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Qingdao
University Corporate Finance Course (FIN 301)
All
relevant information on Qingdao University Corporate Finance Course
(FIN 301) will be posted on this website.
Click
to go directly to: (1) Updates, (2) Course
Outline and Lecture Notes, (3) Lecture Review,
(4) Course Details, or (4) Assessment
Information.
Course
outline can be downloaded here.
For academic registry office who need the syllabus for credit transfer
purposes, please email todrthomaswu@gmail.com.
UPDATES:
Back
to top || Updates || Course
Outline and Lecture Notes || Lecture Review
|| Course Details || Assessment
Information
Please
check here for updates during the semester.
| Aug
8, 2011 |
Due
to weather condition, there is no class on Monday August 8. The
review session will be held on Tuesday August 9 and the final
exam will be held on Wednesday August 10 as scheduled. |
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| July
28, 2011 |
I
am a little under the weather today so I have someone came to
provide questions that you can do in class. Two questions were
assigned, Question 10-16 and Question 14-9. Please check below
for answer key. Assignment due changed to Tuesday August
2 so you can ask questions on Monday. |
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| July
26, 2011 |
Home
assignment questions due next Monday August 1 before class. 4
questions from Chapter 10, # 13, 17, 18, and 19. It can be submitted
in electronic or paper form. |
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| July
21, 2011 |
Class
notes from the third week of classes can be downloaded below. |
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| July
19, 2011 |
Assignment
on capital budgeting due Monday August 1 2011 before class in
electronic form (ie, email to my email). There are 4 questions
from Chapter 10, # 13, 17, 18, and 19. |
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| July
16, 2011 |
Answer
for question 57 for Bilbo wanting to retire, buy a house, and
leave money to nephew. (a) Have to convert EAR from annual to
monthly as all payments made monthly. 10% EAR = 0.797% per month.
7% EAR = 0.565% per month. This is the formula for the 10% EAR:
((1+0.10)^(1/12))-1. (b) Draw time line for events that meet his
objective. Here do your own based on info given. (c) How much
he has in t=10 when he buys the house? FV of annuity formula can
be used. FV at t=10 of saving 2500 per month is 499660. After
buying the house at t=10 for 380000, he has 119660 left. (d) He
wants to leave 900000 to his nephew in t=55, how much is that
at t=30 when he retires? At t=30, he needs to have 165824 in his
account to get 900000 in 25 years' time. (e) He wants to have
20000 per month for 25 years after he retires at t=30. PV of annuity
can be used to determine how much he needs to have at t=30. The
amount he needs for the monthly retirement payment of 20000 would
be equivalent to 2885497 at t=30. (f) In other words, he would
need to have 165824+2885497=3051321 at t=30, ie when he retires,
to get the monthly 20000 and leave 900000 to his nephew. (g) To
summarize, he has 119660 at t=10, he needs 3051321 at t=30, then
how much he needs to save each month from t=10 to t=30? (h) This
step checks how much he is short at t=30. He has 119660 at t=10,
that means FV of 805013 at t=30. So he is short 3051321-805013=2246308
at t=30. (i) Based on needing 2246308 at t=30, how much to save
month for t=10 to t=30? Using FV of annuity formula, monthly saving
must be 3127. |
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Answer
for question 68 for insurance policy for child. Here are the main
calculation points. (1) Find value of the 6 payments made, either
as PV at t=0 or FV at t=6. If discount CF to t=0,
PV=4050. If compound CF to t=6, FV=7994. But easier if
use FV at t=6 because can find FV of 7994 to t=65 at i=8%. If
use PV at t=0, then have to compound to t=6 using i=12% which
also equal to 7994, then do another compounding using the different
i of 8%. (b) Using value of all payments made at t=6 of 7994,
compound at i=8% for 59 years (age 6 to age 65 of 59 years) and
will get FV of 749453. (c) Now value of 749453 at t=65 based on
payments made but only receive 500000, so can conclude that insurance
policy NOT worth buying. |
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| July
16, 2011 |
As
discussed in class, please try questions no 57 (Bilbo Baggins)
and 68 (insurance company for child policy) in chapter 6 of Ross
to see how well you know the material. I will post the answer
later on today. |
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| July
14, 2011 |
The
mid-term test for the class will be held on next Monday July 18
at the normal class time. As mentioned in class, there will be
multiple choice questions, short written type questions, and longer
calculation questions. Examination policy includes, but not limiting
to, students perform mid-term test based on own personal efforts,
mobile phones and other communication devices not allowed, each
student should have their own calculator and not shared. |
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| July
14, 2011 |
Class
notes from the second week of classes can be downloaded below. |
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| July
8, 2011 |
Notes
from the first week of classes can be downloaded below. |
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| December
20, 2010 |
Our
course will start on Monday July 4, 2011. Further information
on course outline, books, and other information will be available
as we approach commencement time. |
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Outline and Lecture Notes || Lecture Review
|| Course Details || Assessment
Information
ASSESSMENT
Back
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Outline and Lecture Notes || Lecture Review
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Information
ALL
assignments, mid-term test, and final examination are INDIVIDUAL
effort, meaning that you should work on your own material and any unscholarly
actions prohibited by the university must be avoided. More details on
what are acceptable and une acceptable behaviors can be found on university's
website.
