VIETNAM NATIONAL UNIVERSITY UNIVERSITY OF ECONOMICS AND BUSINESS

SYLLABUS

CORPORATE FINANCE 1
I INSTRUCTOR INFORMATION: Tran Thi Thanh Tu, PHD. o Office: Room 511, E4 Building, University of Economics and Business Vietnam National University, Hanoi o Office hours: Friday (9am-11am) o Contact address: 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam o Telephone: (84)4 37547506 Ext.: 512; Mobile: (84) 904.385858 o Email: tuttt@vnu.edu.vn II COURSE DESCRIPTIONS: 2.1 Prerequisite courses: Principles of Ec onomic Statistics, Microeconomics 2.2 Number of credits: 3 2.3 Credit hours: 45 2.4 Course descriptions: A basic knowledge of finance is important for all students majoring in business and this course is designed to fill that need. The course is also a pre-requisite for students who wish to later enroll in more advanced courses in finance. This course is divided into 5 parts. Part 1 (topic 1-3) provides an introduction to corporate finance. In this section, basic financial concepts and principles will be defined and discussed. Students will gain an understanding of basic financial statement and be able to used financial statements to understand the differences between corporate income and cash flows. This section will end with a formal analysis of financial statement.
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Part 2 of the course (topic 4-6) presents some techniques of long-term financial

planning and basic theories modern financial analysis. This portion of the course includes an in - depth analysis of interest rates which is considered as basic valuation technique to discount the firm cash flows. Students will apply the basic theories of Time Value of Money to the valuation of both stocks and bonds. Part 3 of the course (topic 7, 9) is concerned with the principles of capital budgeting. Basic concepts such as NPV, IRR will be introduced as the primary analytical techniques used for the evaluation of business investment decisions. This section is ended with risk and return concept. Part 4 of the course (topic 10-12) is devoted to long term financial decision making. Topics in this section include: Cost of capital, financial leverage, capital structure. The final part (topic 13, 14) is involved with short term financial decision. These topics are discussed: Cash and liquidity management, inventory and receivable management. 2.5 Course objectives: Knowledge: By the end of the course students are expected to be able to: o Understand the functions, the roles, the goals and the processes of corporate financial management and identify the major types of organizational forms. o Construct basic financial statements (balance sheet, income statement and cash flow statement); build simple financial planning models (pro-forma statements); and use financial statement information to analyze company performance (ratio analysis). o Solve Time Value of Money (TVM) problems involving Present Value (PV), Future Value (FV), Annuity (Annuity, Deferred Annuity and Annuity Due), and Perpetuity (No Growth and Constant Growth Perpetuity). o Make investment decisions using investment criteria such as NPV, profitability index, IRR, and payback period. o Make a decision involving the fixed cost and debt. Solving operating and financial leverage problems.
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o Solve capital budgeting problems by identifying relevant cash flows and by calculating relevant cost of capital (risk adjusted). Skills: Students are required to build up both personal and inter-personal skills during and after the course: realize and analyze, understand and apply, and interact effectively. Specifically, students will develop and promote the use of their skills in: o Apply basic mathematical techniques to analyze business and economic data. o Apply ethical principles and corporate governance strategies to address real world issues and problems. o Apply appropriate theories and analysis tools and method to financial decision making. o Evaluate the applicability of various theories and techniques to business and economics related problems. o Interact effectively with others in order to work towards a common outcome in group discussions and presentation. Attitude: Students are expected to show the following attitudes during the course: o Responsible. o Teamwork. o Diligent and hard working. o Honest and sincere. o Being tolerant and open-minded. III TEXBOOKS AND REFERENCES: 3.1 Required textbook(s): o Fundamental of Financial Management, Brigham & Houston, 2007 o Ross Westerfield Jordan, Fundamentals of Corporate Finance, McGraw- Hill, 2006 o Stanley B.Block & Geoffrey A. Hirr, Foundation of Financial Management (8th edition), McGraw- Hill, 1997 3.2.References:
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o Nguyn Hi Sn, Qun tr ti chnh doanh nghip, NXB Ti Chnh, 2007 o Nguyn Minh Kiu, Ti chnh doanh nghip, NXB Thng K, 2008 o Students are also required to collect information from websites and articles. IV ASSESSMENT AND GRADING: 4.1 Grading Distribution and Mechanism:
Class participation Quizzes Group Project 5% 5% 15 % 15% 60%

