Principles of Finance (FIN 311)




Principles of Finance (FIN 311)

 FIN 311-01

Spring 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.

Time:  Tuesday-Thursday 12:30-1:45

Location:  WB 611

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).

Homework:  I will assign homework almost every week due Tuesday of the next week.  We will spend part, sometimes a large part, of each Tuesday discussing the original homework problems and other problems suggested by the parts already solved.  Homework problems will reappear in modified form in the quizzes.  Finance is not a spectator sport.

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, but see the “Homework” point.

Plagiarism:  Please review Roosevelt’s policy on 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.

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.  lI will revise it as we go through the semester to reflect our actual progress.


                                                              As of January 10, 2014

Week                Chapters                     Topics

Jan 14             B9                                Introduction, the time value of money

Jan 21             B9, B10                       More time value of money, bond valuation

Jan 28            B10                               Bond valuation

Feb 4*             S1                                 Retirement planning

Feb 11              S1                                 Retirement planning

Feb 18              B12                              Capital budgeting, the process

Feb 25              B12                              Net Present Value and Internal Rate of Return

Mar 4*             B12                              More NPV and IRR, comparing projects

Mar 11             /////                             Spring Break

Mar 18             B12, B13                      Depreciation and project cash flows

Mar 25             B12, B13                      Interdependent projects

Apr 1*               S2                                 More, cost of capital

Apr 8                S2                                 Leverage and capital structure

Apr 15              S2                                 The world of Perfect Markets, arbitrage

Apr 22             S2                                 Investment decisions with different financing

Apr 29*           /////                            Last Quiz


Quizzes will be given on the Thursdays of weeks marked with an asterisk (*).  This includes the quiz in final exam week.  There will be no class Tuesday of finals week.



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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