I will
post ALL relevant course materials, updated information,
correspondences, and relevant student questions in the UPDATES
section on this page. Students are responsible to check the
UPDATES section frequently on
their own to ensure that they are up-to-date. I will provide the dates
and topics of the updates to easier search.
The
final grade is based on three parts:
| Attendance
and participation |
10% |
| Assignment |
15% |
| Mid-term
test |
25% |
| Final
examination |
50% |
| Total |
100% |
The mid-term
test and final examination can consist of true and false, multiple choice,
calculation, and short answer questions. The date of the mid-term test
will be announced during the course. The date of the final examination
will be announced during the course. The exact date, time, and place
will be announced by the school as we approach the final examination
period.
The assignment
includes four questions from Chapter 10 (# 13, 17, 18, and 19) and it
is due on Monday August 1 before class in paper or electronic form.
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Outline and Lecture Notes || Lecture Review
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Information
LECTURE
REVIEW Back
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Outline and Lecture Notes || Lecture Review
|| Course Details || Assessment
Information
A summary
of our discussion during the lecture is provided here for your reivew.
Week
1 July 4, 2011 |
We
worked on the following topics during this week: |
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- forms
of organization,
- the
agency problems,
- discounted
cash flow calculations using PV, FV, r, and t,
- discounted
cash flow valuation using present value analysis,
- multiple
cash flow analysis,
- perpetuity,
- PV
and FV of annuity,
- PV
and FV of annuity due,
- growing
annuity,
- growing
perpetuity,
- annual
percentage rate APR,
- effective
annual rate EAR, and
- continuous
compounding.
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| Week
2 July 11, 2011 |
We
worked on the following topics during this week: |
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-
capital budgeting using ARR, payback, discounted payback,
NPV, IRR, and PI,
- deriving
cash flow from various accounting measures,
- calculation
of depreciation tax shield,
- cost
cutting decision,
- replacement
decision,
- bid
price determination, and
- equivalent
annual cost.
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| Week
3 July 18, 2011 |
We
worked on the following topics during this week: |
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-
mid-term test,
- review
of mid-term test,
- practice
questions on depreciation tax shield, cost cutting decision,
replacement decision, bid price determination, and equivalent
annual cost, and
- cost
of capital.
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| Week
4 July 25, 2011 |
We
worked on the following topics during this week: |
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- cost
of capital practice questions,
- short
term working capital,
- operating
cycle, and
- cash
cycle.
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| Week
5 August 1, 2011 |
We
worked on the following topics during this week: |
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- went
through questions for assignment,
- cash
budgeting to determine short term financing needs,
- cash
float versus float needed for online electronics payment today,
- WACC
practice questions,
- assignment
questions, and
- accounts
receivable and inventory management.
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| Week
6 August 8, 2011 |
We
worked on the following topics during this week: |
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- practice
questions on WACC and bid price for projects,
- final
examination for course, and
- review
of final examination questions.
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Back
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Outline and Lecture Notes || Lecture Review
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Information
COURSE
OUTLINE AND LECTURE NOTES Back
to top || Updates || Course
Outline and Lecture Notes || Lecture Review
|| Course Details || Assessment
Information
This
course outline is tentative and subject to change based on our progress.
Please check the UPDATES section and table below
for latest information.