Mid-term exam
Final exam:

o Class participation: All students are expected to participate actively in class discussion. This includes evidence of thorough prior preparation of course materials, engaging in exercises, etc. Attendance at all session is required except in previously arranged cases/emergencies. Each absent tick (x) in the checking list will reduce this grade by the proportion to the total lesson hours. o Quizzes: The quizzes will be given in the class hours without prior notice to the students with the purpose of checking their understanding of the lessons and/or their daily revision. Each quiz will be designed to be completed in 15 minutes. The total quizzes during the course will be not be more than 4. o Group project: Student is required to self select into group of no more than 5 students. They will choose one of topics in the list given by the instructor(s) for each class and collect information from real situation to complete it. The project is due at the beginning of the session in which the group makes its presentation. It is compulsory to site any sources for data used in financial project. Each group will be required to make a 15-20 minute project presentation. The template of groups presentation is given by the instructor(s) o Mid-term exam: The mid-term exam covers all elements of the previous chapters (including the concepts, cases, exercises, and discussions). o Final exam: The final exam covers all elements of the entire course (including the concepts, cases, exercises, and discussions).This exam is designed to test the students understanding of key concepts in the subject as well as their
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skills of computing and analyzing of financial problems. The date is fixed by the Department of Training and informed to students in due course. o The total grade for the course will be an average lump sum of individual grades for class participation, quizzes, group project, mid-term exam and final exam. 10 point 9 point 8 point 7 point 6 point 5 point 4 point Failed 4.2 Policy: o Calculators: Bring your calculator to every class section after the first week. Calculators are needed for doing exercises in class. o Class Participation: Part of students grade is based on attendance. Students must be ready for class at the scheduled time and class will start on time. This policy avoids the problem of having people wander in late and not being able to pick up the discussion. Students will take an active role in leading discussion of cases, presenting cases and providing critical commentary. Individual participants will be responsible for completing reading assignments and participating in discussion of those readings. o Plagiarism: The Code of Academic Integrity of the University addresses cheating, fabrication of submitted work, plagiarism, handing in work completed for another course without the instructors approval, and other forms of dishonesty. For the first offense, a student who violates the Code of the University will receive 0 point for the assignment. The violation will be reported by the instructor(s) to the Deans Office and recorded in the students file. For the second offense, the student will be failed from the course and the reason noted on the students official transcript. >= 95% >= 85% >= 75% >= 65% >= 55% >= 45% >= 35% < 35%

o Cell phones: Cell phone is not allowed in class. Using cell phones during exams will be assumed to be cheating and treated as such.

V LECTURE TOPIC CALENDAR:

No. Teaching Methods Main contents Course Introduction Chapter 1: Introduction to Corporate Finance Course Introduction and Lecture (2.5 hours) 1.1.Corporate Finance and Financial Manager 1.2.Forms of Business Organization Block & Hirr Chapter 1 1.3.The Goals of Financial Management 1.4.The Functions of Financial Management Reading the case and answering Case: Andy company the questions. Reading Ross Chapter 2 Block & Hirr Chapter 2 Collecting financial statements in the website and compare it with model one (given by instructor). Each group reads and answers the questions No 1,2 (Ross p 47) on A0 side paper. Reading course syllabus Reading Ross Chapter1 Reading/Assignment

Discussions (0.5 hour)

