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University Mission:
As a distinctive, comprehensive university of the Lutheran Church—Missouri Synod, centered in
the Gospel of Jesus Christ and based in the liberal arts, Concordia University Chicago (CUC)
equips men and women to serve and lead with integrity, creativity, competence, and compassion
in a diverse, interconnected, and increasingly urbanized church and world.
Your timely participation in the course is requested and required. If you anticipate problems with
your attendance, please let your instructor know.
By virtue of your enrollment in this course, you are committing yourself to Concordia
University’s honor code. It reads:
This honor code is available for review on the Concordia University website. As a result of your
commitment to this honor code, violations of the code will have serious repercussions. Academic
consequences resulting from violations of the Honor Code could range from a zero on the
assignment or examination (which will count in your overall point total for this course) to failure
of the course. Multiple violations will be reviewed by the Honor Code Council and could result
in a failing course grade, suspension or expulsion from the university.
In accordance with the honor code that you have signed, turning in any piece of work, which
includes your digital signature, constitutes your pledge that your documents are original and that
you have not given or received any unauthorized assistance in completing your assignments.
Plagiarism:
Plagiarism is defined as use of intellectual material produced by another person without
acknowledging its source. CUC faculty members monitor student work.
For example:
• Widespread copying of passages from works of others into an assignment, paper,
discussion board posting, or thesis or dissertation without acknowledgment.
• Using the views, opinions, or insights of another without acknowledgment.
• Paraphrasing another person’s characteristic or original phraseology, metaphor, or other
literary device without acknowledgment.
Accommodations Statement:
Americans with Disability Act (ADA)
Concordia University Chicago is committed to ensuring the full participation of all students in its
programs, as required under the Americans with Disabilities Act (ADA). Any student who,
because of a disability, requires accommodations to participate in a course should speak with the
instructor and contact the Center for Accessibility and Resource for Excellence (CARE).
Disabilities covered by ADA may include chronic health conditions as well as learning,
psychiatric, or physical disabilities. CARE is part of the Academic Center for Excellence (ACE).
Please contact: ACE/CARE Office – Klinck Memorial Library, Room 025, 708-209-3462
Additional information may be found here:
https://www.cuchicago.edu/academics/success/disability-services/
Students are responsible for participating in this course through the following academic activities:
• completing assigned readings from both texts and supplemental articles,
• participating in the discussions with classmates and instructor, and
• submitting assignments for each learning module on the due date.
This course is organized by weekly learning modules. All assigned readings for the module are to
be completed before completing assignments. After completing the assigned readings and any
ancillary materials posted by the instructor, e.g. power points, etc. students will participate in
discussions in class.
This will afford the professor ample time to provide a substitute assignment or reschedule an
exam.
If you do not notify your professor at least two weeks in advance of your absence due to
observing a religious holiday, the professor has the discretion whether to adjust exams,
assignments or general attendance requirements, and also to determine whether all or partial
credit will be received.
Late Policy:
Late assignments will either not be accepted or will incur a grade penalty (recommend 5% per
day late) unless due to documented serious illness or family emergency. Instructors will make
exceptions to this policy on an as needed basis. Assignments over 7 days late will not be
accepted.
In Class Participation:
Discussions require a response to specific questions that results in collaborative conversations
and construction of knowledge that builds and expands learning of the course. As a master-level
student, it is expected that you will reply as a practitioner-scholar.
Every week, students will be required to submit documentation to show preparation for the
week’s discussion(s). This is a required assignment and will count towards participation points for
the week. Failure to submit this assignment will result in an immediate point deduction. Students
should bring this information to class to participate in class discussions. This will contribute to
the participation grade as well. To get full points, the following will be required:
• Submit prepared discussion documentation
• Interact with peers and the instructor in class
• Complete all in-class activities while showing understanding of the material
You must support your discussion responses with academically appropriate references unless you
are asked to provide an opinion or personal reflection for a specific question. Unless noted
otherwise, your initial discussion preparation document should be approximately 250-300 words
in length, substantive and scholarly in nature. Please refer to the College of Business power point
“Engaging in Dialogue.” You are required to respond verbally in each class to colleagues in the
following ways:
• Suggest why you might see things differently.
• Ask a probing or clarifying question.
• Share an insight from having listened to the colleague's points.
• Offer and support an opinion.
• Validate an idea with your experience.
• Make a suggestion.
• Expand on the colleague's discussion.
• Ask for evidence that supports the discussion.
• Always be respectful and collegial.
If you are not in class, you cannot receive full participation points.
