FINC-212

Applied Financial Management

Fall 2017

FINC-212-01 Mondays & Wednesdays, 2:00pm 3:15pm, Hariri Room 230

FINC-212-02 Mondays & Wednesdays, 3:30pm 4:45pm, Hariri Room 230
FINC-212-03 Mondays & Wednesdays, 5:00pm 6:15pm, Hariri Room 230

Professor: Lynn Doran, Ph.D.

Office: Room 540, Hariri Building

E-mail: Lynn.Doran@georgetown.edu

Phone: (202) 687-2688

Office Hours: Tuesdays, 10:30amNoon and 2:00pm4:30pm

Other days/times are available by appointment.

Course Description:
This course is a continuation and extension of the introduction to the fundamentals of corporate
finance provided by the Business Financial Management course. The course is intended for
undergraduate business students who are majoring in Finance. The course includes discussions
of investment and financing decisions, valuation techniques, value additivity in the market for
corporate control, and corporate risk management policies. Through a case study approach,
students develop skill in recognizing business problems in which financial theory is applicable
and develop competencies in applying financial theory to corporate decision-making.

Prerequisite: FINC-211 Business Financial Management, or the equivalent.

Textbook and Materials:

Fundamentals of Corporate Finance, by Stephen Ross, Randolph Westerfield, and Bradford
Jordan, 11th Edition, 2016. (Earlier editions are suitable.)

Cases and Readings To be purchased directly from Harvard

Lecture Notes Distributed in class

A business calculator (Texas Instruments BAII Plus is recommended)

A 3-ring notebook is strongly suggested for lecture notes and other class materials
Course Requirements:
Class attendance and participation are expected. Please arrive early for class to allow yourself
time to get settled so we can begin class promptly. Also, please turn off cell phones and other
electronic devices during class. Laptop computers are not needed during lectures and tend to
distract both the user and other students in the class. As such, my policy is that laptop
computers must be closed during lectures. Laptops may be used when discussing readings or
cases.

You are expected to complete assigned readings before class and be prepared to discuss them in
class. You are also expected to read the business press, especially The Wall Street Journal or
Financial Times. We will discuss current events in class as appropriate.

Announcements about the class and various course materials are sent by email and/or posted on
Canvas.

The course outline is tentative but the dates of the exams are set. Please mark your calendar
now, since no makeup exams are given. Dont be concerned if we get a little ahead or behind the
schedule. If changes to the schedule become necessary, the changes will be announced in class.

Your grade in the class comprises your performance on written case assignments, a midterm
exam, a final exam, and class participation.

Written case assignments

During the semester, five written case assignments are submitted for grading. The cases
themselves are in the course materials purchased from Harvard or distributed in class and/or
posted on Canvas. Assigned questions for a given case are posted on Canvas approximately one
week before the case is due. Please note that, for each case, you must begin with a blank
spreadsheet or the template if provided. You may NOT use a template from any other source
(e.g., other classes, clubs, internships, friends, etc.).

On two of the case assignments, students work individually. For these individual assignments,
students are permitted to seek guidance from other students in understanding the concepts
underlying the assignment. However, each student is to work independently in the actual
preparation of the answers/spreadsheets submitted. Sharing of spreadsheets is NOT
permitted. Do not attach a cover page to individual cases submitted for grading. Just put your
name in the upper right-hand corner of the first page of your report.

Students work in groups on the other three cases. Groups should consist of four students and the
maximum group size is four students. You may choose the members of your group, but the
group members are to remain the same throughout the semester. Group members must all be
registered in the same section of the course. Decide on a name for your group; names should
be imaginative and appropriate for a consulting firm. A list of your groups members and your
groups name are to be submitted in class on September 18. At the end of the semester, students
are asked to evaluate themselves and other members of their group in terms of effort,
participation, and contribution in completing the group assignments. These evaluations are used
in determining class participation grades and final course grades.
For group cases, splitting the case questions among group members is not a good method.
Students are encouraged to first complete each case individually. Then, as a group, you can
compare work and finalize the answers/spreadsheets submitted for grading. During class
discussions of cases students are called on randomly to provide their groups answers. Unless
you have individually prepared each part of the case you may not be able to contribute to the
class discussion, which adversely affects your class participation score. Also, some exam
questions are based on cases. If you have not individually completed each part of each case you
may not be prepared to answer those exam questions.