Chapters 2: Lecture (2 hours) 2 Overview of Financial Statements 2.1.Balance Sheet 2.2.Income Statement 2.3.Cash Flow Statement Discussions (0.5 hour) Case: Cash Flows and financial statements at Sunset Boards, Inc Chapter 3: Financial Statement Analysis 3.1.Cash Flow and Financial Statement Lecture and Exercises (2 hours) 3 3.4.Du Pont Analysis Method 3.2.Standardized Financial Statements 3.3.Financial Ratio Analysis

Reading Ross Chapter 3 Block & Hirr Chapter 3 http://www.investopedia.com/uni versity/peratio/ Each group reads and answers the

Discussions (1hour) Lecture and Exercises (2 hours)

Case: Ratio and Financial Planning at S&S Air,Inc. Chapter 4: Long term Financial Planning 6

questions No.1,2,3 ( Ross p.123) on A0 side paper. Reading Ross Chapter 4 Block & Hirr Chapter 4

4.1. What is Financial Planning? 4.2.Pro Forma Income Statement 4.3.Pro Forma Balance Sheet 4.4.The Percentage of Sales Approach Discussions (1 hour) Case: Ratio and Financial Planning at S&S Air,Inc.(cont.) Chapter 5:Time Value of Money 5.1.Simple and Compound Interest Lecture and Exercises (2.5 hours) 5 5.2.Future Value of Single Amount 5.3.Present Value of Single Amount 5.4.Future Value of Annuities 5.5.Present Value of Annuities
Presentation & Discussions (0.5 hour)

Each group reads and answers the questions No.4,5,6 ( Ross p.123).

Reading Ross Chapter 5 Block & Hirr Chapter 9

Each group collects information Common stock and preferred stock Chapter 6:Securities Valuation about stocks and makes a 15-20 minute presentation

Lecture and Exercises (2.5 hours) 6

Presentation & Discussions (0.5 hour)

6.1.Valuation of Bond 6.2.Valuation of Preferred Stock 6.3.Valuation of Common Stock

Reading Ross Chapter 7,8 Block & Hirr Chapter 10

Each group collects information Bond and comparison of bond and stock Chapter 7:Investment Criteria about bond and makes a 15-20 minute project presentation

Lecture and Exercises (3 hours)

7.1.Net Present Value 7.2.Discounted Pay Back Method 7.3.Internal Rate of Return 7.4.Profitability Index Chapter 8: Reading Ross Chapter 9 Block & Hirr Chapter 12

Lecture and Exercises (2 hours)

Making Capital Investment Decisions 8.1.Project Cash Flows: A First Look 8.2.Incremental Cash Flows 7

Reading Ross Chapter 10

8.3.More on Project Cash Flow 8.4.Alternative Definitions of Operating Cash Flow Midterm exam (1hour) Chapter 1- 8 Chapter 9:Risk and Return 9.1.Expected Returns and Variances Lecture and Exercises (2 hours) 9.2.Systematic and Unsystematic Risk 9.3.Diversification and Portfolio Risk 9.4.Systematic Risk and Beta 9.5.Security Market Line Discussions (1hour) Each group reads and answers Case: S&S Airs Convertible Bond Chapter 10 :Cost of Capital the questions (Ross p.467) Reading Ross Chapter 13

10.1.Cost of Debt Lecture and Exercises (2 hours) 10 Reading Ross Chapter 15 10.2.Cost of Preferred Stock Block & Hirr Chapter 11 10.3.Cost of Common Stock 10.4.Weighted Average Cost of Capital 10.5.Marginal Cost of Capital

Each group reads and answers the Discussions (1 hour) questions in the assigned cases Case: Cost of capital for Hubbard Computer,Inc (Ross p.604)

Chapter 11:Financial Leverage 11 Lecture and Exercises (3 hours) 11.1.Operating Leverage 11.2.Financial Leverage 11.3.Combining Operating and Financial Leverage Lecture and Exercises (3 hours) Chapter 12:Capital Structure 12.1.The Capital Structure Question 8