Technology Expectations:
• Students will complete assignments using the Internet and library-technology based
database, such as the university’s research database when conducting literature searches
and course assignments and discussions.
• Students will interact with their instructor and other classmates through the Blackboard
virtual classroom, including: retrieving their syllabus, submitting assignments, and
communicating with their professor.
• Students are expected to use their Concordia email for all correspondence. Students
should log into Concordia Connect to check their email on a regular basis.
Course Description
• Ethics and Social responsibility as drivers for the basic principles of fundamental analysis
and investing.
• Impact of communication on explaining the structure of accounting and how it aids or
hinders valuation analysis.
• Significance of critical thinking and entrepreneurial mindset in determining the drivers of
residual earnings and earnings growth into the future
• Effective strategy in calculating and determining the required return in an attempt to
value an organization.
Diversity:
Students are expected to respect diversity of thought, opinion, and background in all aspects of
interaction and communication. The course incorporates and supports aspects of a diverse
learning
Required Text:
Lasher, W. R. (2013). Practical Financial Management, 8th Ed, Cengage Publishing
The ISBN for Lasher Practical Financial Management 8th edition loose-leaf bundle plus
CengageNOW
1-term access printed access card is 9781337130172, $140 net to bookstore.
Course Activity
Outcome
Description/Due in Course Outcome Assessed
Activity Name Point value/P
Module #
#1 #2 #3 #4
√ √ √ √
Participation 1-8 Module 1-8 24 pts. (3 pts.
√ √ √ √
Problem Sets 1-7 Module 1-7 28 pts. (4 pts.
√ √ √ √
Case Studies Module 2-4-6 15 pts. (3 pts.
Grading Scale
100-93% A 4.00 82-80% B- 2.67 69-67% D+
1.33
92-90% A- 3.67 79-77% C+ 2.33 66-63% D
1.00
89-87% B+ 3.33 76-73% C 2.00 62-60% D-
.67
86-83% B 3.00 72-70% C- 1.67 59% & below F
.00
Quick Reference to Module Activities
Start Readings/ Resources
Weeks Topics and Module Assignments and Activities
Date
Monday of Week 1 Module 1 • Review Syllabus • Participation Preparation Document
Week 1 • Course Introduction #1 Due the night before Week #2
• Read Chapters 1 & 2 in Textbook class by 11:59pm – 3 pts
• Participation #1
• Power Points 1 & 2 • Problem Set #1 – 4 pts
• Problem Set #1
Monday of Week 2 Module 2 • Read Chapters 3 & 4 in Textbook • Participation Preparation Document
Week 2 • Participation #2 #2 Due the night before Week #3
• Power Points 3 & 4 class by 11:59pm – 3 pts
• Problem Set #2
• Problem Set #2 – 4 pts
• Case Study #1
• Case Study #1 -5pts.
Monday of Week 3 Module 3 • Chapters 5 & 6 in Textbook • Participation Preparation Document
Week 3 • Participation #3 #3 Due the night before Week #4
• Power Points 5 & 6 class by 11:59pm – 3 pts
• Problem Set #3
• Problem Set #3 – 4 pts
Monday of Week 4 Module 4 • Read Chapters 7 & 8 in Textbook • Participation Preparation Document
Week 4 • Participation #4 #4 Due the night before Week #5
• Power Points 7 & 8 class by 11:59pm – 3 pts
• Problem Set #4
• Problem Set #4 – 4 pts
• Case Study #2
• Case Study #2 -5pts.
Monday of Week 5 Module 5 • Read Chapter 9 & 10 in Textbook • Participation Preparation
Week 5 • Participation #5 Document #5 Due the night before
• Power Points 9 & 10 Week #6 class by 11:59pm – 3 pts
• Problem Set #5
• Problem Set #5 – 4 pts
Monday of Week 6 Module 6 • Read Chapter 11 & 12 in • Participation Preparation Document
Week 6 • Participation #6 Textbook #6 Due the night before Week #7
class by 11:59pm – 3 pts
• Problem Set #6 • Power Points 11 & 12
• Problem Set #6 – 4 pts
• Case Study #3
• Case Study #3 -5pts.
Problem Sets
Problem Set #1: Problems From Chapters 1 & 2 4 pts. Due at the end of Module 1
CH 1 - An Overview of Finance
• Problems: CH 1- 1, 2
CH 2 - A Review of Accounting, Financial Statements, and Taxes
• Problems: CH2- 1, 2, 16, 20
Course Learning Outcomes: A, B, C & D
You must show all of your work for each problem. Failure to do so will result in partial credit.
