Course Syllabus

Business 393 Financial Management II

Department of Business, School of Business and Economics, Waterloo Campus
Fall 2017

Table of Contents
1 Instructor Contact Info............................................................................................................. 2
2 Prerequisites............................................................................................................................. 2
3 Textbook .................................................................................................................................. 2
4 Course Description .................................................................................................................. 2
5 Course Goals............................................................................................................................ 3
6 Student Responsibilities .......................................................................................................... 3
7 Instructor Responsibilities ....................................................................................................... 4
8 How to Learn Finance ............................................................................................................. 4
9 Grading Scheme ...................................................................................................................... 5
10 Participation ......................................................................................................................... 5
11 Online Homework ................................................................................................................ 6
12 Online Homework Schedule ...............................................Error! Bookmark not defined.
13 MyFinanceLab Format Sensitivities .................................................................................... 9
14 Quiz and Exams ................................................................................................................... 9
15 Announcements and Downloads........................................................................................ 10
16 Academic Help................................................................................................................... 10
17 MFL/CFO Technical Support ............................................................................................ 11
18 Calculators and Computers ................................................................................................ 11
19 Schedule and Readings ...................................................................................................... 12
20 Pearson Registration Instructions ...................................................................................... 13
21 University and Course Policies .......................................................................................... 14

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1 Instructor Contact Info
Name Office Phone Email
M. Brolley LH4071 4836 mbrolley@wlu.ca
E. Cosgrove LH4069 3525 ecosgrove@wlu.ca
B. Everitt LH2050 4939 beveritt@wlu.ca
P. Freire LH4082 2581 pfreire@wlu.ca
J. Wang LH4047 2660 jwang@wlu.ca

2 Prerequisites
BU383 Financial Management I

3 Textbook
Required
Stanley Eakins and William McNally. Corporate Finance Online Canadian Edition
(Ontario: Pearson Canada, 2015). ISBN-13: 978013275893.
o http://pearsonmylabandmastering.com/
o Course ID: freire99654. CFO access instructions are provided at the end of this
document.

Recommended
William McNally. Student Workbook for Corporate Finance Online 1ce (Ontario:
Pearson Canada, 2015). ISBN: 0134174836.
o The CFO Workbook is a supplement to the e-text Corporate Finance Online
(CFO). The chapter sequencing and the content of each chapter in the workbook
matches CFO. Each chapter in the workbook contains a series of questions: some
quantitative and some qualitative. The questions guide the reader through the
material and highlight the key intuition behind the ideas. Students who are serious
about the course but have a weaker quantitative background might find that the
workbook is a useful supplement to the e-text.

4 Course Description
BU393 presents the foundational tools and ideas of corporate finance. It is the second of two pre-
requisites to all other finance courses. If you plan to major in finance or accounting, this course
is central to your program of study. If you dont plan to major in finance or accounting, then this
course is still very important.

The first third of the course shows students how to evaluate new project ideas. This is critical for
getting others to accept and adopt your ideas. It isnt enough to have a good project idea, you

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must show that the idea will make money for the company. The tools presented in capital
budgeting will give you the ability to formalize the financial impact of a project.

The second topic in the course is corporate valuation. This topic is important for two reasons.
First, all managers need to understand how the market arrives at its valuation of a company so
they can anticipate the markets response to corporate initiatives and so that they can
successfully maximize the market value. Second, valuation is important because the last three
topics in the course explore how certain corporate actions impact value.

The final third of the course explores three very common corporate activities: 1) borrowing
(leverage); 2) cash distributions (dividends and repurchases); and 3) mergers and acquisitions.

