Corporate Finance: Fourth Canadian Edition, McGraw-Hill Ryerson Limited,
Toronto. ... Finance: Third Canadian Edition by Ross, Westerfield, Jaffe and
Roberts.
Business 3019
Corporate Finance Lakehead University Philippe Gr´egoire
Office: RB 1011
Phone: 343-8320
Classes: M,W 4:00-5:30pm
Email:
[email protected]
Room: RB 1023
Course website: http://foba2.lakeheadu.ca/gregoire/3019/ Backup website: http://www.geocities.com/lufinance/index3019.html
Prerequesite: Business 2039 Course Description: This course will include study of the current literature in the field of corporate finance. Emphasis is on empirical findings and the application of theory to practice. The analysis of cases with the aid of computer-based applications software is a dominant feature of this course. Suggested Textbooks: • Ross, S.A., Westerfield, R.W., Jordan, B.D. and Roberts, G.S. (2002), Fundamentals of Corporate Finance: Fourth Canadian Edition, McGraw-Hill Ryerson Limited, Toronto. • Ross, A.S., Westerfield, R.W., Jaffe, J.F. and Roberts, G.S. (2003) Corporate Finance: Third Canadian Edition, McGraw-Hill Ryerson Limited, Toronto. • Davis, A.H.R. and Pinches, G.E. (2002). Canadian Financial Management, Addison Wesley Longman, Toronto. • Ogden, J.P., Jen, F.C. and O’Connor, P.F. (2002), Advanced Corporate Finance, Policies and Strategies, Prentice Hall, Upper Saddle River, New Jersey. Methodology of the Course: There is no required textbook for this course. The above textbooks will be used interchangeably throughout the semester, although most of the material will be taken from Corporate Finance: Third Canadian Edition by Ross, Westerfield, Jaffe and Roberts. Copies of the sections covered in class will be available at the library reserve. 1
Student Evaluation: Assignments:
10%
Report on the Cost of Capital:
15%
Presentation on the Cost of Capital:
10%
Presentation Critique:
5%
Case Studies (2):
30%
Final Exam:
30%
Assignments A series of assignments will be given to you throughout the semester. These assignments will provide a good idea of the questions that will be asked on the final exam. There is no limit to group sizes for the assignments. That is, if you all collude and submit one assignment for the whole class, I will accept it. A deadline will be specified for each of them and late assignments won’t be graded. Estimating the Cost of Capital: This work can be done in groups of (at most) four students. Each team will choose two publicly traded companies and will estimate the cost of capital for each of them. The methodology used for your calculations must be carefully explained and justified. Using these estimates, you will have to tell whether each firm is under- or overvalued and to explain the differences between the two firms. Different teams cannot choose the same company. A first draft of this report has to be submitted no later than Friday, February 28. Reports should be (approximately) 15-20 pages long (single spaced, 12 pt), including graphics, tables and references (there won’t be any penalty if you exceed 20 pages but you should be worried if you cannot write at least 15 pages). Each team will also present its work to the rest of the class and discuss another team’s work. Discussant teams will be assigned randomly. Documents from presenting teams must be available at least three days prior to each presentation. This project is worth, overal, 30% of your final mark and is due the last day of classes. Case Studies: You will have to analyze two cases, most likely on the topics “Long-Term Financing”, “Capital Structure Theory” or “Dividend Policy”. These cases can be done in groups of (at most) four. Groups need not be the same as for the cost of capital project. Each case is worth 15% of your final mark, comes with a specific deadline and late cases won’t be graded. 2
Final Exam The last requirement for this course is an exam, worth 30% of your final mark. This will be the only exam of the course. Course Outline: • Estimating the Cost of Capital Davis and Pinches, Chapter 6 Ogden, Jen and O’Connor, Sections 9.6 and 9.7 • The Principal-Agent Problem Ogden, Jen and O’Connor, Chapters 3 and 4 • Private Equity and Venture Capital Ogden, Jen and O’Connor, Chapter 11 • Capital Structure Davis and Pinches, Chapters 12 and 13 Ross, Westerfield, Jaffe and Roberts, Chapters 15 and 16 • Dividend Policy Davis and Pinches, Chapter 14 Ross, Westerfield, Jaffe and Roberts, Chapter 18 • Long-Term Financing: Equity Davis and Pinches, Chapter 10 Ross, Westerfield, Jaffe and Roberts, Chapters 14 and 19 • Long-Term Financing: Debt Davis and Pinches, Chapter 11 Ross, Westerfield, Jaffe and Roberts, Chapters 14 and 20 • Financial Planning and Short-Term Finance Davis and Pinches, Chapter 21 Ross, Westerfield, Jaffe and Roberts, Chapter 27 • Cash Management Davis and Pinches, Chapter 22 Ross, Westerfield, Jaffe and Roberts, Chapter 28 3
• Credit Management Davis and Pinches, Chapter 23 Ross, Westerfield, Jaffe and Roberts, Chapter 29 • Mergers and Acquisitions Davis and Pinches, Chapter 16 Ross, Westerfield, Jaffe and Roberts, Chapter 30
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