Make sure your work flows logically and solutions are identified clearly.
If any problems involve writing, please use complete sentences.
Problem Set #2: Problems From Chapters 3 & 4 4 pts. Due at the end of Module 2
CH 3 – Cash Flows and Financial Analysis
• Problems: CH 3: 3, 13
CH 4 – Financial Planning
• Problems: CH 4: 1, 5
Course Learning Outcomes: A, B, C
You must show all of your work for each problem. Failure to do so will result in partial credit.
Make sure your work flows logically and solutions are identified clearly.
If any problems involve writing, please use complete sentences.
Problem Set #3: Problems From Chapters 5 & 6 4 pts. Due at the end of Module 3
CH 5 – The Financial System, Corporate Governance, and Interest
• Problems: CH 5: 2, 4, 5
CH 6 – Time Value of Money
• Problems: CH 6: 1, 2, 4, 6, 18
Course Learning Outcomes: A, B, & D
You must show all of your work for each problem. Failure to do so will result in partial credit.
Make sure your work flows logically and solutions are identified clearly.
If any problems involve writing, please use complete sentences.
Problem Set #4: Problems From Chapters 7 & 8 4 pts. Due at the end of Module 4
CH 7 - The Valuation and Characteristics of Bonds
• Problems: CH 7: 1, 11, 22
CH 8 - The Valuation and Characteristics of Stock
• Problems: CH 8: 1, 2, 5
Course Learning Outcomes: A, B, & C
You must show all of your work for each problem. Failure to do so will result in partial credit.
Make sure your work flows logically and solutions are identified clearly.
If any problems involve writing, please use complete sentences.
Problem Set #5: Problems From Chapters 9 & 10 4 pts. Due at the end of Module 5
CH 9 - Risk and Return
• Problems: CH 9: 1, 3, 9
CH 10 - Capital Budgeting
• Problems: CH 10: 1, 2, 5
Course Learning Outcomes: A, B, & C
You must show all of your work for each problem. Failure to do so will result in partial credit.
Make sure your work flows logically and solutions are identified clearly.
If any problems involve writing, please use complete sentences.
Problem Set #6: Problems From Chapters 11 & 12 4 pts. Due at the end of Module 6
CH 11 - Cash Flow Estimation
• Problems: CH 11: 1, 2, 3, 4
CH 12 - Risk Topics and Real Options in Capital Budgeting
• Problems: CH 12: 1, 10, 12, 16
Course Learning Outcomes: A, B, C & D
You must show all of your work for each problem. Failure to do so will result in partial credit.
Make sure your work flows logically and solutions are identified clearly.
If any problems involve writing, please use complete sentences.
Problem Set #7: Problems From Chapters 13 & 18 4 pts. Due at the end of Module 7
CH 13 - Cost of Capital
• Problems: CH 13: 1, 4, 10, 17
CH 18- International Finance
• Problems: CH 18: 1, 6, 10, 11
Course Learning Outcomes: A, B, C & D
You must show all of your work for each problem. Failure to do so will result in partial credit.
Make sure your work flows logically and solutions are identified clearly.
If any problems involve writing, please use complete sentences.
If you have questions about these problems, please email your professor.
Case Studies
Case Study #1: Chapter 4 Business Analysis - 5pts. Due at the end of Module 2
Ed Perez has always wanted to run his own restaurant. He worked part-time in the food service
business during high school and college and has worked for a large restaurant chain since
graduating from college four years ago. He's now ready to open a franchised family style
restaurant. However, to get started, a large investment is required. Ed has saved some money,
but will also have to secure a substantial loan.
Fortunately, Ed's old college roommate, Joe Dixon, is now a loan officer with the local bank.
Besides being a good friend, Joe knows that Ed is a stable, hard-working businessman and an
excellent credit risk. Ed is now meeting with Joe to apply for the loan. After exchanging
pleasantries, Joe asks to see Ed's business plan. In response Ed tells him all about the idea and
shows him the written information from the franchisor, which Joe glances at briefly.
Joe listens politely, leans back in his chair, and says, "Ed, I've known you for years. I'm sure this
is a great idea, and that you'll make a terrific restaurateur, but we can't even begin to consider a
loan until we see a fully developed business plan that looks at least five years into the future."
• Why is Joe (the bank) insisting that Ed prepare a business plan?
• What will it show the bank?
• List some specific concerns that the bank might have that a plan would answer
outside of the financial section.