For group cases, a single hard copy report, with the signature of each group member on the cover
page, is submitted for each assigned case. The cover page for the group cases is posted on
Canvas. Discussion of cases across groups is permitted; however, each group must work
independently in the actual preparation of the answers/spreadsheets to be submitted for grading.
Sharing of spreadsheets across groups is NOT permitted. The cover page includes an Honor
Statement that you are asked to read carefully before signing. By signing your name on the
group report, you attest that you have contributed to the preparation of the report and that your
group has worked independently in the preparation of the written answers and spreadsheets
submitted. Each member of the group should keep a copy of the report to refer to while
discussing the assignment in class.

Please follow these guidelines for the written portion of your case reports:
Page layout must be in portrait (not landscape) format.
Use standard margins of 1-inch top/bottom and each side.
Use Times New Roman 12-point font.
Double-space all written answers.
o If using bullets, single space within each bullet and double space between
bullets.
All direct quotes must be indicated by quotation marks and a footnote.
Footnotes and bibliographies must use the standard APA format. Do not list just a
link to a website as your footnote. A list of APA guidelines is posted on Canvas.

Written case reports are graded on a scale of 1-10, with 10 being outstanding. Fulfillment of
the requirements, numerical solutions, spreadsheets, content and clarity of essay answers,
grammar and spelling in essay answers, attention to detail, and overall professionalism are all
considered in determining grades on written case assignments.

Due dates for all written case assignments are specified on the course outline. Assignments can
be submitted early, but will be penalized if turned in late.

Hard copies of the written report must be ready for submission at the beginning of class on the
day they are due. You must also submit to Professor Doran by email your Excel file and written
report for each case. In the subject line of the email you must put AFM followed by your own
name for individual cases or your groups name for group cases. Regardless of the section in
which you are registered, your emailed case report and spreadsheets must be received by
Professor Doran by 1:30 p.m. on the due date. Assignments turned in after that time will be
assessed a 1-point (i.e., 10 percent) deduction for being late. The time stamp of your email is
used to
determine if your case was submitted on time. No credit will be given for assignments
turned in after the class discussion of the assignment. Missing class is not an acceptable
excuse for missing an assignment due date.

Exams
The midterm exam is on Monday, October 16, during your regular class time. Please mark
your calendar now since no makeup exams are given. The midterm exam is closed-book, but
needed formulas are provided.

The final exam is 7:00-9:00 p.m. on Saturday, December 16. This is a common exam time for
all sections of AFM. You may not take the final exam at a time other than the scheduled exam
period.

The final exam is comprehensive and may cover any topic discussed throughout the course. No
formulas are provided for the final exam. However, you are allowed one single-sided sheet of
notes to help organize your thoughts for the final exam. This sheet of notes may contain
formulas or anything else you wish. Each person must prepare his/her own study sheet for the
final exam.

If higher, your final exam score can replace your midterm exam grade. If a student misses
the midterm exam, that students final exam score will replace the midterm exam grade.

Class participation
Class participation contributes a significant portion to your final course grade. Students are
graded on overall participation throughout the course, including class attendance, small group
discussions, speaking in class, and participation on group cases. This course is case-based and,
as such, class discussions of cases are an integral part of the course. Attendance and
participation in class are crucial to your understanding of the cases and course material.

There may be times when missing class is unavoidable, due to illness, interviews, etc. You are
not explicitly penalized for missing class, but it is difficult to obtain a good grade for class
participation if you rarely attend class. Coming to class late on a consistent basis and/or taking
breaks during class adversely affect your class participation grade. Please inform Professor
Doran of any extenuating circumstances that may affect your class attendance or participation.

