Agenda

Principles of Finance (Business 219)

Fall 2006

Dr. Coty Keller

Updated: December 6, 2006

Key Dates

Midterm Exam: October 23

Project Proposal due 11/1

Peer Evaluations due: 12/4

Project due: 12/4

Final Exam: Monday 12/18 11:10-1:10

 

 

class

#1

Topics & Objectives

class preparations

class activities

Date 9/6

INTRODUCTION TO THE COURSE

      What you will take away from this course

      Understand the means we will use for teaching and learning

Buy the e-book and other course materials See What you need

 

Navigate your way around the Course Outline

Introduction to the course

 

Intro to Time Value of Money and Excel

 

 

class

#2

Topics & Objectives

class preparations

class activities

Date 9/11

PERSONAL FINANCE BASICS AND TIME VALUE OF MONEY

1.      Analyze the process for making personal financial decisions.

2.      Develop personal financial goals.

3.      Assess personal and economic factors that influence personal financial planning.

4.      Determine the personal and financial opportunity costs associated with personal financial decisions.

5.      Determine strategies for achieving personal financial goals for different life situation.

6.      Use Excel to do time value of money calculations

Radio check: Send the instructor an email telling

      Which email address you prefer for course communications.

      Also, let me know your major and what year you are in (Sophomore, Jr., Sr.)

      Tell me what kind of jobs you have held

This information will be kept confidential. I will use it to make up the class teams. I will let you know I got your message.

 

Read:

      Chapter 1 Personal Finance including the case, Now What Should I do?

      The Five Most Important Financial Concepts (e-Reserves)

 

Slide Show:

      Intro to Personal Financial Planning (Chapter 1)

 

Financial Planning Problems:: Managing the Math Behind your Money (e-Reserve) skim this article and bring a copy to class where we will attack these problems with Time Value of Money and Excel

Case discussion

 

Excel exercise: mastering the math behind your money

 

Brief Collaborative Quiz BCQ (Take home turn in beginning of class #3)

 

 

class

#3

Topics & Objectives

class preparations

class activities

Date 9/13

Financial aspects of career planning

      Describe the activities associated with career planning and advancement.

      Evaluate the factors that influence employment opportunities.

      Implement employment search strategies.

      Assess the financial and legal concerns related to obtaining employment.

      Analyze the techniques available for career growth and advancement.

Read: Chapter 2 Personal Finance

 

Slide Show: Financial Aspects of Career Planning

 

Financial Planning Cases:

      Triple Trouble for the Sandwich Generation (Chapter 1)

      Economic Uncertainty and Cyber Job Hunting (Chapter 2)

 

Optional: Personal Financial Planner Worksheets: #1-5

Team Formation and team time

 

Case presentations

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#4

Topics & Objectives

class preparations

class activities

Date 9/18

MONEY MANAGEMENT STRATEGY:
FINANCIAL STATEMENTS AND BUDGETING

      Recognize the relationships among financial documents and money management activities.

      Create a system for maintaining personal financial documents.

      Develop a personal balance sheet and cash flow statement.

      Create and implement a budget.

      Relate money management and savings activities to achieve financial goals

Read: Chapter 3 Personal Finance

 

Slide Show: Financial Statements and Budgeting

 

Look at the Financial Planning Case: Out of Work but Not out of Bills

 

Think about Financial Planning Problems: 3,5,6 &7

 

Optional: Personal Financial Planner Worksheets: #6-13

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#5

Topics & Objectives

class preparations

class activities

Date 9/20

PLANNING YOUR TAX STRATEGY

      Describe the importance of taxes for personal financial planning.

      Calculate taxable income and the amount owed for federal income tax.

      Prepare a federal income tax return.

      Identify tax assistance sources.

      Select appropriate tax strategies for different financial and personal situations.

Read: Chapter 4 Personal Finance

 

Slide Show: Planning Tax Strategy

 

Look at Financial Planning Problems:: 1-8

 

Financial Planning Case: A Single Fathers Tax Situation and Taxes

 

Optional:: Personal Financial Planner Worksheets: #14-19

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#6

Topics & Objectives

class preparations

class activities

Date 9/25

FINANCIAL SERVICES: SAVINGS PLANS AND PAYMENT ACCOUNTS

      Analyze factors that affect selection and use of financial services.