• List several concerns that the financial plan might answer for the bank.
• Why is the bank insisting on such a long planning horizon? Does that imply the
bank is looking for a strategic plan?
• What will preparing a business plan do for Ed?
• Before he gets started.
• After he gets started.
• What will he learn by doing the financial plan?
• What kind of thinking is the bank looking for in Ed's plan? That is, should the plan be
strategic or operational or very short term?
Case Study #2: Chapter 5 Business Analysis - 5pts. Due at the end of Module 4
Harry, a friend of yours, is taking a course in economics, and has become confused by some of
the terminology because of the way people commonly use the same words. The economics
professor says investment occurs when companies buy equipment and build factories. Yet Harry
has always heard people talk about investing as a method of saving when they put money in the
bank or purchase securities. He's confused by these dissimilar uses of the word, and has asked
you to explain. After asking for your help, Harry happily states that there's one thing he does
understand perfectly about what the econ prof says, and that is "savings equals investment."
Since investing in stocks and bonds is also saving money, it's obvious that savings equals
investment!
• Write a brief explanation to help Harry out.
Case Study #3: Chapter 6 Business Analysis - 5pts. Due at the end of Module 6
A business can be valued by capitalizing its earnings stream (see example 6.15).
• How might you use the same idea to value securities, especially the stock of large
publicly held companies?
• Is there a way to calculate a value that could be compared to the stock’s market price that
would tell an investor whether it’s a good buy? (If the market price is lower than the
calculated value, the stock is a bargain.)
• What financial figures associated with shares of stock might be used in the calculation.
Consider the per share figures and ratios discussed in chapter 3 including EPS, dividends,
book value per share etc.
• Does one measure make more sense than the others?
• What factors would make a stock worth more or less than your calculated value.
Course Reflection
Reflective Paper: Course Reflection – 8pts: Due at the end of Module 8
It is expected that you will share your lessons learned. It is important that your lessons learned
demonstrate your learning and critical thinking. Here are some suggestions to ensure you provide
appropriate depth and breadth:
• Process Evaluation: What was the most valuable concept you learned about in this
class?
• Content Highlights: Discuss what you have learned in this class and how it will assist
you in achieving further professional goals.
• Spirit of Inquiry and Continuous Learning: What questions will you carry forward,
either because of their inherent value to continue to inform or just because they remain
perplexing?
• Improvements: What enhancements could be made to this class and how would they
improve the overall learning experience? What would you keep the same about this
course?
Take the time to craft a well-written and thoughtful reflection that contains relevant reference to
the course concepts and readings. 450-500 words
Portfolio
Assignment: This is your final assignment and will become part of your CUC MBA
ePortfolio.
In this assignment you will complete a paper on the following situation:
Ed Draycutt is the engineering manager of Airway Technologies, a firm that makes computer
systems for air traffic control installations at airports. He has proposed a new device the success
of which depends on two separate events. First the Federal Aviation Administration (FAA) must
adopt a recent proposal for a new procedural approach to handling in flight calls from planes
experiencing emergencies.
Everyone thinks the probability of the FAA accepting the new method is at least 98%, but it will
take a year to happen. If the new approach is adopted, radio makers will have to respond within
another year with one of two possible changes in their technology. These can simply be called A
and B. The A response is far more likely, also having a probability of about 98%. Ed’s device
works with the A system and is a stroke of engineering genius. If the A system becomes the
industry standard and Airway has Ed’s product, it will make a fortune before anyone else can
market a similar device.
On the other hand if the A system isn’t adopted, Airway will lose whatever it’s put into the new
device’s development.
Developing Ed’s device will cost about $20 million, which is a very substantial investment for a
small company like Airway. In fact, a loss of $20 million would put the firm in danger of failing.
Ed just presented his idea to the executive committee as a capital budgeting project with a $20
million investment and a huge NPV and IRR reflecting the adoption of the A system.
Everyone on the committee is very excited. You’re the CFO and are a lot less excited. You asked
Ed how he reflected the admittedly remote possibility that the A system would never be put in
place. Ed, obviously proud of his business sophistication, said he’d taken care of that with a
statistical calculation.
He said adoption of the A system required the occurrence of two events each of which has a 98%
probability. The probability of both happening is (.98x.98=.96) 96%. He therefore reduced all of
his cash inflow estimates by 4%. He maintains this correctly accounts for risk in the project.
• Evaluate Ed’s analysis. Does Ed have the right expected NPV? What’s wrong with his
analysis?
• Suggest an approach that will give a more insightful result.
