2. Student Learning Outcomes
The students can expect to learn.
· To value the cash-flows · To understand risk-return trade-offs · To understand the tools of capital budgeting · To do the risk analysis of capital budgeting exercise
3. Required Textbook
"Financial Management: Theory and Practice by Brigham and Ehrhardt" Published by Cengage Learning.
4. Tentative Session Plan
Session 1: Introduction to financial management
In this session, we will discuss the objective of a firm, concept of shareholder’s value, role of finance manager in an organization, and how this course is going to help in financial decision making process for an organization.
Session 2 – 4: Time value of money: Learning the tools that is required to make the decisions
In these sessions, we will study the importance time in valuing money and how the concept is used to calculate the present and future value of money. Role of compounding and the calculation of effective rate of return will be discussed in detail. Calculation of annuity and its applications will be studied.
Session 5-6: Risk vis-à-vis return: Understanding the role of risk in valuation
In these sessions, we will define risk, and its relationship with return. We would learn some basic aspect of measurement of risk. Role of risk in valuation of assets also would be discussed in these sessions.
Session 7-8: Discounted cash-flow and valuation of assets: Getting the right inputs for financial decisions
In these sessions, we will study various types of bonds, explain various terminologies. Basic valuation of the model will be explained. Besides basic concept of yield curve will be discussed along with the term-structure of interest rate. Attempt would be made to link the valuation of bond with the yield curve. Similarly, equity valuation will be studied with help of Dividend Discount Model and Discounted Cash Flow model. Most importantly the role of discount rate and what is the appropriate discount rate one should use to value asset would be discussed in detail.
Session 9-10: Cost of capital: Getting the right inputs for financial decision
In these sessions, we would study the concepts of capital and cost associated with various types of capital. Concept of risk and return would be discussed within the context of Capital Asset Pricing Model (CAPM) and the application of the same in calculating the cost of capital. Weighted average cost of capital would be studied in detail and its applications will be discussed.
Session 11-14: Capital Budgeting: The investing decisions In these sessions, we will discuss the various types of capital budgeting methods, and critically evaluated them to understand the implication of using them for capital allocation to various competing projects. Besides we would study various scenario analysis and sensitivity analysis to understand the risk associated with the investment decisions.
Session 15-16: Capital Structure: The long-term financing decisions In these sessions, we will study the importance of structure of firm with respect to how the firm finances their investment. We would study the Modigliani & Miler (MM) Theorem and its implications for capital structure. How the imperfections in the market needs to be understood in the context of MM theorem so that we can explain the differences in capital structure across industries.
Session 17: Dividend policy: The sharing of surplus decision In these sessions, we will study the firm’s decision about how much cash from the profit to distribute to the shareholders of the firm. Does pay-out policy make a difference to the valuation of firm? We would study the Modigliani & Miler (MM) theorem and try to understand the implications for the pay-out decisions for a firm. How pay-out different form stock purchase and what is would be appropriate thing to do under what conditions would be studied.
Session 18-19: Working capital management: The Short-term financing decisions In these sessions, we will study the importance of working capital, and how one can estimate the requirement of working capital. Given that more working capital is drag on the profitability, how can a finance manager reduce the working capital requirement.
Session 20: Assignment Presentation
5. Evaluation
The following table describes the per cent of weights given for the evaluation.
The class participation would be based on the regularity of attendance (Students attending all classes would be rewarded), and the student’s participation level on the overall learning process.
Class assignment would be given to groups (each group would consist of 2 students. It is expected that each student should understand the assignment. Marks on the assignment would be given based on report and class discussion. Each group would get 15 minutes to discuss the assignment (faculty will decide who would discuss in the class). If any individual fails to do so, then the group would get zero in that component. No negotiations on this respect would be encouraged.
Quizzes would be of MCQ types with negative marks. There will of two quizzes and both the quizzes would cover the portion discussed till the time the quizzes are conducted. End term examination would cover the entire syllabus and would test students understanding of the subject.
6. Academic Integrity
You must demonstrate high order of academic integrity being attentive in the class and regularly read the prescribed reading material. In case of group assignment, all members of the group should contribute to the preparation of the report and you are expected to write the report in your own style and language. Your basic purpose should be to learn, without resorting to any unfair means for getting a higher score/grade.
Created By: Alora Kar on 10/16/2020 at 11:52 AM Category: MBA(Exe.)2020-21 T-II Doctype: Document