      Compare the types of financial institutions.

      Compare the costs and benefits of various savings plans

      Identify the factors used to evaluate different savings plans.

      Compare the costs and benefits of different types of payment accounts.

INTRODUCTION TO CONSUMER CREDIT

Understand the advantages and disadvantages of consumer credit, as well as the types of credit that are available. More specifically:

      Define consumer credit and analyze its advantages and disadvantages.

      Differentiate among various kinds of credit.

      Assess your credit capacity and build your credit rating.

      Describe the information creditors look for when you apply for credit.

      Identify the steps you can take to avoid and correct credit mistakes.

      Describe the laws that protect you if you complain about consumer credit.

Read: Chapters 5 & 6 Personal Finance

 

Slide Shows: Banking: Savings & Payment Accounts and Consumer Credit

 

Financial Planning Cases: Checking out Financial Services and A Hard Lesson on Credit Cards

 

Financial Planning Problems: #1-9,Chapter 5; #6 Chapter 6

 

Optional: Personal Financial Planner Worksheets: #20-22

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#7

Topics & Objectives

class preparations

class activities

Date 9/27

CHOOSING A SOURCE OF CREDIT:
THE COSTS OF CREDIT ALTERNATIVES

      Analyze the major sources of consumer credit.

      Determine the cost of credit by calculating interest with various interest formulas.

      Develop a plan to manage your debt.

      Evaluate various private and governmental sources that assist consumers with debt problems.

      Assess the choices in declaring personal bankruptcy.

 

Read: Chapter 7 Personal Finance

Slide Show: Sources of Credit

 

Financial Planning Case: Financing Sues Hyundai Excel

 

Financial Planning Problems: 1-5

 

Optional: Personal Financial Planner Worksheets: #23-29

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

NO CLASS October 2nd (Yon Kippur)

 

class

#8

Topics & Objectives

class preparations

class activities

Date 10/4

Making Decisions: CONSUMER PURCHASING STRATEGIES AND LEGAL
PROTECTION

      Identify strategies for effective consumer buying

      Implement a process for making consumer purchases.

      Identify steps to take to resolve consumer problems.

      Evaluate the legal alternatives available to consumers.

Read: Chapter 8 Personal Finance and Managing the Math Behind your Money lease vs. buy example.

 

Slide Show: Purchasing Strategies and Legal Projection

 

Financial Planning Case: Amie Carver/Online Shopping

 

Financial Planning Problems: 2,3, 7-10

 

Optional: Personal Financial Planner Worksheets: #30 &31

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#9

Topics & Objectives

class preparations

class activities (Class will not meet as a group)

Date 10/11

Making Decisions: THE HOUSING DECISION: FACTORS AND FINANCES

      Evaluate available housing alternatives.

      Analyze the costs and benefits associated with renting.

      Implement the home-buying process.

      Calculate the costs associated with purchasing a home.

      Develop a strategy for selling a home.

Read: Chapter 9 Personal Finance

 

Slide Show: The Housing Decision

 

Financial Planning Case: Housing Decisions

 

Financial Planning Problems: 1,2, 4-7

 

Optional: Personal Financial Planner Worksheets: #32-39

Meet on your own time, anywhere you like. Prepare a report to turn in at the beginning of class #10 (10/16). In the report, analyze the case, Housing Decisions. Also solve the problems 1,2, 4-7 (use Excel where appropriate).

 

For extra credit, answer this Time Value of Money question: In 1973 a 4 bedroom, 1 bath ranch home in Virginia Beach cost $41,000. If housing in Virginia Beach has increased with the general consumer price index, what would that house be worth now?

 

 

class

#10

Topics & Objectives

class preparations

class activities

Date 10/16

PROPERTY AND MOTOR VEHICLE INSURANCE

      Develop a risk management plan using insurance.

      Discuss the importance of property and liability insurance.

      Explain the insurance coverages and policy types available to homeowners and renters.