• Discuss why the firm might consider passing on the proposal in spite of the tremendous NPV
and IRR Ed has calculated?
• Evaluative if Ed’s case be might be helped by a real option. If so, what kind? How would it
help?
You have two options for how you may present your Signature Project, including the
following:
• A written essay (8-10 pages-not including the CUC cover, title, or reference pages)
• PowerPoint or Prezi presentation (20 slides-not including the reference slide) (click
here for help in creating a PowerPoint presentation, and Prezi for creating a Prezi.)
All presentations must be submitted via Word document. For all presentations that are not
in an essay format, insert your presentation slides into a Word document or paste the link to
your online presentation into a Word document and submit that document as your
assignment. Notes in the form of a professional-quality handout must accompany all
presentations other than essay format. The handout should contain what you would say if
you were presenting to a board of directors or senior leadership of an organization.
Your well-written and well-developed submission should meet the following requirements,
regardless of the presentation format you choose:
• Include the CUC cover page, introduction, a conclusion, and a references page.
• Use a minimum of 8 credible sources that are cited within the essay or presentation.
• Include proper citation of any graphs or figures that you do not create yourself.
Be formatted according to the 6th edition APA form and style. If using the essay format, please use
the provided writing template.
Module 1
Finance is the art and science of handling money. In the modern world, virtually every
organization, public and private, runs on money. That includes families, businesses, governments,
and nonprofit enterprises like colleges and churches. Money touches everything we do. And
finance, the management of money, is behind most everything we see each day. We don’t
physically observe the financing behind a building or a new car or a house, but it’s there, and
without it most of the things we do see wouldn’t exist. That’s because without money to pay for
resources and a financial system to make trading possible, no one could organize more than a few
people to work together at one time.
Some knowledge of accounting is necessary to appreciate finance. That’s because financial
transactions are recorded in accounting systems, and financial performance is stated in accounting
terms. In other words, if we want to deal with money in business, we have to deal with the system
that keeps track of it, and that’s accounting. Some knowledge of taxes is also necessary, because
tax considerations influence most financial decisions.
Required Readings/Resources:
Read Chapters 1 & 2 in Textbook
Power Points 1 & 2
Introduce yourself. Tell us something about yourself. What motivates you to succeed? Share why
you are pursuing the MBA, what you expect to learn from this course. Feel free to share photos.
Chapter 2
• What is leverage and how does it work? What is the main concern about using it?
http://giddy.org/dbs/structured/LevFinarticle.htm
http://www.accountingtools.com/financial-leverage
http://www.myaccountingcourse.com/accounting-dictionary/financial-leverage
http://www.financepractitioner.com/dictionary/financial-leverage
Refer to the MBA Discussions power point presentation for tips on how to gain maximum
learning and points from your discussion engagement.
• Your participation preparation document should be a substantive response to the
question (minimum 250-300 words) in the participation assignment for the week. It
should be substantive and scholarly in nature including academically appropriate
references (unless you are asked to provide your opinion or a personal reflection on a
specific question).
• The participation preparation document is due the night before class at 11:59 pm CST.
• Your participation preparation document must contain a citation of the course
concepts. This can be in the form of one of the videos you watched, the text, or other
appropriate and relevant literature.
• You will be required to bring this document to class and use it during the in class
discussion to get full participation points.
Required Readings/Resources:
Read Chapters 3 & 4 in Textbook
Power Points 3 & 4
CHAPTER 3
BUSINESS ANALYSIS
1. A company has been growing rapidly for the last three years. It was profitable before the
growth spurt started. Although this year’s revenues are almost three times those of three years
ago, the firm is now losing money. What’s the first thing you would do to try to pinpoint where
the problem(s) may be?
Chapter 4
FINANCIAL PLANNING
2. The following issues are relate to the accuracy and reliability of financial plans. Explain the
process/issues related to each.
Module 3
The Financial System, Corporate Governance, and Interest
Time Value of Money
The time value of money is based on the idea that a sum of money in your hand today is worth
more than the same sum promised at some time in the future, even if you’re absolutely certain to
receive the future cash. The idea is pretty easy to grasp if you think in terms of having a bank
account and being promised an amount of money a year from now. Money in the bank earns
interest, so it grows over time. The value today of the sum promised in one year is an amount that
will grow into that sum if deposited in the bank now. In other words, a sum promised in a year is
worth only as much as you’d have to put in the bank today to have that sum in a year. That value
obviously depends on the interest rate the bank is paying. The higher the interest rate, the faster
money grows, so the less you’d have to deposit today to get a given amount next year. The
present value of a sum at a future time is the amount that must be deposited at interest today to
have the sum at that time. The time value of money is one of the most important principles in
finance and economics today. It’s based on the simple ideas we’ve just stated, but the applications
can get quite complicated.