Participation is graded on a scale of 1-10, with 10 being outstanding. In past semesters, only a
few students in each class received participation grades higher than 9. It is also common for
students who rarely attend class to receive participation scores as low as 2 or 3.

At the end of the semester, students evaluate their own class participation. You may want to
keep a record of your participation and classes missed. This self-evaluation is considered by
Professor Doran in determining class participation grades.
Course Continuity
In the case of University closure due to weather or other unexpected circumstance, class is not
cancelled. Professor Doran will email all students with details of how the class will be held
virtually or made up later in the semester. If class is held virtually, it will be at the scheduled
class time, which allows lecturing and real time student participation. Alternatively, the lecture
will be recorded and provided to students for viewing at any time. The course outline, including
exam dates and due dates for assignments, will not be changed due to the closure unless students
are otherwise notified by Professor Doran.

Finance Area Standard Grading Policy

The average GPA for all students in FINC 212 taught by a given professor in any semester will
not be higher than 3.4 and the percentage of grades in the A/A- range will not be above 50%
when averaged over all sections of the course taught by that professor during that semester.

Grading:
Weighting of course requirements is:
Individual Cases 20 percent of grade
Group Cases 15 percent of grade
Midterm Exam 25 percent of grade
Final Exam 25 percent of grade
Class Participation 15 percent of grade

Your grade in the class is based on your overall percent average, in accordance with the Finance
Areas Standard Grading Policy. Based on past semesters, the following is a rough guideline as
to how grades will be determined:

94-100% A 82-83% B- 70-71% D+

92-93% A- 80-81% C+ 64-69% D
90-91% B+ 74-79% C <64% F
84-89% B 72-73% C-
Academic Integrity:
Students are expected to adhere to the highest standards of academic integrity. It is your
responsibility to know the Honor Code and what constitutes a violation. Information about
Georgetowns Honor System is available at gervaseprograms.georgetown.edu/honor.

Please be aware that professors are obligated to report any suspected violations of the Honor
System to the Honor Council. The following notes concerning the Honor Code apply to this
class:

1. Working together on practice problems and studying together for exams is acceptable and
encouraged.

2. For the final exam, discussing the study sheet is acceptable but each student must prepare
his/her own study sheet.

3. Cheating on exams (in whatever form) is expressly prohibited by the Honor Code.

4. On group case assignments, collaboration among group members is required and

discussion of cases across groups is also permitted. However, each group must work
independently in the actual preparation of written answers and spreadsheets submitted for
grading. Each group must begin with a blank spreadsheet or the template posted on
Canvas (if a template is provided). Groups may not use a template from any other source
(e.g., other classes, clubs, internships, friends. etc.). Sharing of spreadsheets or written
answers across groups is prohibited and is a violation of the Honor Code.

5. On individual case assignments, students are permitted and encouraged to discuss the
concepts underlying the case. However, each student must work independently in the
actual preparation of written answers and spreadsheets submitted for grading. Each
student must begin with a blank spreadsheet or the template posed on Canvas (if a
template is provided). Students may not use a template from any other source (e.g., other
classes, clubs, internships, friends. etc.). Sharing of spreadsheets or written answers is
prohibited and is a violation of the Honor Code.

6. For all written assignments, if you gather data from any source (case, web, library, etc.),
you must properly cite your sources. Direct quotes should be in quotation marks with a
footnote. All sources used must be listed in a bibliography included with your hard copy
of the case. Footnote and bibliography formats must follow APA guidelines. A list of
APA guidelines is posted on Canvas. You can obtain additional information on APA
guidelines at: http://owl.english.purdue.edu/owl/resource/560/01/.
 TENTATIVE COURSE OUTLINE

