DE LA SALLE UNIVERSITY Financial Management Department College of Business COURSE SYLLABUS COURSE CODE/TITLE TERM/TIME/ROOM INSTRUCTOR : FINANCIAL MANAGEMENT

2 (FINMAN2) : Term 1, AY 2012-2013 TH V24 0800-0930 L218, K32 1120-1250 L227, K31 1300-1430 L209 : Ms. Vivian Y. Eleazar

COURSE DESCRIPTION: The course is a continuation of Financial Management 1. It covers the more complex aspects of financial decisions such as medium to long term investments, capital budgeting under uncertainty, debt versus equity financing, cost of capital, dividend decisions, valuation, and stock options/warrants These concepts are applied to financial and non-financial enterprises. LEARNING OUTCOMES (LO): On completion of the course, the student is expected to be able to do the following: ELGA LEARNING OUTCOME Critical and creative thinker Understand the role of time value of money and appreciate its applications Describe the key inputs-cash flows (returns), timing and required rate of return (risk) basic model used in the valuation process Understand the meaning and fundamentals of risk, return and risk preferences a. Appraise capital investment projects using the nondiscounted and discounted cash flow techniques b. Identify an optimal capital structure in relation to the objective of maximizing the value of the firm c. Describe theoretical and practical issues in dividend policy d. Evaluate and distinguish the various sources of longterm financing e. Relate current developments in the financial environment to the course Reflective lifelong learner Develop an attitude of keeping abreast of the current developments in the financial environment Service-drive citizen/ethical Be conscious of his/her social responsibility in the and socially responsible application of his/her knowledge to financial citizen management decisions To maximize owners wealth with due respect to the rights of others. COURSE OUTPUT: As evidence of attaining the above learning outcomes, the student is required to do and submit the following during the indicated dates of the term. LEARNING OUTCOME REQUIRED OUTPUT DUE DATE - Understand the role of time value of Deadlines are Final Exam money and appreciate its applications announced Quizzes - Describe the key inputs-cash flows during the term. Seatwork/Assignments (returns), timing and required rate of return (risk) basic model used in the valuation process - Understand the meaning and fundamentals of risk, return and risk preferences a. Appraise capital investment projects using the non-discounted and discounted cash flow techniques b. Identify an optimal capital structure in relation to the objective

of maximizing the value of the firm c. Describe theoretical and practical issues in dividend policy d. Evaluate and distinguish the various sources of long-term financing e. Relate current developments in the financial environment to the course - Develop an attitude of keeping abreast of the current developments in the financial environment - Be conscious of his/her social responsibility in the application of his/her knowledge to financial management decisions - To maximize owners wealth with due respect to the rights of others. RUBRIC FOR ASSESSMENT: CRITERIA EXEMPLARY 4 Correct The final computations/ answer is solutions to correct and mathematical solutions problems clearly show the train of thought followed to arrive at the final answer. Quality/Substa The submitted nce for Term work manifests Paper qualities which go beyond the requirements. SATISFACTORY 3 The final answer has some mistakes due to some carelessness with regards to the computations DEVELOPING 2 The final answer shows some understanding to the problem but the solution is lacking to arrive at the correct final answer. BEGINNING 1 The student does not understand what mathematical method to use or how to apply the mathematical models. The submitted work does not manifest any of the requirements.

The submitted work manifests the required qualities.

The submitted work partially manifests the required qualities. Certain aspects are either incomplete or incorrect.

GRADING SYSTEM: The following grading scheme will be used to assess the student's performance in this course. The passing mark for the course is 70 percent.
FINMAN2 GRADING SCHEME

Mid -termGrad e Quizzes Class Standing Mid-termexam Total

Original

Rev ed is

50% 10% 40% 1 00%

60% 40% 0% 1 00%

S econ ha Grad d lf e Quizzes Term Paper C S lass tanding Final Exam Total 50 .0% 25 .0% 0 .0% 7 .5% 17 .5% 100 .0%

Original

Revised

40% 15% 10% 35% 100%

50% 0% 15% 35% 100%

Sm a u m ry Mid-termGrade Quizzes, 2nd half Term Paper Class Standing 2nd half , Final Exam Total

FINAL GRADE =(Midterm G rade +Second half Grade)/2 PAS SING GRAD =70%(1.0) E GRADE EQUIVALENT: 97-100 4.0 80-84 2.0 93-96 3.5 75-79 1.5 90-92 3.0 70-74 1.0 85-89 2.5 Below 70 0.0