      Analyze factors that influence the coverage amount and cost of home insurance.

      Identify the important types of automobile insurance coverage.

      Evaluate factors that affect the cost of automobile insurance.

Read: Chapter 10 Personal Finance

 

Slide Show: Property Insurance

 

Financial Planning Case: We Rent, so why do we Need Insurance?

 

Financial Planning Problems: 1-3, 5-7

 

Optional: Personal Financial Planner Worksheets: #40-45

 

Get ahead. Next classs assignment is pretty big. You may want to work now to get a head start

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#11

Topics & Objectives

class preparations

class activities

Date 10/18

Due to special common hour activity (James McBride), class will end at noon

health and disability insurance

      Explain why the costs of health insurance and health care are increasing.

      Define health insurance and disability income insurance and explain their importance in financial planning.

      Analyze the benefits and limitations of the various types of health care coverage.

      Evaluate private sources of health insurance and health care.

      Appraise the sources of government health care programs.

      Recognize the need for disability income insurance.

LIFE INSURANCE

      Define life insurance and describe its purpose and principle.

      Determine your life insurance needs.

      Distinguish between the two types of life insurance companies and analyze various types of life insurance policies these companies issue.

      Select important provisions in life insurance contracts.

      Create a plan to buy your life insurance.

      Recognize how annuities provide financial security.

Read: Chapters 11 & 12 Personal Finance

 

Slide Show: Health Insurance and Life Insurance

 

Financial Planning Case: Chapter 11: Giving Power to the Patient. Chapter 12: Life Insurance for the Young Marrieds

 

Financial Planning Problems: Chapter 11: 1-5; Chapter 12: 1-3

 

Financial Planning Activities:

      What type of life insurance policy do you think most agents would try to sell to you? Why?

 

Primerica agents often try to sell term insurance to most clients. Clients are encouraged to drop whole life policies & invest cash values in mutual funds through Primerica. Comment on Primericas sales approach.

 

 

Optional: Personal Financial Planner Worksheets: #46-50

BCQ

 

Exam Review

 

class

#12

Topics & Objectives

class preparations

class activities

Date 10/23

Self directed study

Review what we have covered in the course.

      Problems and cases

      BCQs

      Think about and reflect on the use of the course concepts in your life

      Click here for format and type questions

Mid Term Exam

 

 

 

class

#13

Topics & Objectives

class preparations

class activities

Date 10/30

INVESTING FUNDAMENTALS

      Describe why you should establish an investment program

      Assess how safety, risk, income, growth, and liquidity affect your investment decisions.

      Explain how asset allocation and different investment alternatives affect your investment plan.

      Recognize the importance of your role in a personal investment program.

      Use the various sources of financial information that can reduce investment risks and increase investment return.

Read: Chapters 13

 

Slide Show: Investing Fundamentals

 

Financial Planning Case: Budget First, then Plan for Financial Success

 

Financial Planning Problems: 3-5 (Use Excel)

 

Optional: Personal Financial Planner Worksheets: #51-54

Exam review

 

Midcourse Feedback

 

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

Reminder: Project proposals are due before class November 1st.

 

class

#14

Topics & Objectives

class preparations

class activities

Date 11/1

INVESTING IN STOCKS

      Identify the most important features of common and preferred stock.

      Explain how you can evaluate stock investments

      Analyze the numerical measures that cause a stock to increase or decrease in value.

      Describe how stocks are bought and sold.

      Explain the trading techniques used by long-term investors and short-term speculators.

      Learn the benefits of dollar cost averaging.

INVESTING IN BONDS

      Describe the characteristics of corporate bonds.

      Discuss why corporations issue bonds.

      Explain why investors purchase corporate bonds.

      Discuss why federal, state, and local governments issue bonds and why investors purchase government bonds.

      Evaluate bonds when making an investment.

Read: Chapter 14 & 15 Personal Finance

 

Slide Shows: Investing in Stocks and Investing in Bonds

 

Financial Planning Cases: Research Info available from Mergent and A Lesson from the Past

 

Financial Planning Problems: Chapter 14: 1,3 & 11. Chapter 15: 1,4 & 8

 

Optional: Personal Financial Planner Worksheets: #55-59

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#15

Topics & Objectives

class preparations

class activities

Date 11/6

INVESTING IN MUTUAL FUNDS

      Describe the characteristics of mutual fund investments.