Date Topics and Readings1 Case Assignments2

W-Aug 30 Introduction to Course

Review - Time Value of Money

RWJ - Chapters 1, 5, and 6

W-Sept 6 Capital Budgeting

Read Tremont & Company case & Answer questions
on handout
(Case and handout are distributed in class and posted
on Canvas)

RWJ Chapters 9 and 11

M-Sept 11 Cash Flow Analysis

RWJ - Chapter 10

W-Sept 13 Risk and Return Case Due:

RWJ Chapters 12 and 13 Tremont & Co. (IA)

M-Sept 18 Cost of Capital Name of group due

RWJ - Chapter 14

RWJ refers to the Ross, Westerfield, Jordan textbook. Other readings are in the
1

course materials purchased from Harvard, distributed in class, and/or posted on Canvas.
Reading assignments must be completed by each student independently. Assigned
questions for the readings are posted on Canvas and/or distributed in class approximately
one week before the reading is due.
2Cases are in the course materials purchased from Harvard or distributed in class
and/or posted on Canvas. IA refers to an individual case assignment and GA refers to
a group case assignment. Assigned questions for a case are posted on Canvas
approximately one week before the case is due.
W-Sept 20 Capital Structure
Read JetBlue: Prepare for Financing case &
Answer questions on handout
(Case is in course pack; handout is distributed in
class and posted on Canvas)

RWJ Chapter 16

M-Sept 25 Capital Structure (continued) Case Due:

Marriott (GA)

W-Sept 27 Dividends
Read Financial Policy at Apple, 2013 (A) case &
Answer questions on handout
(Case is in course pack; handout is distributed in
class and posted on Canvas)

RWJ - Chapter 17

M-Oct 2 Dividends (continued)

W-Oct 4 International Financial Management

RWJ Chapter 21

M-Oct 9 Columbus Day No Class

W-Oct 11 International Financial Management (continued)

M-Oct 16 MIDTERM EXAM

W-Oct 18 Valuation
RWJ - Chapter 8
M-Oct 23 Valuation (continued)
Read Note on cash flow valuation methods: Comparison
of WACC, FTE, CCF and APV approaches &
Answer questions on handout
(Reading is in course pack; handout is distributed in
class and posted on Canvas)

W-Oct 25 Valuation (continued) Extra Credit Due:

Valuation Example (IA)

M-Oct 30 Raising Capital

Read Facebook, Inc: The IPO & Answer questions
on handout
(Case is in course pack; handout is distributed in
class and posted on Canvas)

RWJ - Chapter 15

W-Nov 1 Raising Capital (continued) Case Due:

Singapore Airlines: In
Talks to Invest in JeJu Air
(IA)

M-Nov 6 Corporate Control

Read: Finance Reading: The Mergers and Acquisitions
Process
(Reading is in course pack; No assigned questions
for this reading)

RWJ - Chapter 26

W-Nov 8 Corporate Control (continued) Case Due:

Read: Articles on Corporate Control Part 1 & Answer Facebook (GA)
questions on handout
(Articles and handout are posted on Canvas)
M-Nov 13 Corporate Control (continued)
Read: Articles on Corporate Control Part 2 & Answer
questions on handout
(Articles and handout are posted on Canvas)

W-Nov 15 Corporate Control (continued)

Read: Articles on Corporate Control Part 3 & Answer
questions on handout
(Articles and handout are posted on Canvas)

M-Nov 20 Corporate Control (continued) Case Due:

Read: Articles on Corporate Control Part 4 & Answer Mellon Financial & The
questions on handout Bank of New York (GA)
(Articles and handout are posted on Canvas)

W-Nov 22 Review Day No class

M-Nov 27 Options
RWJ Chapters 24 and 25

W-Nov 29 Options (continued)

Risk Management
RWJ - Chapter 23

M-Dec 4 Risk Management (continued)

W-Dec 6 Extra Day/ Review for Final Exam

Saturday FINAL EXAM

Dec 16 Saturday, December 16, 7:00-9:00pm

This is a common exam time for all sections of AFM.

You may not take the AFM final exam at any other time.