Principles of Finance (FIN 311)


Principles of Finance (FIN 311)

FIN 311-01

Fall 2014



Instructor:  Donald W. Swanton

Contact Information:  office Wabash 1112z, telephone (312) 281-3278, fax (312) 281-3290, email, web site   My web site has information about office hours etc. If this seems a lot to remember, just Google Swanton Roosevelt, and this will be the first hit.

Time:  Tuesday-Thursday 11:00-12:15

Location:  WB 1111

Text:  Foundations of Financial Management  15th ed. by Block, Hirt, and Danielson, (B), McGraw-Hill, 2014,  ISBN-978-0-07-786161-2.  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) from both economic and ethical points of view

Grades:  Grades will be determined by an equally weighted 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.
An average above 3.50 is required for an A, above 2.50 for a B, etc.  I do not give plusses and minusses.  I will post new sample quizzes on my web page as we get colse to each quiz date.

Homework: I will assign problems each Thursday due the following Tuesday when we will discuss them. This discussion will include additional parts of some the problems not assigned at first and new problems suggested by student questions. Do not think that because we will go over the answers on Tuesday that you can afford not to try them first. Finance is not a spectator sport. These problems are the heart of the course. They often reappear on subsequent quizzes. I will collect homework and check it in but not grade it.

Attendance:  I do not take attendance, however see the section on homework.

Plagiarism:  Please review Roosevelt’s policy on plagiarism

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

Student Learning Objectives: Business Discipline Principles, Quantitative Techniques, Business Ethics

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.  I will revise it as we go along to reflect what we have covered and how much time remains in the semester, and I will put these revisions on my web page.


                                                                      As of October 6, 2014

Week                Chapters                     Topics

Aug 26             B9                               Introduction, the time value of money

That is correct. We begin the week BEFORE Labor Day September 1.

Sep 2               B9                                More time value of money

Sep 9              B10                              Bond valuation

Sep 16             S1                                Retirement planning

Sep 23*           S1                                Retirement planning

Sep 30             S1                                More

Oct 7                B12                             Capital budgeting, NPV and IRR

Oct 14*            B12                              More NPV and IRR, comparing projects

Oct 21              B12, B13                     Depreciation and project cash flows

Oct 28             B12, B13                     Interdependent projects

Nov 4               S2                                Cost of capital

Nov 11*            S2                               Leverage and capital structure

Nov 18              S2                              The world of Perfect Markets, arbitrage

Nov 25            ////                             Thanksgiving break

Dec 2               S2, S3                         Investment decisions with different financing

Dec 9*             /////                           Last Quiz

Quizzes will be given on the Tuesdays of weeks marked with an asterisk (*), including the last quiz the Tuesday of final exam week.



Standard 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.  The words we have been using in FIN 311 are all strange to them. 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.

Half your grade will be determined by the calculations you choose to make, and half will depend on the clear and simple presentation of your recommendations.


Alternate Version

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

Bottom of Form



Bottom of Form











  • Ø  Americans with Disabilities Act –



Bottom of Form