Module Outcomes: A, B, C, & D
Required Readings/Resources:
Read Chapters 5 & 6 in Textbook
Power Points 5 & 6
CHAPTER 5
1. Brokers and mutual funds do the same: invest your money for you. Is that statement true or
false? Explain. What kind of financial institution is a mutual fund? What is its distinguishing
feature? Describe how savings banks and insurance companies are similar to mutual funds.
http://www.investopedia.com/terms/m/mutualfund.asp
https://www.fidelity.com/learning-center/investment-products/mutual-funds/what-are-mutual-
funds
https://www.investor.gov/investing-basics/investment-products/mutual-funds
CHAPTER 6
2. Discuss mortgage loans in terms of the time value of money and loan amortization. What
important points should every homeowner know about how mortgages work? (Hint: Think about
taxes and getting the mortgage paid off).
http://budgeting.thenest.com/home-mortgage-example-tvm-29982.html
https://www.propertymetrics.com/blog/2014/06/17/time-value-of-money/
https://www.youtube.com/watch?v=ukktf6IdrX0
Refer to the MBA Discussions power point presentation for tips on how to gain maximum
learning and points from your discussion engagement.
• Your participation preparation document should be a substantive response to the
question (minimum 250-300 words) in the participation assignment for the week. It
should be substantive and scholarly in nature including academically appropriate
references (unless you are asked to provide your opinion or a personal reflection on a
specific question).
• The participation preparation document is due the night before class at 11:59 pm CST.
• Your participation preparation document must contain a citation of the course
concepts. This can be in the form of one of the videos you watched, the text, or other
appropriate and relevant literature.
• You will be required to bring this document to class and use it during the in class
discussion to get full participation points.
Module 4
The discussion of bonds is presented in two parts. First we concentrate on understanding the
calculations associated with pricing bonds including consideration of call provisions and
convertibles. After that we take a close look at the nature of the bondholder-issuer relationship
and the institutional characteristics of the bond instrument. Like bonds, stocks are worth the
present value of their expected future cash flows, but the process of estimating that value is far
less precise than it is for bonds. We begin studying stock valuation with basic ideas comparing
equity cash flows with those associated with bonds. After mastering these concepts we turn to
growth models of valuation beginning with the constant growth case and moving on to the more
complex two-stage model. We conclude our treatment of common stock valuation by discussing
pricing in the context of newly issued securities. To do that we explain investment banking and
the IPO process including an analysis of the IPO pop phenomenon.
Following that we consider some issues of corporate control along with the rights and privileges
of stockholders. The point is made, however, that most equity investors are only in for the
money, not for a voice in running the company. Next we move into preferred stock. Its
straightforward valuation is followed by a discussion of preferred’ s nature which makes it
something of a cross between common stocks and bonds. At this point we briefly outline the
nature of securities analysis including a light treatment of the Efficient Market Hypothesis EMH.
The module concludes with a detailed treatment of options and warrants. This will help you get
used to the option concept before taking up a more quantitative treatment of stock options. We
finish with a discussion of the problems created by stock options as executive compensation.
Required Readings/Resources:
Read Chapters 7 & 8 in Textbook
Power Points 7 & 8
CHAPTER 7
• What is a call provision? Why do companies put them in bonds? Define call protected
period and call premium/penalty. (Page 302).
http://finance.zacks.com/advantages-disadvantages-deferred-call-provision-5080.html
http://www.investinginbonds.com/learnmore.asp?catid=5 HYPERLINK
"http://www.investinginbonds.com/learnmore.asp?catid=5&subcatid=18&id=180"&
HYPERLINK "http://www.investinginbonds.com/learnmore.asp?
catid=5&subcatid=18&id=180"subcatid=18 HYPERLINK
"http://www.investinginbonds.com/learnmore.asp?catid=5&subcatid=18&id=180"&
HYPERLINK "http://www.investinginbonds.com/learnmore.asp?
catid=5&subcatid=18&id=180"id=180
https://www.boundless.com/finance/textbooks/boundless-finance-textbook/bond-valuation-6/key-
characteristics-of-bonds-63/call-provisions-289-8368/
CHAPTER 8
• What does the efficient market hypothesis say? What is its implication for stock
analysis? (Page 375).
https://www.fool.com/knowledge-center/what-is-the-efficient-market-hypothesis.aspx
http://www.nasdaq.com/article/investing-basics-what-is-the-efficient-market-hypothesis-and-
what-are-its-shortcomings-cm530860
http://www.morningstar.com/InvGlossary/efficient_market_hypothesis_definition_what_is.aspx
Refer to the MBA Discussions power point presentation for tips on how to gain maximum
learning and points from your discussion engagement.