5 Course Goals
Our (the teaching teams) overall goals are:
1. That you learn the foundational ideas and techniques of finance: 1) capital budgeting; 2)
corporate valuation using the discounted cash flow methodology; 3) capital structure
theory; 4) distributions; and 5) mergers and acquisitions.
2. That you develop and/or improve your critical thinking and problem solving skills by
practicing when and how to apply concepts to newly encountered problems in finance.
3. That you develop as a self-directed (self-regulated) learner. That is, that you become
better at learning. For a good summary of self-directed learning go here:
https://uwaterloo.ca/centre-for-teaching-excellence/teaching-resources/teaching-tips/tips-
students/self-directed-learning/self-directed-learning-four-step-process
4. That you develop professional capacity. In particular, the ability to follow instructions.
This will be particularly important with the computerized homework and exams. This
learning objective is consistent with level 6 Professional Capacity in the OCAV
guidelines for undergraduate learning expectations. One dimension of professional
capacity in finance is the ability to follow instructions.

6 Student Responsibilities
Students will be treated as (and be expected to behave as) adult learners. Adult learners have four
main characteristics: 1) they are self-directed; 2) they are experienced learners; 3) they are ready
to learn; and 4) they are self-motivated to learn.

Self-directed means the learner can plan and allocate their time to suit their learning needs. In the
context of this course, that means working steadilydoing a little finance every day and not
procrastinating, reading the textbook before class sessions, completing the weekly homework on
schedule (starting homework early so last minute issues do not interfere), and being prepared to
write exams when they are regularly scheduled. It is critically important that students read the
textbook before class. This course is designed so that information transmission happens outside
of class (through the online textbook) and idea assimilation happens in class through the process
of working on problems. Students must come prepared to work on problems by reading the
online textbook before class.

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Being ready to learn means having the right tools (i.e., a spreadsheet) and a quiet work space.
Being ready also means that a student regularly checks the course announcement page and is
aware of course news and policies.

Self-motivated means that students are genuinely interested in the course content and not solely
motivated by grades. Self-motivated students have a positive attitude about the course and the
instructor. They dont grumble and complain. They read the financial news to find current
examples of the ideas presented in the course.

7 Instructor Responsibilities
We will help you learn by providing the following:
A rich on-line learning environment with explanations of course concepts, video lectures,
downloadable excel templates, interactive activities, and lots of practice problems with detailed
solutions.
A list of clear and reasonable learning tasks and outcomes, with in-class activities appropriate
for achieving these tasks and outcomes;
Assessment tools that treat all students equally, have academic integrity, clearly assess the stated
learning tasks and outcomes, and provide useful and timely feedback so that you can learn from
mistakes and move forward;
Sufficient contact time with the instructor and TAs through email, Ask My Instructor and TA
office hours (see Academic Help section, below).
A well-organized course that provides you with the best possible opportunity to learn finance.

8 How to Learn Finance

Finance is a problem-based discipline. That is, the majority of learning occurs while students
work on problems. This has a number of implications for the way that you should organize your
time.

To get the most out of this course you should approach each week as follows. At the beginning
of the week you should do the assigned readings. To learn more about how to read a finance
textbook, watch this video: https://youtu.be/3V-t7XFkoOE

On your first pass of a chapter your goal is to understand the basic learning objectives and the
big ideas within each objective. Get comfortable with the basic terminology. To motivate you to
do this, there is an introductory (online) homework scheduled for Sunday of every week.

Next, read each of the learning objectives through one at a time. Go through each of the
examples and watch the appropriate videos if you do not understand the written description. Play
with all Explore Its and answer all of the self-test problems. After you are finished reading the
learning objective, you should attempt some homework problems for that learning objective.
(See the Homework section, below.) When you are stuck, look back through the text for help.

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There might be a worked example on a similar problem. A subset of the homework problems are
graded and must be completed (usually by Friday, but check the homework schedule below).

A recent study of student performance in introductory finance found that a students grade
improves with the number of questions attempted and with the number completed correctly.1 So,
try to do as many of the CFO problems as possible. (Do them all if you can.)

The average student should expect to spend six or seven hours outside of class reading, watching
videos and working on problems. Students with weaker quantitative skills may need to spend
more time. Since this is a relatively large amount of time, students should do a little every day.

When working on problems, we strongly recommend that you DO NOT look at the
MyFinanceLab (MFL) solution tools until you have worked through the problem and have your
own answer. Peaking at the learning tools can create the illusion of learning when none has
occurred.

