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Oregon State University

College of Business

 

BA 540

Corporate Finance

SYLLABUS

EVENING CLASS (6-8:50)

 

Instructor Name

John R. Becker-Blease

Office

436 Austin Hall

Phone

541.737.6061

Email

john.beckerblease@oregonstate.edu

Course Website

Canvas

Office Hours

M: 10-11 AM

T: 9-10 AM

Th: 12-1 PM

 

Course Description

 

The objective of this course is the application of finance theory and principles to the analysis of important business problems.  Specific topics will include valuation, capital budgeting, cost of capital, and capital structure. 

 

Course Objectives

  1. Identify and critique normative theories of management’s role in the firm and understand the relation between long-term value maximization and stakeholder relationships.
  2. Understand accepted techniques for making capital budgeting decisions.
  3. Determine value of and forces that affect fixed income securities.
  4. Estimate project cost of capital, cash flow, sensitivity, and scenario analyses.
  5. Demonstrate how capital structure decisions can affect firm value.

 

Course Materials

 

Textbooks:

·       Principles of Corporate Finance, by Brealey, Myers, and Allen, McGraw-Hill/Irwin 11th ed. (BMA). (The 10th or 9th edition is fine as well).

 

Articles:

·       Various modules will have required articles for reading. These articles will be posted no later than Sunday evening (11PM) of the week before I would like them read. Students are responsible for the content in these articles.

 




 

Grading

 

Each student’s course grade will be calculated using the following weights:

 

4 Quizzes              12.5% each

5 Homeworks       5% each

Final Exam           25%

 

Homework

 

There are nine homework assignments during the term. Each is due at the beginning of class. Late homework will be accepted with a 20% penalty. If there is any uncertainty of your ability to submit your homework at the beginning of class, plan to submit it a day early. Students are permitted to collaborate on homework assignments, however, each student must submit their own assignment and your answer must reflect your own understanding of the answer. Simply copying another student’s solution is considered a breach of academic integrity. Also, I will not answer homework-specific questions during office hours; I will answer general questions related to the material, but I will not help with answering specific homework questions. Solutions to the homework questions will be distributed at the beginning of each class. I will grade each homework question based on “all”, “half”, or “no” credit depending on the level of completeness and accuracy. Finally, you should plan to edit/proof your homework answers. Grammatical, typographical, as well as quantitative/qualitative errors will detract from your overall score.  

 

Quizzes

 

There are four quizzes administered during the quarter as indicated on the schedule. Quizzes are cumulative and comprehensive and designed to be challenging. The quizzes are closed-book, closed-note and permit no cheatsheets. Further, no student collaboration is permitted on quizzes. You will need a calculator for each quiz that has exponential or financial functions. No wifi-connected devices are permitted during quizzes. Quizzes are administered at the end of class and strictly timed (as indicated on the schedule); I will not be able to accept quizzes submitted late. Students will be given a 5-minute and then a 1-minute warning before the end of each quiz. Students should expect quiz questions from material covered up to and including the current day’s required material. Further, while there will be overlap of content between the homework and quizzes, questions on the quizzes may or may not resemble questions from lecture or homeworks.

 

Final Exam

 

The final exam is administered during the normal meeting time in finals week. The exam is a 2-hour cumulative exam. Students will have exactly 120 minutes to complete the exam.


 

 

Keys to Success

 

This course is a challenging course. While no particular topic in the course is that challenging, the nature of the material is cumulative and comprehensive. As a result, many students find the quantity of material they must learn and retain to be substantial. In addition, while finance is a highly technical discipline, many finance questions at the graduate-level do not have clear-cut “correct” answers. Instead, students must use the technical skills of the course to formulate compelling arguments, and be prepared to defend these arguments against equally technically correct challenges. This can be a difficult skill to acquire. A good financial manager is part-mathematician, part-lawyer, and part-artist.

 

Graduate students are expected to learn the bulk of the material on their own. Class-meeting times are intended to provide an overview of the content, an opportunity for questions to be answered, and a chance for nuanced applications of the material to be presented. The expectation is that students will spend 2-3 hours outside of class preparing for each hour of class, which translates into 6-9 weekly hours spent on the material prior to attending class. Students who fail to make this investment should not expect to perform well in the class. Further, this investment of time does not guarantee performing exceptionally in the course; rather, an investment of 6-9 hours is what is deemed necessary for the student with average-ability to achieve an historically average level of mastery (and grade). Exceptional performance, by definition, requires either exceptional ability or commitment, or both. Finally, note that grades are distributed based on quantifiable performance rather than reported effort.