LEARNING PLAN: LEARNIN TOPIC/ Chapter (Titman 11e/Keown G 10e) OUTCOM E I. INTRODUCTION/CLASSROOM POLICIES/COURSE REQUIREMENTS/GROUPINGS II. TIME VALUE OF MONEY (Chap.5&6/5) 2.1Compound Interest and Future Value 2.2Compound Interest with Non-annual Periods 2.3Present Value 2.4Annuities - A Level Stream 2.5Annuities Due 2.6Present Value of Complex Stream 2.7Perpetuities and Infinite Annuities 2.8Making Interest Rates Comparable QUIZ # 1

WEEK NO.

LEARNING ACTIVITIES Problem Sets Quizzes Board Work Assignment Graded Recitation Seatwork Lectures Discussions/recitation s Audio visual aids Research Group work

Wk 1 (1.5 hrs) Wk 1,2, 3 (6 hrs)

III. RISK AND RATES OF RETURN (Chap.7&8/6) 3.1Rates of Return in the Financial Markets 3.2 Effects of Inflation on Rates of Return and the Fisher Effect 3.3Term Structure of Interest Rates 3.4Expected Return Risk 3.5Risk and Diversification 3.6Measuring Market Risk 3.7Measuring a Portfolio's Beta 3.8Investor's Required Rate of Return QUIZ # 2 Wk 5 (1.5 hrs) IV. VALUATION AND CHARACTERISTICS OF Wk 5,6 (3 BONDS (Chap.9/7) hrs) 4.1 Types of Bonds 4.2 Terminology and Characteristics of Bonds 4.3 Definitions of Value 4.4 Determinants of Value 4.5 Valuation: The Basic Process 4.6 Bond Valuation 4.7 Yield to Maturity 4.8 Bond Valuation: Five Important Relationships V. STOCK VALUATION (Chap. 10/8) Wk 6,7 (3 5.1 Features and Types of hrs) Preferred Stock 5.2 Valuing Preferred Stock 5.3 Characteristics of Common Stock 5.4 Valuing Common Stock 5.5 Stockholder's Expected Rate of Return MID-TERM EXAM Wk 7 (1.5 hrs) VI. COST OF CAPITAL (Chap. 14/12) Wk 8 (3 hrs) 6.1 Cost of Capital: Key Definitions and Concepts 6.2 Determining Individual Costs of Capital 6.3 Weighted Average Cost of Capital

Wk 3 (1.5 hrs) Wk 4 (3.0 hrs)

6.4 Using a Firm's Cost of Capital to Evaluate New Capital Investments QUIZ #3 Wk 9 (1.5 hrs) VII. CAPITAL-BUDGETING DECISION Wk 9 (1.5 CRITERIA hrs) (Chap. 11/9) 7.1 Finding Profitable Projects 7.2 Payback Period 7.3 Net Present Value 7.4 Profitability Index (Benefit/Cost Ratio) 7.5 Internal Rate of Return 7.6 Ethics in Capital Budgeting VIII. CASH FLOWS AND OTHER TOPICS IN Wk 10 (3.0 CAPITAL BUDGETING (Chap.12/10) hrs) 8.1 Guidelines for Capital Budgeting 8.2 An Overview of the Calculations of a Project's Free Cash Flows 8.3 Complications in Capital Budgeting: Capital Rationing and Mutually Exclusive Projects IX. CAPITAL BUDGETING AND RISK Wk 11 (3.0 ANALYSIS hrs) (Chap. 13/11) 9.1 Risk and the Investment Decision 9.2 Methods for Incorporating Risk into Capital Budgeting 9.3 Other Approaches to Evaluating Risk in Capital Budgeting QUIZ # 4 Wk 12 (1.5 hrs) X. PLANNING THE FIRM'S FINANCING MIX Wk 12,13 (Chap. 15/16) (2.5 hrs) 10.1 Key Terms and Getting Started 10.2 A Glance at Capital Structure Theory 10.3 Basic Tools of Capital Structure Management XI. DIVIDEND POLICY AND INTERNAL Wk 13 (3.0 FINANCING (Chap. 16/17) hrs) 11.1 Dividend Payment Versus Profit Retention 11.2 Does Dividend Policy Affect Stock Price? 11.3 Dividend Decision in Practice 11.4 Dividend Payment Procedures 11.5 Stock Dividends and Stock Splits 11.6 Stock Repurchases DEPARTMENTAL FINAL EXAM Wk 14 (2.0 hrs) Total 42.0 hrs TIMETABLE: as of May 29, 2012 (VYE) TOPIC / Chapter (Titman 11e/Keown 10e) I. INTRODUCTION/CLASSROOM POLICIES/COURSE REQUIREMENTS/ WEEK NO. Wk 1 (1.0 hrs) DATES May 24, 2012