9 Grading Scheme
Students must choose the extent of their involvement with the course and, as a result, which
grading scheme will apply to them. Students who choose to participate in class will have 10% of
their grade based on classroom participation. (The participation mark is described below.)
Students who choose not to participate will not be graded on participation but may still come to
class.

By default all students are in the Participate category and must choose to not to participate by
Sunday September 17th. The choice can be made using the Class Participation homework
under Do Homework in the Assignments menu.
Participate Dont Participate
Participation 10% 0%
Homework 15% 15%
In-Class Quiz 15% 15%
Midterm 25% 30%
Final Exam 35% 40%

10 Participation
Most class sessions will be based around 5-10 problems (total will vary by instructor). The
instructor may provide brief lecture to introduce a topic, elucidate a complicated idea or to explain
a solution technique. The in-class questions will be served through the Pearson Learning Catalytics
web site.

1
Determinants of Performance in a Hybrid Finance Course with Brian F. Smith. 2010.
Advances in Financial Education. Vol. 8, Issues 1&2, pp. 22-34.

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https://learningcatalytics.com/sign_in?login=true

Students will have automatic access to the learning catalytics site with their online textbook
subscription.

Participation Mark
The participation mark is based on answering questions in class through the Learning Catalytics
classroom response system. Each question is worth 1 point. Half of the point is earned by
responding and the other half is earned if the response is correct. There will be at least 100
questions asked along the term. Not all classes involve Learning Catalytics questions (e.g.,
classes 1, 12, and 21). The participation mark will be constructed as follows:

=
100

You do not need to provide an excuse for missed classes or appeal for the reduced denominator.

11 Online Homework
Most weeks there will be online homework on CFO. The graded homework can be found under
Do Homework which is under the Assignments menu on the left-hand navigation bar of the
main MyFinanceLab page. The graded homework assignments are just a subset of the problems
in the Topic and Chapter homework which appear below the graded assignments. Those
homework problems are the equivalent of the end-of-chapter problems that you would see in a
printed textbook. Those same problems are accessible through the e-text at the links on the pages
with stop signs. If you miss a graded homework assignment, then you should work on the
Topic and Chapter homework for that chapter instead.

The homework can be started and stopped as desired and answers will be saved. The homework
can be completed on any computer.

The numeric homework questions are algorithmic. Each students homework assignment has the
same questions but the questions have different numbers. Each time a question is regenerated it
will have different numbers. Numeric questions can be repeated until answered correctly.

Qualitative homework questions can only be answered once.

Homework Mark
Each students homework mark will be constructed as follows:

=
20

Where N = the total number of questions. If there are 250 questions and you answer 150
correctly, then your homework mark is 150/(250-20) = 65.2%. The 20 subtracted questions (in
the denominator) are gimmee marks. You can miss up to twenty questions without penalty.

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With so many homework deadlines, there are many events that might cause you to miss a deadline.
For example, your home internet connection might fail, your computer might break, you might
sustain a sports injury, you might have a health problem or you might have a family emergency.
Regardless of the reason, no extensions will be given to students who cannot complete a homework
on time. The 20 gimmee marks (described above) are provided to mitigate the loss associated
with one of these events. No additional gimmee marks will be provided. To reduce the risk that a
problem interferes with completing online homework, you should start your homework well before
the deadlines.