      Classify mutual funds by investment objective.

      Evaluate mutual funds for investment purposes.

      Describe how and why mutual funds are bought and sold.

      Learn the benefits of dollar cost averaging.

REAL ESTATE AND OTHER INVESTMENT ALTERNATIVES

      Identify types of real estate investments.

      Evaluate the advantages of real estate investments.

      Assess the disadvantages of real estate investments.

      Analyze the risks and rewards of investing in precious metals, gems, and collectibles.

Read: Chapters 16 & 17 Personal Finance

 

Slide Shows: Mutual Funds and Real Estate and Other Investments

 

Financial Planning Cases: Research Info from Morningstar and The Homes Keep Selling

 

Financial Planning Problems: Chapter 16: 1,3,6,7,10 & 12. Chapter 17: 4 & 5

 

Optional: Personal Financial Planner Worksheets: #60

Discussion

 

Mini-lecture on mutual funds and real estate

 

Brief Collaborative Quiz - BCQ

 

 

class

#16

Topics & Objectives

class preparations

class activities

Date 11/8

RETIREMENT PLANNING

      Recognize the importance of retirement planning.

      Analyze your current assets and liabilities for retirement.

      Estimate your retirement spending needs

      Identify your retirement housing needs.

      Determine your planned retirement income.

      Develop a balanced budget based on your retirement income.

Read: Chapter 18 Personal Finance

 

Slide Show: Retirement Planning

 

Financial Planning Case: When Hes Retired and She Isnt

 

Financial Planning Problems: 4-6

 

Optional: Personal Financial Planner Worksheets: #61-62

Team time

 

Case & problem presentation

 

Class discussion

 

Where are we?

 

 

 

class

#17

Topics & Objectives

class preparations

class activities

Date 11/13

THE CORPORATION AND THE FINANCIAL MANAGER

      Give examples of the investment and financing decisions that financial managers make, and explain the responsibilities of the CFO, treasurer and controller.

      Cite some advantages and disadvantages of organizing as business as an S or C corporation, a sole proprietor, or a partnership.

      Understand why conflicts of interest arise, especially in large, public corporations

      Explain how corporations mitigate conflicts and encourage ethical, cooperative behavior

      Give examples of career paths in finance

ACCOUNTING AND FINANCE

      Interpret the information contained in the balance sheet, income statement and statement of cash flows

      Distinguish between market and book values

      Explain why income differs from cash flow

      Understand the essential features of the taxation of corporate and personal income

Read: Chapters 1 & 3 Fundamentals of Corporate Finance

 

Slide Show: The Corporation & the Financial Manager, and Accounting & Finance

 

End of Chapter Quizzes: Chapter 1: #1-9, Chapter 3: #1-8.

 

Practice Problems 21-27 end of Chapter 3

 

Optional: Personal Financial Planner Worksheets: #63-78

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#18

Topics & Objectives

class preparations

class activities

Date 11/15

NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA

      Calculate the Net Present Value of an investment

      Calculate the internal rate of return of a project and know what to look out for when using the internal rate of return rule

      Explain why the payback rule does not always make shareholders better off

      Use the net present value rule to analyze three common problems that involve competing projects

1.     When to postpone an investment expenditure

2.     How to choose between projects with unequal lives

3.     When to replace equipment

      Calculate the profitability index and use it to choose between projects when funds are limited

Read: Chapter 7 Fundamentals of Corporate Finance

 

Slide Show: NPV and other Investment Criteria

 

Case: Mini-case (Flowton Products)

 

End of chapter quiz: #1-8

Team time

 

Case & problem presentation

 

Class discussion

 

Brief Collaborative Quiz - BCQ

 

 

class

#19

Topics & Objectives

class preparations

class activities

Date 11/20

USING DISCOUNTED CASH-FLOW ANALYSIS (DCFA) TO MAKE INVESTMENT DECISIONS

      Calculate the cash flows of a project from standard financial statements

      Understand how the companys tax bill is affected by depreciation and how this affects the projects value

      Understand how changes in working capital affect project cash flows

Read: Chapter 8 Fundamentals of Corporate Finance

 

Slide Show: Discounted Cash Flow Analysis

 

Financial Planning Case: Mini-case Sheetbend & Halyard, Inc.