GROUPINGS II. TIME VALUE OF MONEY (Chap.5&6/5) 2.1Compound Interest and Future Value 2.2Compound Interest with Non-annual Periods 2.3Present Value 2.4Annuities - A Level Stream 2.5Annuities Due 2.6Present Value of Complex Stream 2.7Perpetuities and Infinite Annuities 2.8Making Interest Rates Comparable QUIZ # 1 Wk 1,2 (3.0 hrs) May 29, 31

III. RISK AND RATES OF RETURN (Chap.7&8/6) 3.1Rates of Return in the Financial Markets 3.2 Effects of Inflation on Rates of Return and the Fisher Effect 3.3Term Structure of Interest Rates 3.4Expected Return Risk 3.5Risk and Diversification 3.6Measuring Market Risk 3.7Measuring a Portfolio's Beta 3.8Investor's Required Rate of Return QUIZ # 2 Wk 4 (1.5 hrs) IV. VALUATION AND CHARACTERISTICS OF Wk 4,5 (2.5 BONDS (Chap.9/7) hrs) 4.1 Types of Bonds 4.2 Terminology and Characteristics of Bonds 4.3 Definitions of Value 4.4 Determinants of Value 4.5 Valuation: The Basic Process 4.6 Bond Valuation 4.7 Yield to Maturity 4.8 Bond Valuation: Five Important Relationships V. STOCK VALUATION (Chap. 10/8) Wk 5 (2.0 hrs) 5.6 Features and Types of Preferred Stock 5.7 Valuing Preferred Stock 5.8 Characteristics of Common Stock 5.9 Valuing Common Stock 5.10 Stockholder's Expected Rate of Return QUIZ # 3 Wk 6 (1.5 hrs) VI. COST OF CAPITAL (Chap. 14/12) Wk 6, 7 (3 hrs) 6.1 Cost of Capital: Key Definitions and Concepts 6.2 Determining Individual Costs of Capital 6.3 Weighted Average Cost of Capital 6.4 Using a Firm's Cost of Capital to Evaluate New Capital Investments QUIZ # 4 Wk 7 (1.5 hrs) MIDTERMS TBA VII. CAPITAL-BUDGETING DECISION CRITERIA Wk 8 (3.0 hrs) (Chap. 11/9) 7.1 Finding Profitable Projects 7.2 Payback Period 7.3 Net Present Value 7.4 Profitability Index (Benefit/Cost Ratio)

Wk 2 (1.5 hrs) Wk 3 (3.0 hrs)