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12 Online Homework Schedule
PREPARATORY HOMEWORK SUMMATIVE HOMEWORK
START DUE TITLE DUE TITLE
SEP 07 Sep 15 Course Introduction
Sep 07 Sep 13 Intro: 11
Sep 07 Sep 15 WACC
Sep 07 Sep 17 Intro: Ch. 9, 10.1, 10.2
Sep 09 Sep 22 CB Techniques
Sep 09 Sep 24 Intro: Ch. 10.3
Sep 16 Sep 29 Expansion & Replacement
Projects
Sep 16 Oct 1 Intro: Ch. 10.4
Sep 16 Oct 6 CB Refinements, Project with
unequal lives
Sep 30 Oct 15 Intro: Ch. 14.1, 14.3 & 17.1
Oct 07 Oct 20 Sales & F/S Forecasting
Oct 14 Oct 22 Intro: Ch. 17.2, 17.3 & 17.4
Oct 14 Oct 27 Free Cash Flow & DCF
Oct 21 Oct 29 Intro: Ch. 13.1, 13.2 & 13.3
Oct 21 Nov 03 Dividends & Repurchases
Oct 28 Nov 5 Intro: Ch. 13.4
Oct 28 Nov 10 Splits
Nov 04 Nov 13 Intro: Ch. 12.1 & 12.2 &12.3
Nov 04 Nov 17 Capital Structure I
Nov 12 Nov 19 Intro: Ch. 18.1, 18.2 & 18.3
Nov 12 Nov 24 Capital Structure II
Nov 18 Nov 26 Intro: Ch. 20
Nov 18 Dec 1 M&A
IN CASE OF DISCREPANCIES, THE DATES AND TIMES ON CFO ARE OFFICIAL.

You can view start and end dates for upcoming homework on the calendar on the
course home page.

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13 MyFinanceLab Format Sensitivities
The fill-in-the-blank questions on MyFinanceLab are VERY sensitive as to the format and
accuracy of your answers. Please read the instructions for each question, because they tell you how
to format your answer. Please be careful with rounding. If your answer is wrong due to the fact
that it is not formatted as the question requests, then you will not get a mark for that answer. Do
not include any symbols in your answers (i.e., $ or %). If you include a symbol you will not get a
mark.

14 Quiz and Exams

Duration
Name Location Date Time (mins)
Midterm Exam Nov 12 TBA 120
Quiz In-class through MFL Oct 4-6 In Class 80
Final Exam TBA TBA 150

Students, who miss the midterm and/or the in class quiz and have a valid medical note, will have
the weight of their exam(s) moved to a cumulative final exam. The only other valid excuse for an
absence is a death in the immediate family (i.e., parents, spouses, siblings and children). There is
no deferred midterm exam.

The quiz, midterm and final exam will all be conducted with/on laptops so students can use
Excel. The exams will be open book. Students may review the online text or visit any website.
Students may not communicate with anyone with any software (i.e., Facebook or Google Chat.)

While the exams are open book, you should not rely on being able to look-up facts or techniques.
The exams will have more questions than can reasonably be answered in the time allotted. Thus,
the more you look up the fewer questions you can complete. Students who are better prepared
and do less referencing will answer more questions and score higher. This is intentional.

This design is intended to encourage deeper studying/learning and to discourage students from
cheating. The downside is that it will yield a low average score. The quiz and exam scores will
all be adjusted to a common mean such that the overall course mean is a B. Thus, you should not
focus on your absolute exam score, but rather on your position in the distribution. Students who
score the average on the quiz, midterm and final exams will earn a grade of B or better.

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15 Announcements and Downloads
Major and minor course announcements will be posted on the CFO/MFL Course Home page
under the Announcements heading. It is your responsibility to check the announcements every
few days.

Supplementary readings, old exams, formula sheets, the course outline and exam information can
be downloaded from the Document Sharing area on the CFO/MFL web site.

16 Academic Help
If you are stuck on a problem (or idea), then you can get assistance in a number of ways.

Ask My Instructor
The best way to pose a question is to use the Ask my Instructor button in MFL. Every
homework question in MFL has an Ask My Instructor button. Click on that and the Pearson
system will send an email to the TAs with your question and a link to the problem you are stuck
on.

The TAs will attempt to answer your question within one day. If you arent satisfied with the
answer, then forward the email correspondence to your instructor. If a TA doesnt feel
comfortable answering a question, then he/she may escalate the question to an instructor.

Email
If you cant use the Ask My Instructor button, then you can send an email directly to the TAs
by using the gmail account: BU393fm2@gmail.com.

