:

Please bring a calculator to class. Any calculator in which you can compute powers like xy will be sufficient.

  

Problem Sets:

There will be seven problem sets throughout the semester.  The problem sets are intended to help you understand the course material and prepare you for the exams. 

I will announce in class and on Blackboard when we have a new problem set; the problem set will be due in class one week after it is posted.  The solutions for the problem set will be posted on Blackboard after the problem set is due. 

You can work alone or with other students on the problem sets.  However, you need to write up your own individual solution and turn it in for credit.  If you work with other students, note their names on your problem set.   

The problem sets will be graded on a pass/fail basis.  No late problem sets will be accepted.  Exceptions will be made for students who experience a documented serious illness or family emergency.  Exceptions will also be made for religious observances or civic obligations only when the problem set cannot reasonably be completed prior to the due date and you make arrangements for late submission with me at least one week prior to the due date.

 

Cases:

There will be three cases studies in this course.  The cases are intended to help you understand the course material and prepare for the exams. 

I will announce in class and on Blackboard when we have a new case study and when the case study solutions are due in class.  The solutions for the case study will be discussed in class. 

You can work alone or with other students on the case studies.  However, you need to write up your own individual solution for each case and turn it in for credit.  If you work with other students, note their names on your solution.   

The cases will be graded on a pass/fail basis.  No late case solutions will be accepted.  Exceptions will be made for students who experience a documented serious illness or family emergency.  Exceptions will also be made for religious observances or civic obligations only when the case study cannot reasonably be completed prior to the due date and you make arrangements for late submission with me at least one week prior to the due date

 

Assessment Components

Problem Sets:    7%

Cases:              3%

Midterm:          40%

Final:               50%

To ensure that all students are treated fairly and consistently, all exams will be graded according to a grading schedule, which awards points for correctly completing specific steps of a question.

 

Grading

At NYU Stern we seek to teach challenging courses that allow students to demonstrate their mastery of the subject matter.  In general, students in undergraduate core courses can expect a grading distribution where: 

Note that while the School uses these ranges  as a guide, the actual distribution for this course and your own grade will depend upon how well  you actually perform in this course.

 

Re-Grading

The process of assigning grades is intended to be one of unbiased evaluation. Students are encouraged to respect the integrity and authority of the professor’s grading system and are discouraged from pursuing arbitrary challenges to it.

If you believe an inadvertent error has been made in the grading of an individual assignment or in assessing an overall course grade, a request to have the grade re-evaluated may be submitted. You must submit such requests in writing to me within 7 days of receiving the grade, including a brief written statement of why you believe that an error in grading has been made.

 

Academic Integrity

Integrity is critical to the learning process and to all that we do here at NYU Stern. As members of our community, all students agree to abide by the NYU Stern Student Code of Conduct, which includes a commitment to:

The entire Stern Student Code of Conduct applies to all students enrolled in Stern courses and can be found here:

Undergraduate College: http://www.stern.nyu.edu/uc/codeofconduct
Graduate Programs: http://w4.stern.nyu.edu/studentactivities/involved.cfm?doc_id=102505

To help ensure the integrity of our learning community, prose assignments you submit to Blackboard will be submitted to Turnitin.  Turnitin will compare your submission to a database of prior submissions to Turnitin, current and archived Web pages, periodicals, journals, and publications.  Additionally, your document will become part of the Turnitin database.

 

Recording of Classes

Your class may be recorded for educational purposes

 

Students with Disabilities

If you have a qualified disability and will require academic accommodation of any kind during this course, you must notify me at the beginning of the course and provide a letter from the Moses Center for Students with Disabilities (CSD, 998-4980, www.nyu.edu/csd) verifying your registration and outlining the accommodations they recommend.  If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.

 

Professional Responsibilities For This Course

Assignments

 

Classroom Norms

 

Stern Policies

General Behavior
The School expects that students will conduct themselves with respect and professionalism toward faculty, students, and others present in class and will follow the rules laid down by the instructor for classroom behavior.  Students who fail to do so may be asked to leave the classroom. 

 

Collaboration on Graded Assignments
Students may not work together on graded assignment unless the instructor gives express permission. 

 

Group Projects

Guidelines for Group Projects

Business activities involve group effort. Consequently, learning how to work effectively in a group is a critical part of your business education.

Every member is expected to carry an equal share of the group’s workload. As such, it is in your interest to be involved in all aspects of the project. Even if you divide the work rather than work on each piece together, you are still responsible for each part. The group project will be graded as a whole:   its different components will not be graded separately. Your exams may contain questions that are based on aspects of your group projects.

It is recommended that each group establish ground rules early in the process to facilitate your joint work including a problem-solving process for handling conflicts. In the infrequent case where you believe that a group member is not carrying out his or her fair share of work, you are urged not to permit problems to develop to a point where they become serious. If you cannot resolve conflicts internally after your best efforts, they should be brought to my attention and I will work with you to find a resolution.

You will be asked to complete a peer evaluation form to evaluate the contribution of each of your group members (including your own contribution) at the conclusion of each project. If there is consensus that a group member did not contribute a fair share of work to the project, I will consider this feedback during grading.

 

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