Principles of Finance (FIN 311)

             

 

 

Principles of Finance (FIN 311)

 FIN 311-01                                                                                                         

 Fall 2013

 PRINCIPLES OF FINANCE

 SYLLABUS

 Instructor:  Donald W. Swanton

 Contact Information:  office Wabash 1112z, telephone (312) 281-3278, fax (312) 281-3290, email dswanton@roosevelt.edu, web site http://sites.roosevelt.edu/dswanton/.   My web site has information about office hours etc.

 Time:  Tuesday-Thursday 11:00-12:15

 Location:  WB

 Text:  Foundations of Financial Management  14th ed. by Block, Hirt, and Danielson, (B), McGraw-Hill ISBN-9780077454432.  Students should have financial calculator (TI BA-II or II+ or TI 83+, TI84, or TI89).  If you bought a graphing calculator for MATH 116 or 121, you have the right one. I will be handing out my Notes on Finance (S) in class as the semester progresses.

 Prerequisites:  ACCT 210 (but NOT 211), ECON 101-102, MATH 116 or 121, ENG 101-102.  The mathematics prerequisite is very important.  Students who attempt this class before finishing it generally drop the class within a few weeks.

 Goals:  This course introduces students to the time value of money.  We will develop some of its applications to corporate investment planning, valuation of projects and securities, and to retirement planning.   Then we will discuss capital structure (the difference made by the firm’s choice of financing).

 Grades:  Grades will be determined by an average of the best three out of the four quiz grades and the retirement planning project.  Quizzes will receive the numerical version of letter grades, A = 4.00, A/B = 3.50, B = 3.00 B/C = 2.50, etc. 

 Attendance:  I do not take attendance.

 Plagiarism:  Please review Roosevelt’s policy on plagiarism www.roosevelt.edu/plagiarism.

 Religious Holidays:  Roosevelt’s policy is to accommodate students who will be celebrating religious holidays.  Talk to me in the first couple of weeks, and we will work something out.

 http://www.roosevelt.edu/~/media/Files/pdfs/Policies/HumanResources/ReligiousHoliday.ashx

 Student Learning Objectives:  Business Discipline Principles, Quantitative Techniques

 Notes:  My Notes on Finance currently consist of:

      S1    Retirement Planning

      S2    Capital Structure and Leverage

      S3    Corporate Governance and Ethics

 

The following schedule is tentative.  

                                                                               SCHEDULE

                                                                       As of May 22, 2013

 Week                Chapters                     Topics

 Aug 27             B9                                Introduction, the time value of money

 Sep 3               B9                                More time value of money

 Sep 10             B10                              Bond valuation  

 Sep 17             S1                                 Retirement planning

 Sep 24*           S1                                Retirement planning

 Oct 1                B12                             Capital budgeting, the process

 Oct 8               B12                              Net Present Value and Internal Rate of Return

 Oct 15*            B12                              More NPV and IRR, comparing projects

 Oct 22             B12, B13                     Depreciation and project cash flows

 Oct 29             B12, B13                     Interdependent projects       

 Nov 5               S2                                Cost of capital

 Nov 12*           S2                               Leverage and capital structure

 Nov 19             S2                               The world of Perfect Markets, arbitrage

 Nov 26            ////                             Thanksgiving break

 Dec 3               S2                                Investment decisions with different financing

 Dec 12*           /////                           Last Quiz

 

Quizzes will be given on the Tuesdays of weeks marked with an asterisk (*).

 

                                                          THE RETIREMENT PROJECT

 First Version

 You are a financial planner.  You have clients who are just beginning to think about planning for retirement.  They are both thirty five years old and have $80,000 in a company retirement plan which they can roll over into their own plan.  They want to retire at 67 but are wondering what effect retiring a year or two earlier or later will have on their retirement.  Their combined income is $100,000 per year, and they want to finance the same income in retirement.  When they retire they can purchase a two-life annuity with an expected second death at age 87.

             They have not taken any finance courses, and their last mathematics course was many years ago.  They will not understand equations, formulas, or finance jargon.  Large tables will make their eyes glaze over.  You must explain your recommendations to them in simple, ordinary language.  Prepare a plan with some alternative rates of return and retirement dates and explain what annual contributions they must make to the plan to make their retirement what they want.  Make your own assumptions about social security by the time they retire.

 

Second Version

 You may use yourself as the client rather than the couple in the first version.  This self does not know any more about finance or mathematics than the couple, so you must explain everything.

 

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