• Your participation preparation document should be a substantive response to the
question (minimum 250-300 words) in the participation assignment for the week. It
should be substantive and scholarly in nature including academically appropriate
references (unless you are asked to provide your opinion or a personal reflection on a
specific question).
• The participation preparation document is due the night before class at 11:59 pm CST.
• Your participation preparation document must contain a citation of the course
concepts. This can be in the form of one of the videos you watched, the text, or other
appropriate and relevant literature.
• You will be required to bring this document to class and use it during the in class
discussion to get full participation points.
Module 5
In addition to such short-term expenditures, firms spend large sums on special projects from time
to time. For example, machines normally wear out and need to be replaced every few years. The
replacement expenditures tend to be relatively large, but they are infrequent. New business
ventures provide a second example because they generally require initial spending to get started.
Start-up amounts are usually large, but the opportunities don’t come along often. Spending on
things like these is long term because the projects involved tend to last for long periods. As a
general rule, money spent on long-term projects is called capital. The field known as capital
budgeting involves planning and justifying how capital dollars are spent on long-term projects. It
provides methods through which projects are evaluated to decide whether they make sense for a
particular business at a point in time. It also provides a basis for choosing between projects when
more than one is under consideration at the same time.
Module Outcomes: A, B, C, & D
Required Readings/Resources:
Read Chapters 9 & 10 in Textbook
Power Points 9 & 10
CHAPTER 9
• Describe the SML in words. What is it saying about how investors form required rates of
return? Thoroughly evaluate the implications of the SML’s message.
https://www.wallstreetoasis.com/finance-dictionary/what-is-the-security-market-line-sml
https://www.boundless.com/finance/textbooks/boundless-finance-textbook/introduction-to-risk-
and-return-8/understanding-the-security-market-line-82/defining-the-security-market-line-355-
1866/
http://www.investopedia.com/walkthrough/corporate-finance/4/return-risk/security-market-
line.aspx
CHAPTER 10
CAPITAL BUDGETING
• Explain the rationale behind the NPV method in your own words. Why is a higher NPV
conceptually better than a lower one?
https://www.propertymetrics.com/blog/2015/06/11/what-is-npv/
https://hbr.org/2014/11/a-refresher-on-net-present-value
https://www.thebalance.com/net-present-value-npv-as-a-capital-budgeting-method-392915
https://www.fool.com/knowledge-center/advantages-and-disadvantages-of-net-present-value.aspx
Refer to the MBA Discussions power point presentation for tips on how to gain maximum
learning and points from your discussion engagement.
• Your participation preparation document should be a substantive response to the
question (minimum 250-300 words) in the participation assignment for the week. It
should be substantive and scholarly in nature including academically appropriate
references (unless you are asked to provide your opinion or a personal reflection on a
specific question).
• The participation preparation document is due the night before class at 11:59 pm CST.
• Your participation preparation document must contain a citation of the course
concepts. This can be in the form of one of the videos you watched, the text, or other
appropriate and relevant literature.
• You will be required to bring this document to class and use it during the in class
discussion to get full participation points.
Module 6
Cash flow estimation focuses on the numerical methodology used in putting together an estimate
of a capital project. We keep the question of accuracy and risk in mind throughout, and continue
with a discussion of the methods available to incorporate risk into the process. Traditional capital
budgeting techniques compute point estimates of NPV and IRR with no measure of variability.
Hence they don’t give managers the information necessary to include a tradeoff between risk and
expected return in their decisions. This module is concerned with modern approaches to
incorporating risk into capital budgeting. The techniques considered include probabilistic cash
flows, risk adjusted discount rates, decision tree analysis, and the idea of real options.