Reading Ross Chapter 17 Block & Hirr Chapter 5

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Reading Ross Chapter 17

12.2.Capital Structure and Cost of Equity 12.3. M&M Propositions I& II with Taxes. 12.4.Bankcruptcy Cost 12.5.Optimal Capital Structure Chapter 13: Cash and Liquidity Management 13.1.Reasons for Holding Cash 13.2.Cash Flow Cycle Lecture and Exercises (2 hours) 13 13.3.Understanding Float 13.4.Cash Collection and Concentration 13.5.Managing Cash Disbursements 13.6.Investing Surplus Cash in Marketable Securities
Presentation & Discussions (1hour)

Reading Ross Chapter 20 Block & Hirr Chapter 7

Each group summaries the story The story: Rich Dad and Poor Dad Chapter 14: Credit and Inventory Management 14.1.Credit and Receivables and discusses ideas of Rich Dad.

Lecture and Exercises (2.5 hours) 14

Reading Ross Chapter 21 Block & Hirr Chapter 7

14.2.Term of Sales 14.3.Analyzing Credit Policy 14.4.Inventory Management 14.5.Inventory Techniques (EOQ,ABC,JIT)

Presentation & Discussions (0.5 hour)

Each group reads and answers the The topic is assigned by instructor. questions.

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Discussions

Final Revision

Remarks: o Further essential materials (if any) will be provided during each class. o Venue for lectures and presentation/discussions: classroom.
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Prepared by

For Faculty of Finance and Banking Head of Financial Unit Dean of Faculty

Approved by

Lan Trinh Thi Phan

Ha Tran Thi Thai

Mai Trinh Thi Hoa

COURSE SPECIFICATION
Course Code Course Name Level Language of Instruction School Year Semester Credits Lecturer BSA 2018 Corporate Finance 1 General English 2010-2011 04 03 (45 credit hours) Mrs. LAN TRINH THI PHAN Provide background on the functions, the roles, the objectives and financial management process. Objectives Provide analysis tools and methods to make investment and financing decisions to get the target of firms maximization. Help learners manipulate the theoretical knowledge and the tools of financial analysis to solve the practice problems in financial management. This course comprises 5 parts covering 14 topics defined in the lecture calendar. Part 1 provides an introduction to corporate finance. Part 2 of the course presents some techniques of long-term financial planning and basic theories modern financial analysis. Part 3 of the course is concerned
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Overview

with the principles of capital budgeting. Part 4 of the course devoted to long term financing decision. The final part is involved with short term financing decision.

Hours per week

03 credit hours per week All these topics of the course will be given through lectures in class. The practice by the students will be done in the form of exercises and group tasks. There will be a group project to make sure that student are able to work in

Teaching Method

team and can deal with information from real world. During the course, there will be some cases. The objective of the case

( Project, case study, lectures)

method in finance is to use the logic of financial theory to arrive at coherent and defensible conclusions when faced with real world problems presented in cases.

Assessment

Class participation, homework, quizzes, project and written exam. Title Fundamentals of Author Ross Westerfield Jordan --------------Stanley B. Block &Geoffrey A. Hirr ISBN McGrawHill, 2006 ------------McGrawHill, 1997 Price

Compulsory literature

Corporate Finance -------------------Foundations of Financial Management

Prerequisites

Principles of Economic Statistics, Microeconomics Mrs. LAN TRINH THI PHAN - Office: Room 302, E4 Building, 144 Xuan Thuy, Cau Giay, Hanoi - Office hours: Friday (9am-11am)

Remarks/ Contact

- Contact address: 13 F2, Tong cuc II, Xuan Dinh, Hanoi. - Mobile phone: 0915562655 Home phone :(04).3 7580660

- Email: trinhphanlan@gmail.com, lanttp@vnu.edu.vn

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Degree program: Part of Double Degree Program

Year: 2008-2012

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