NYU Stern School of Business

Undergraduate College

C15.0007.003: CORPORATE FINANCE

Spring 2011

Instructor Details

Lee, Samuel

slee@stern.nyu.edu

Fridays (by appointment)

KMC 9-71

 

Course Meetings

TR, 2:00pm to 3:15pm

Tisch T-200



 

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. 

 

Valuation

 

 

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 & Financing

 

 

Capital Structure and Investment Decisions

7

20.1-20.4

Payout Policy

8

 17.1-17.5



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

Course Material:

Lecture Notes (required):

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

Case Studies (required):

There will be three case studies for the course.  The case studies are available for purchase at the NYU bookstore.            

Textbook (required):

The lecture notes are self-contained. In addition to the class notes, I recommend that you use the textbook

Brealey, R. A., Myers, S. C., and F. Allen, 2007, Principles of Corporate
Finance
, 9th edition, McGraw-Hill.  

The lecture notes are mostly based on this book. 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.

The textbook is available for purchase at the NYU Bookstore or online.  If you want to save money, you can buy a used version or an older version of the textbook. The textbook is also available on Reserve at the NYU Library.  

Problem Sets:

We will have seven problem sets throughout the semester.  The problem sets are intended to help you understand the lectures and prepare yourself for the type of questions asked in the exam. My advice is to complete all problem sets and check your answers with the solution guide after you hand in the problem sets.

I will announce in class when we have a new problem set.  The problem sets will be posted on Blackboard and are due in class one week after they are posted.  I will not accept late problem sets.  The solutions will be posted on Blackboard after a problem set is due.

You are welcome to work in groups or alone on the problem sets.  However, you need to write up your individual solution.  If you work in a group, note the names of all group members on your problem set.

You can miss one problem set, which means that you need to hand in at least six out of the seven problem sets. If you hand in fewer problem sets, I will deduct 2% from your grade for each problem set missed.   The problem sets are graded.  If you hand in more than six problem sets, I count the six best grades.

Cases:

We will cover three case studies in this class.  I will announce in class when you should start working on a case study.

The case studies are group projects.  You can work in groups of 3-5 students.  You can choose your group yourself.  If you have trouble finding a group, let me know and I will assign you to a group.  Group work is generally self-policed, except in extreme circumstances.  If you think that extreme circumstances apply to your group, bring it to my attention and I will handle the situation.

You are expected to read the case studies and discuss the case studies with your team members.  I will hand out detailed instructions and questions for each case.  Each group must hand in a solution in class which will be graded on pass/fail.  Also, each group must prepare an in-class presentation. Each time I will randomly select one or two groups and have them present their solution.

Calculator:

Please bring a calculator to class.  You will need the calculator to follow the examples we do in class. There are no restrictions regarding the type of calculator you may use but you are responsible for understanding how your calculator works.  Any calculator in which you can compute powers like xy will do the job.   

 

Assessment Components

Problem Sets:   6%

Cases:              6%

Midterm:          33%

Final:               55%

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.

 

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.

 

Professional Responsibilities For This Course

Attendance

 

Participation

In-class contribution is a significant part of your grade and an important part of our shared learning experience. Your active participation helps me to evaluate your overall performance.
You can excel in this area if you come to class on time and contribute to the course by:

 

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. 

 

Course Evaluations
Course evaluations are important to us and to students who come after you.  Please complete them thoughtfully.

 

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