Required Readings/Resources:
Read Chapters 11 & 12 in Textbook
Power Points 11 & 12
CHAPTER 11
• Most top executives are graded primarily on their results in terms of net income rather
than net cash flow. Why, then, is capital budgeting done with incremental cash flows
rather than with incremental net income.
http://www.unf.edu/~dtanner/dtch/dt_ch17.htm
http://smallbusiness.chron.com/difference-between-incremental-cash-flow-total-cash-flow-
67986.html
http://www.investopedia.com/walkthrough/corporate-finance/4/capital-investment-
decisions/incremental-cash-flows.aspx
CHAPTER 12
• Rationalize the appropriateness of using the cost of capital to analyze normally risky
projects and higher rates for those with more risk
https://www.business-case-analysis.com/cost-of-capital.html
https://hbr.org/2015/04/a-refresher-on-cost-of-capital
http://www.investopedia.com/terms/c/costofcapital.asp
Refer to the MBA Discussions power point presentation for tips on how to gain maximum
learning and points from your discussion engagement.
• Your participation preparation document should be a substantive response to the
question (minimum 250-300 words) in the participation assignment for the week. It
should be substantive and scholarly in nature including academically appropriate
references (unless you are asked to provide your opinion or a personal reflection on a
specific question).
• The participation preparation document is due the night before class at 11:59 pm CST.
• Your participation preparation document must contain a citation of the course
concepts. This can be in the form of one of the videos you watched, the text, or other
appropriate and relevant literature.
• You will be required to bring this document to class and use it during the in class
discussion to get full participation points.
Cost of Capital
Capital Structure Leverage
Required Readings/Resources:
Read Chapters 13 & 14 in Textbook
Power Points 13 & 14
CHAPTER 13
COST OF CAPITAL
• Define the marginal cost of capital (MCC) and explain in words why it predictably
undergoes a step-function increase (breaks) as more capital is raised during a budget
period.
CHAPTER 14
Refer to the MBA Discussions power point presentation for tips on how to gain maximum
learning and points from your discussion engagement.
• Your participation preparation document should be a substantive response to the
question (minimum 250-300 words) in the participation assignment for the week. It
should be substantive and scholarly in nature including academically appropriate
references (unless you are asked to provide your opinion or a personal reflection on a
specific question).
• The participation preparation document is due the night before class at 11:59 pm CST.
• Your participation preparation document must contain a citation of the course
concepts. This can be in the form of one of the videos you watched, the text, or other
appropriate and relevant literature.
• You will be required to bring this document to class and use it during the in class
discussion to get full participation points.
Module 8
International Finance
In the last 60 years, business has become increasingly international. The change has occurred in
two distinct ways. First, we do more import/export business with other countries than ever before.
In 1960, imports and exports were3% and 4% of gross domestic product (GDP), respectively. By
2010, imports were about 13% of GDP, while exports were about 9%. Second, the nature of
international business has changed. In 1960, doing business with a foreign country generally just
meant importing and exporting goods. Now, international business as often as not implies a direct
investment in facilities and equipment in another country and the operation of a full-scale
business there.
Companies that have divisions and branches in other countries are known as multinational
corporations, abbreviated MNCs.
The volume or international business is steadily increasing worldwide.
Financial markets are also increasingly international. Fifty years ago it was very unusual for an
investor to buy the stock of a foreign company. Today people make portfolio investments in
foreign stocks and bonds all the time. International business has changed from import/export to
operating full-scale businesses in other countries. Building a business in another country is a
direct investment, while buying foreign securities is a portfolio investment.
International business is an increasingly large part of commercial activity in the United States.
Virtually all companies of any size have some international dealings. It’s clearly important,
therefore, that we understand the basic financial principles of doing business with companies
from other countries. Such business has all of the problems and challenges of operating
domestically but includes several additional complications and risks. We will examine exchange
rates as a base of information for understanding international and domestic business.
Required Readings/Resources:
Read Chapter 18 Textbook
Power Point 18
After World War II, the United States was the world’s dominant economic power. We’re still the
largest economy, but the rest of the world has caught up significantly. In some areas, we’ve lost
the lead. The production of consumer electronic equipment, for example, is largely done in the
Far East. Is this trend good or bad for Americans? Explain.
Refer to the MBA Discussions power point presentation for tips on how to gain maximum
learning and points from your discussion engagement.
• Your participation preparation document should be a substantive response to the
question (minimum 250-300 words) in the participation assignment for the week. It
should be substantive and scholarly in nature including academically appropriate
references (unless you are asked to provide your opinion or a personal reflection on a
specific question).
• The participation preparation document is due the night before class at 11:59 pm CST.
• Your participation preparation document must contain a citation of the course
concepts. This can be in the form of one of the videos you watched, the text, or other
appropriate and relevant literature.
• You will be required to bring this document to class and use it during the in class
discussion to get full participation points.