 

Contacting Me:

 

The best way to contact me outside of class or office hours is via email (john.beckerblease@oregonstate.edu). I try to get through all of my email within 24 hours of its arrival. If you do not hear back from me within 48 hours, please follow-up.

 

Students with Disabilities

 

I am committed to providing all reasonable assistance to help each of you achieve your potential in this course.  Reasonable accommodations are available for students with a documented disability.  Please visit the Disability Resource Center (DRC) at the Office of the Dean of Student Life during the first two weeks of every semester to seek information or to qualify for accommodations.  All accommodations must be approved through the DRC. Please ask the Associate Director of Student Services, in the Student Services Building (Room 203), to forward the appropriate documentation to me as early as is possible.


 

Academic Integrity

 

Your personal integrity is the foundation for your success and happiness in business and in life; you should treat it as your most valuable asset.  Academic integrity is also the foundation of our institution’s reputation and success.  I will pursue all suspected cases of academic dishonesty consistent with the policies of the College of Business and Oregon State University.  Academic dishonesty includes, but is not limited to: copying the work of others (or allowing others to copy your work) for exams, cases or assignments.  I also consider it a violation of academic integrity for you to refer to case notes from students who previously took this course either at OSU or at another institution.

 

Consequences Please note, these consequences are different than what you may have encountered in other classes so please read and understand them well.  At a minimum, cheating or academic dishonesty of any form will result in a failing grade for this class, and may lead to your expulsion from the university.  I do not have a policy of assigning a “zero” for the first infraction and taking more severe action on the second violation.  Rather, the first incidence of cheating of any form will result in a failing grade.  Please be aware that I take this issue very seriously and all incidences will be referred to the appropriate university administrator for further action.

 

Academic Dishonesty: According to OSU student conduct regulations, academic dishonesty is defined as an intentional act of deception in which a student seeks to claim credit for the work or effort of another person or uses unauthorized materials or fabricated information in any academic work. All cases of suspected academic dishonesty will be handled in strict accordance with University and College Policies. Please refer to Office of Student Conduct website for more information [ http://oregonstate.edu/studentconduct/index.htm ]. Students are expected to follow University policies [ http://oregonstate.edu/studentconduct/achon.htm ]and College policies.


COB Code of Honor:


A code of honor represents the moral commitments of those abiding to it. While each person lives by his or her personal code, the establishment of collective values creates a universal goal to which we can aspire. It is through the pursuit of these professional attributes that we reduce the possibility of immoral actions ourselves.

In order to uphold our personal character and the organization that we proudly call our own, we take this oath.

Integrity
The quality of being honest and having strong moral principles, integrity stands as the backbone of character and is essential for success.

Respect
Respect for others and yourself is a commitment to the fair treatment of and the fair competition with others. Through respect we embolden the character of others and ourselves.

Responsibility
We are held accountable for our words and actions as professionals to embed a steadfast commitment to honor in our decisions.


Week

Topics

Required Material 

 

DUE

1

Introduction

Time Value of Money

BMA: CH 1

BMA: CH 2

 

2

Bonds

BMA: CH 3

Duration Video

Quiz #1 (30 minutes)

3

Stocks

BMA: CH 4

HW #1

4

Investment Criteria

BMA: CH 5

BMA: CH 6

Quiz #2 (30 minutes)

5

Project Analysis

BMA: CH10

HW #2

6

Risk & Reward

BMA: CH 7

BMA: CH 8

Quiz #3 (30 minutes)

7

Risk & Cost of Capital

BMA: CH 9

HW #3

8

Capital Structure Theory

BMA: CH 16

BMA: CH 17

Quiz #4 (30 minutes)

9

Capital Structure Application

BMA: CH 18

BMA: CH 19

HW #4

10

Corporate Objective Function

1. Jensen (2010) “Value Maximization, Stakeholder Theory, and the Corporate Objective Function”.

2. Becker-Blease (2012) “Corporate Socially Responsible Investment”

 

HW #5