TA Office Hours
Drop-in TA support will be offered occasionally. The schedule will available in the TA Folder
under Document Sharing on the MFL/CFO web site.

How to Ask a Question

A question needs three parts and wont be answered unless you include all three. First, the
original text of the question you are working on. (This is especially important if you are asking
via email and not using the Ask my Instructor button.) Second, your description of what you
dont understand (or think is incorrect). Finally, your work. In order to understand an explanation
you need to have attempted an answer yourself. Dont just ask to have the answer explained. If
you ask that, then you will be referred back to the textbook. Your work must show the equations
that you are using to solve the problem, a description of your solution approach (if necessary)
and the values that you are plugging into the equation(s).

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17 MFL/CFO Technical Support
CFO technical support is available at: http://247pearsoned.custhelp.com. There you can submit a
support request or chat online. You may have to create a support account in order to ask a
question. To create an account click on the 'Sign In' link in the upper right-hand corner.
Telephone support is also available at 1-800-677-6337.

18 Calculators and Computers

Students must have access to a spreadsheet program on a laptop computer. Spreadsheets are the
tool of choice for finance and accounting professionals. Laptops will be allowed for the exams so
that students can use spreadsheets on the exams.

Students should consider purchasing an external monitor for their laptop. CFO is much easier to
use with two monitors. With two monitors, the e-text, MyFinanceLab and a spreadsheet can be
open and visible simultaneously.

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19 Schedule and Readings
Week Topic Learning Objective Readings
0 S7-8 Outline For classes that start on R or F
1 S 11-15 Introduction Intro, Cost of Debt and Equity (Review) Ch. 1, Ch.6 &7
2 S 11-15 COC Weighted Average Cost of Capital Ch. 11
3 S 18-22 CB CB Techniques Ch.9
4 S 18-22 CB Depreciation & Expansion Projects Ch. 10.1 & 10.2
5 S 25-29 CB Depreciation & Expansion Projects Ch.10.1
Ch.10.2
6 S 25-29 CB Replacement Projects Ch. 10.3
7 O 2 6 CB CB Refinements Ch. 10.4
Projects with Unequal Lives
8 O26 CB In-Class Quiz: Capital Budgeting
O 9 13 Reading Week
9 O 16 20 Valuation Sales Forecasting and Ch. 14.1
Basic F/S Forecasting
10 O 16 20 Valuation Adv. F/S Forecasting Ch. 14.3
Ch. 17.1
11 O 23 27 Valuation Free Cash Flow Ch. 17.2
12 O 23 27 Valuation DCF Valuation Ch. 17.3
In-Class Activity: Value Whistler Ch. 17.4
Blackcomb Holdings Inc.
13 O 30 N 3 Distributions Dividends Ch. 13.1
Ch. 13.2
14 O 30 N 3 Distributions Dividends & Ch. 13.3
Repurchases
15 N 6 10 Distributions Repurchases & Ch. 13.3
Splits Ch. 13.4
16 N 6 10 Midterm Review
November 12 Midterm Exam
17 N 13 17 Capital Measures of Leverage Ch. 12.1
Structure Effect of Leverage Ch. 12.2
M&M Mechanics
18 N 13 17 Capital M&M (no tax), M&M Arbitrage Proof & Ch. 12.3
Structure M&M (with tax)
19 N 20 24 Capital M&M with a fixed D/V Ch. 18.1
Structure Leverage and Systematic Risk Ch. 18.2
20 N 20 24 Capital Static Trade-off Model Ch. 18.3
Structure Asset Substitution
Debt Overhang
21 N 27 D 1 M&A M&A Lecture/Video: The Anatomy of a Ch. 20
Hostile Takeover
22 N 27 D 1 M&A M&A : Valuation, Pricing & NPV Ch. 20
23 D4D5 Review Review Sessions for Final
24* D6 ------- Class cancelled

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20 Pearson Registration Instructions

To register for BU 393 Fall 2017:

1. Go to www.pearsonmylabandmastering.com.
2. Under Register, select Student.
3. Confirm you have the information needed, then select OK! Register now.
4. Enter your instructors course ID: freire99654, and Continue.
5. Enter your existing Pearson account username and password to Sign In.
You have an account if you have used a Pearson product, for example:
MyMathLab, MyITLab,
MyPsychLab, MySpanishLab or Mastering, such as MasteringBiology.
If you dont have an account, select Create and complete the required fields.

