Happy New Year. See video on example question here. We went through this question in the make up review session but not everyone can come so here is a repeat of that question on EOQ. Looking at the other topics, I would recommend that you should be familiar with all the calculations. There are also written parts, so you will need to know the concepts wells also. There are 6 questions in total and you need to choose 5 questions to complete for 20 marks each. Another MAJOR AREA OF CONCERN - YOU MUST HAVE YOUR OWN CALCULATOR, NO SHARING OF CALCULATOR, NO MOBILE PHONE WITH YOU, CLOSED BOOK, NO NOTES, NO ELECTRONIC DICTIONARY BUT PAPER DICTIONARY IS OK. THESE WILL BE STRICTLY ENFORCED.

There is a review session on Monday December 21 from 1pm to 3:45pm. Please review and ask questions during the session. We will go over the mid-term test and other questions from this course. The assignment is due at 5pm on Monday December 21. Please email your assignment to myself and Wendy, with a link to the article or report.

For the final exam, there are six questions from which you will need to choose five to do. They account for 20% each. For the final exam, it is closed book (and no notes). You must bring a dedicated calculator with no programming function (you cannot use the calculator in your mobile phone); you should also know how to use the calculator. There is a set of tables and forumla sheet that you can use for the final exam which is available for downloading from iSpace; I recommend that you download and use these when you study so that you know how to use them during the exam. You can bring and use a paper dictionary, but electronic dictionary, mobile phone, or PDA are not allowed in the exam.

• Ch 5 additional practice questions: 5.1 30043; 5.2 730090; 5.3 18.92%; 5.4 21 years and 30 years; 9 103 years; 11 37.68895 million; 13 8.87% and 17691451; 15 -4.668%; 18 7039988 and 3386355; 19 1713824 for 11 years and 2158925 for 13 years; 20 23 years.
• Ch 6 additional practice questions: 6.1 9.42 million; 6.2 9527 and 3673; 6.3 19963.55; 6.4 7.1859%; 6.5 31898.74; 6.6 21579 and 5.1162% and 517627; 2 231652 and 253784 and 92746 and 132137; 4 30723 and 47135 and 49991 and 50000; 12 12.55% and 10.47% and 16.13% and 10.52%; 32 3139.38; 42 16750597; 53 8052 and 8696.
• Ch 8 additional practice questions: 8.1 103 and 119.405; 8.2 99.59; 4 1428.57; 5 8%; 11 49.855; 16 3.8835; 17 2479.34; 21 56.2445.

• what is financial management,
• the goals of financial management,
• time value of money calculations,
• annuity and annuity due,
• perpetual cash flow calculation, and
• EAR and APR.

I will prepare some online material on the Ross Chapter 5 and 6 questions, please check back in a few days.

• the nature of projects,
• accounting income versus cash flow for project evaluation,
• the meaning and treatment of sunk costs,
• the meaning and treatment of opportunity costs,
• net present value analysis (NPV),
• internal rate of return (IRR),
• average accounting return (AAR) or accounting rate of return (ARR),
• payback period, and
• discounted payback period.

• review of present value, future value, and annuity,
• review of project evaluation approach (NPV, IRR, payback),
• relevant cost, sunk cost, opportunity cost,
• how to derive project cash flow using cash flow, tax, net working capital, tax savings from depreciation, investment and salvage value, and
• real cash flow and real rate of discount vs nominal cash flow and nominal discount rate.

• review of profitability index for project evaluation,
• use of scenario analysis (best and worst case) for project evaluation,
• use of sensitivity analysis (variables by variables) for project evaluation,
• accounting, cash, and financial break-even for project evaluation,
• expected value calculation using probabilities,
• risk calculation using variance and standard deviation,
• decision tree,
• historical return and risk level (chapter 12),
• risk premium,
• components of dollar and percentage return (dividends and interest / capital gains), and
• arithmetic and geometric returns.

• review of lecture 4 material on scenario analysis and sensitivity analysis,
• expected value and standard deviation calculations,
• historial return and risk level,
• market efficiency,
• risk and return calculation on a portfolio basis with more than one asset,
• systematic and non-systematic risk, and
• the effects of correlation on asset returns.

• a review of our major topics for this course,
• differences between debt and equity,
• the dividends approach to stock valuation, and
• the three variations of the dividends approach, ie constant dividend, constant growth, supernormal growth models.

• bond fundamentals,
• valuation of bonds (ie find the price of a bond), and
• the required cost of debt including tax effects.

• went through Chapter 15 Cost of Capital,
• went through the questions in the lecture material on cost of capital,
• did the mid-term teaching survey, and
• our open book mid-term quiz.

• went through the cash flow and incremental cash flow criteria for project evaluation,
• looked at sunk cost, finance cost, and non-cash expenses like depreciation as costs that should be excluded,
• worked through two weighted average cost of capital problems (Burse and Fleet),
• started on Lecture 10 Chapter 19,
• calculated inventory, accounts receivable, and accounts payable turnover and days,
• calculated operating cycle and cash cycle, and
• looked at differences between a conservative and aggressive policy on the financing of short term assets.

• the cash flow budget from Lecture 10, and
• a review of the open book mid-term quiz question 1.

• the cash flow budget from Lecture 10, and
• a review of the open book mid-term quiz question 1.

Dr. Thomas Wu

Fundamentals of Financial Management, Brigham & Houston, Thomson

The course consists of class lectures and tutorials. Students should attend all lectures and tutorials. Attendence will be taken and there is a required minimum attendence level. Students should have read and be familiar with assigned readings and related materials before class. Students should also work through practice questions and be familiar with the use of a financial calculator.

For this course, a general purpose non-financial calcuator 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.

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:

• Hong Kong Exchange glossary of terms (English to Chinese)
• 88translation.com finance dictionary (Chinese to English, English to Chinese)

Online finance dictionaries:

• Reuters Chinese to English and English to Chinese finance dictionary
• Goldman Sachs English to Chinese finance dictionary
• Goldman Sachs Chinese to English finance dictionary
• Morgan Stanley English to Chinese finance dictionary

Other unverified sources of financial references:

• Finance Street - a finance related site prepared by the government
• Financial glossary of terms
• List of dictionaries