Jun 5 Jun 7 Jun 12 holiday

Jun 14 Jun 19, 21

Jun 21, 26

Jun 28 Jul 3, 5

Jul 10 Jul 12, 17

Wk 9 (1.5 Jul 19 hrs) VIII. CASH FLOWS AND OTHER TOPICS IN Wk 9, 10 (2.5 Jul 24, 26 CAPITAL BUDGETING (Chap.12/10) hrs) 8.4 Guidelines for Capital Budgeting 8.5 An Overview of the Calculations of a Project's Free Cash Flows 8.6 Complications in Capital Budgeting: Capital Rationing and Mutually Exclusive Projects IX. CAPITAL BUDGETING AND RISK ANALYSIS Wk 10 (2.0 hrs) Jul 26, 31 (Chap. 13/11) 9.1 Risk and the Investment Decision 9.2 Methods for Incorporating Risk into Capital Budgeting 9.3 Other Approaches to Evaluating Risk in Capital Budgeting QUIZ # 6 Wk 11 (1.5 Aug 2 hrs) X. PLANNING THE FIRM'S FINANCING MIX Wk 11,12 (3.0 Aug 7, 9 (Chap. 15/16) hrs) 10.1 Key Terms and Getting Started 10.2 A Glance at Capital Structure Theory 10.3 Basic Tools of Capital Structure Management QUIZ # 7 Wk 12 (1.5 Aug 14 hrs) XI. DIVIDEND POLICY AND INTERNAL Wk 13 (3.0 hrs) Aug 16, 21 FINANCING (Chap. 16/17) 11.1 Dividend Payment Versus Profit Retention 11.2 Does Dividend Policy Affect Stock Price? 11.3 Dividend Decision in Practice 11.4 Dividend Payment Procedures 11.5 Stock Dividends and Stock Splits 11.6 Stock Repurchases QUIZ # 8 Wk 13 (1.5 Aug 23 hrs) DEPARTMENTAL FINAL EXAM Wk 14 (2.0 End Aug-1st wk Sep hrs) Total 42.0 hrs Note: The schedule above will be used as a guideline. However, this schedule is flexible and can be subject to changes. Text / Material: Titman, S., Keown, A.j, Martin, J.D., (2011). Financial Management: Principles and Applications. (11th Ed.). Pearson Education, Pearson/Prentice Hall Keown, A.J., Martin, J.D., Petty, J.W., Scott Jr, D.F., Financial Management: Principles and Applications, 10th Edition, Pearson Prentice Hall 2005. (Coverage for the term: Chapters 5, 6, 7, 8, 12, 9, 10, 11, 16, 17= 10 chapters) References: Brealey, R. A. , Myers, S. C. & Marcus, A. J. (2007). Fundamentals of Corporate Finance. (5th ed.) Boston: McGraw-Hill/Irwin. Brealey, R. A. & Myers, S. C. (2006). Principles of Corporate Finance. (8th ed.) New York: McGraw-Hill Co, Inc. Gitman, L. J. (2006). Principles of Managerial Finance, (11th ed.) Boston: Pearson/Addison Wesley Ross, S. A., Westerfield, R. W. & Jordan, B. D. (2007). Essentials of Corporate Finance. (5th ed.) Boston: McGraw-Hill/Irwin

7.5 Internal Rate of Return 7.6 Ethics in Capital Budgeting QUIZ # 5

CLASS POLICIES: 1. Attendance Students are expected to attend their classes and shall to adhere to the university policy regarding the maximum allowable absences. VYE: Class attendance is highly encouraged. There will additional points in Class Standing for 100% attendance. Excused absences are not counted in 100% attendance. There will be no make-up tests for missed quizzes. There will be a total of 7-8 quizzes. 2. Index Card All students will submit a 3x5 index card with a 1x1 I.D. photo placed on the upper righthand corner, and provided with the following information: Surname, Given Names, Middle Initial; Contact details- landline, mobile and email address; In case of emergency contact name and number. 3. Conduct Students are expected to demonstrate respect to their professor and classmates. Cellular phone should be turned off or placed in silent mode. Laptops are not allowed, unless specified that it is part of the activity to be used in class. All students are expected to partake in meaningful discussions with the class. Students should also respect their fellow students (e.g. listening when someone else is speaking). Any misconduct will be reported to the Discipline Office. 4. Required Materials and Learning Resources The required texts are given above. Other reference materials will be provided by the professor, if applicable. 5. Submission of requirements LATE SUBMISSION of homework WILL BE ALLOWED only up to a maximum of two weeks delay. There will be no make-up exam for any submitted work (seatwork, assignment, quiz, midterms, and final exam). 6. Policy on Cheating A student caught cheating in any assignment, seatwork, quiz, midterm or final exam shall automatically get a 0.0 for the course. 7. Group Work The class shall be divided into 5-7 groups, with each group assigned specific topics to present and discuss during class. Students are allowed to choose their groups. The student will have to work with his/her chosen group mates for the required term paper that deals with the application of finance concepts approved by the professor. 8. IVLE or yahoogroups All students will be invited to join the IVLE or yahoogroups (For IVLE the course code and section will be used, while in yahoogroups the course code, section, AY 2012-13 Term 1 will be used as the name). All articles, lectures and announcements will be posted there. It is the students responsibility to always check their email for important announcements and to download the files needed for class. In addition, the grades/computations will be posted in the IVLE/ yahoogroups. Only class-related topics are allowed to be posted in the IVLE/ yahoogroup. * AMS/JG /May 18, 2011 (with VYE revisions May 21, 2012)