 

Financial Planning Problems:/Exercises:

Team time Mini-case Sheetbend & Halyard, Inc.

 

 

 

 

class

#20

Topics & Objectives

class preparations

class activities

Date 11/22

PROJECT ANALYSIS

      Appreciate the practical problems of capital budgeting in large corporations

      Use sensitivity, scenario and break-even analysis to see how project profitability would be affected by an error in your forecasts and to understand why an overestimate in sales is more serious for projects with high op

      Recognize the importance of flexibility in capital budgeting

LEASE VS BUY

      Compare leasing with purchasing an asset

Read:

      Chapter 9 Fundamentals of Corporate Finance

      Leasing. Chapter 11 of Financial Analysis & Decision Making for Healthcare Organizations by Louis Gapenski. (e-Reserve)

 

Slide Show: Project Analysis

 

Financial Planning Cases: Mini-case: Peru Resources

 

Problems/Exercises: Mastering the Math behind your Money, by Clint Willis in May 1989 Money Magazine. (e-Reserve). Look at the leave vs. buy a car example again.

Review of Capital Budgeting

 

Team time - Mini-case: Peru Resources

 

 

 

class

#21

Topics & Objectives

class preparations

class activities

Date 11/27

WEIGHTED-AVERAGE COST OF CAPITAL AND COMPANY VALUATION

      Calculate the firms capital structure

      Estimate the required rates of return on the securities issued by the firm

      Calculate the weighted-average cost of capital

      Understand when the weighted-average cost of capital is- or isnt- the appropriate discount rate for a new project

      Use the weighted-average cost of capital to value a business given forecasts of its future cash flows

 

Read: Chapter 12 Fundamentals of Corporate Finance

 

Slide Show: Weighted Average Cost of Capital and Company Valuation

 

End of chapter Quiz: #1-7

Team time hand in problems

 

Problem presentation & discussion

 

 

class

#22

Topics & Objectives

class preparations

class activities

Date 11/29

INTRODUCTION TO CORPORATE FINANCING AND GOVERNANCE

      Explain why managers should assume that the securities they issue are fairly priced

      Describe the major classes of securities sold by the firm

      Summarize the changing ways that U.S. firms have finance their growth

      Be able to compare the pros and cons of both equity and debt financing

Read: Chapter 13 Fundamentals of Corporate Finance

 

Slide Show: Corporate Finance & Governance

 

End of chapter quiz: #1-5

Team time

 

Problem presentation & Class discussion

 

Brief Collaborative Quiz - BCQ

 

class

#23

Topics & Objectives

class preparations

class activities

Date 12/4

PROJECT PRESENTATIONS

Prepare a brief (3-5 minute) Presentation to share a highlight or two of your course project. Please keep in mind that your time is limited so we have a chance to hear everyone.

 

Peer evaluation due: Click here for link

Student Presentations

 

Course Review

 

BCQ

 

class

#24

Topics & Objectives

class preparations

class activities

Date 12/6

PROJECT PRESENTATIONS

Prepare a brief (3-5 minute) Presentation to share a highlight or two of your course project. Please keep in mind that your time is limited so we have a chance to hear everyone.

Student Presentations

 

Course Review

 

BCQ

 

class

#25

Topics & Objectives

class preparations

class activities

Date 12/11

PROJECT PRESENTATIONS

 

EXAM REVIEW

 

COURSE FEEDBACK

Prepare a brief (3-5 minute) Presentation to share a highlight or two of your course project. Please keep in mind that your time is limited so we have a chance to hear everyone

 

Review your class notes, Brief Collaborative Quiz - BCQs, mid-term exam, team assignments, and other course material. Come prepared to ask questions on concepts or tools.

Student Presentations

 

Exam Tips

 

SREI

 

 

 

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