Course
outline can be downloaded here.
| PART
I. INTRODUCTION TO CORPORATE FINANCE. |
| Week
1 |
Reading:
Chapter 1, 5 and 6 |
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| July
4, 2011 |
Topics:
Overview of financial management, time value of money including
present value, future value, annuity, annuity due, and use of financial
calculators. |
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(DOWNLOAD:
lecture slides) |
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| PART
II. CAPITAL BUDGETING DECISIONS. Long term project evaluation. |
| Week
2 |
Reading:
Chapter 9 and 10 |
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| July
11, 2011 |
Topics:
Capital budgeting decisions, long term project evaluation. |
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(DOWNLOAD:
lecture slides) |
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| PART
III. COST OF CAPITAL. |
| Week
3 |
Reading:
Chapter 14 |
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| July
18, 2011 |
Topics:
Capital budgeting decisions, cost of capital. |
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(DOWNLOAD:
lecture slides) |
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| PART
IV. WORKING CAPITAL MANAGEMENT AND LONG TERM FINANCIAL POLICY. |
| Week
4 |
Reading:
Chapter 16 to 17 |
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| July
25, 2011 |
Topics:
Cost of capital, long term financial policy, working capital management. |
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(DOWNLOAD:
lecture slides) |
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| Week
5 |
Reading:
Chapter 18 to 20 |
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| August
1, 2011 |
Topics:
Working capital management |
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(DOWNLOAD:
lecture slides) |
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| PART
V. VALUATION. |
| Week
6 |
Reading:
Chapter 4, 7 and 8 |
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| August
8, 2011 |
Topics:
valuation of bonds, valuation of stocks, long term financing. |
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(DOWNLOAD:
lecture slides) |
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Back
to top || Updates || Course
Outline and Lecture Notes || Lecture Review
|| Course Details || Assessment
Information
COURSE
DETAILS Back
to top || Updates || Course
Outline and Lecture Notes || Lecture Review
|| Course Details || Assessment
Information
| Course |
Qingdao
University |
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Corporate
Finance (FIN 301) |
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Course
outline can be downloaded here.
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| Prerequisites |
TBD |
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| Time
and Location |
2:30
pm to 4:10 pm Monday to Thursday |
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| Instructor |
Dr.
Thomas Wu |
| Email |
allthomasemail@gmail.com |
| Website |
http://www.drthomaswu.com
(all information for this course can be found here) |
| Office
Hours |
12:30
pm to 2:30 pm Monday to Thursday by appointments only |
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| Tutor |
TBD |
| Email |
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| Telephone |
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| Course
Aims and Summary |
This
course aims to enable students to:
1. understand the fundamental concepts in financial management,
2. value different investment assets,
3. perform capital budgeting and assess alternative investment
possibilities,
4. evaluate different sources of financing projects, and
5. manage working capital.
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| Teaching
and Learning |
Lectures
and case-based tutorial sessions will form the basis of the module
delivery. Lectures will be used to present key material and to provide
opportunities for students to explore and discuss the concepts.
The tutorial sessions will facilitate students' understanding of
how techniques are used in practice as well as incorporating the
use of case study material. There
are six lecture hours and a two tutorial hour per week. Students
are required to attend all lectures and tutorials. Students are
expected to read the assigned reading materials (or chapters)
prior to the lecture and complete their assignments before the
tutorials.
In
the tutorials, discussions will be based on the topics related
to the materials in the preceding lectures and will be in the
form of problem discussions.
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| Essential
Reading |
Fundamentals
of Corporate Finance, Ross, Westerfield, Bradford,
9th Edition, McGraw-Hill |
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| Recommended
Reading |
Fundamentals
of Financial Management, Brigham & Houston, Thomson
Financial Management Decisions, Hutchinson,
Alison, Warwick, Lumby, Thomas Nelson
Principles of Managerial Financial, Gitman,
Addison Wesley |
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| Calculator
Policy |
For
this course, a general purpose non-financial calculator can be
used. Students who do not have ready access
to a financial calculator should be able to perform all the required
analysis and calculations using a general purpose non-financial
calculator for the tutorials, assignments, mid-term test, and
final examination.
You
can also use a non-programmable financial calculator for the tutorials,
assignment, mid-term test, and final examination. Common financial
calculators are HP12c and TI BAII PLUS. User manual in simplified
chinese and a tutorial for the HP12c can
be found here and a simple tutorial for the HP12c can
be found here. User manual for the TI BAII can
be found here.
Regardless
of the types of calculators used for this course, students are
responsible for their own equipment and they cannot be shared
in a quiz, test, or examination situation. As a result, students
MUST bring their own calculators to each class. In addition, each
student must be proficient in the use of their own equipment.
Electronic
translators CANNOT be used for quiz, test, or examination situations,
but they can be used during class (only with volume off) and your
own study time. |
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| Financial
Terms |
There
are specific terms that apply to accounting and finance, and there
are various online sources that can help students understand these
terms.
Download
and print for reference:
Online
finance dictionaries:
Other
unverified sources of financial references:
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Outline and Lecture Notes || Lecture Review
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|