6. Select an access option.

Use the access code that came with your textbook or that you purchased
separately from the bookstore.
Buy access using a credit card or PayPal account.
If available, get 14 days temporary access. (The link is near the bottom of the
screen.)
7. From the confirmation page, select Go To My Courses.
8. On the My Courses page, select the course titled BU 393 Fall 2017 to start your work.

To sign in later:
1. Go to www.pearsonmylabandmastering.com.
2. Select Sign In.
3. Enter your Pearson account username and password, and Sign In.
4. Select the course tile BU 393 Fall 2017 to start your work.

To upgrade temporary access to full access:

5. Go to www.pearsonmylabandmastering.com.
6. Select Sign In.
7. Enter your Pearson account username and password, and Sign In.
8. Select Upgrade access from the course titled BU 393 Fall 2017.
9. Enter an access code or purchase access with a credit card or PayPal account.

For a registration overview, go to www.pearsonmylabandmastering.com/students/get-

registered. Scroll down to Need a little help? and select a video.

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21 University and Course Policies
1. Academic Integrity/Misconduct (cheating): Laurier is committed to a culture of integrity within
and beyond the classroom. This culture values trustworthiness (i.e., honesty, integrity, reliability),
fairness, caring, respect, responsibility and citizenship. Together, we have a shared responsibility
to uphold this culture in our academic and nonacademic behaviour. The University has a defined
policy with respect to academic misconduct. As a Laurier student you are responsible for
familiarizing yourself with this policy and the accompanying penalty guidelines, some of which
may appear on your transcript if there is a finding of misconduct. The relevant policy can be
found at Laurier's academic integrity website along with resources to educate and support you in
upholding a culture of integrity. Ignorance is not a defense. See: www.wlu.ca/academicintegrity

2. Special Needs: Students with disabilities or special needs are advised to contact Lauriers
Accessible Learning Centre for information regarding its services and resources. Students are
encouraged to review the Academic Calendar. See: www.wlu.ca/page.php?grp_id=1365&p=5123
for information regarding all services available on campus.

3. Final Examinations Students are strongly urged not to make any commitments (i.e., vacation)
during the examination period. Students are required to be available for examinations during the
examination periods of all terms in which they register (See Academic Regulations
Examinations in the academic calendars)

4. Intellectual Property: The educational materials developed for this course, including, but not
limited to, lecture notes and slides, handout materials, examinations and assignments, and any
materials posted to MyLearningSpace, are the intellectual property of the course instructor.
These materials have been developed for student use only and they are not intended for wider
dissemination and/or communication outside of a given course. Posting or providing
unauthorized audio, video, or textual material of lecture content to third-party websites violates
an instructors intellectual property rights, and the Canadian Copyright Act. Recording lectures in
any way is prohibited in this course unless specific permission has been granted by the instructor.
Failure to follow these instructions may be in contravention of the universitys Code of Student
Conduct and/or Code of Academic Conduct, and will result in appropriate penalties. Participation
in this course constitutes an agreement by all parties to abide by the relevant University Policies,
and to respect the intellectual property of others during and after their association with Wilfrid
Laurier University.

Student Food Bank | www.wlusu.com/food-bank/

All students are eligible to use this service to ensure theyre eating healthy when overwhelmed,
stressed or financially strained. Anonymously request a package online 24-7. All dietary
restrictions accommodated.
Foot Patrol | 519.886.FOOT (3668)
A volunteer operated safe-walk program, available Fall and Winter, daily from 6:30pm to 3am.
Teams of two are assigned to escort students to and from campus by foot or by van.
http://www.wlusu.com/foot-patrol/
Peer Connect | 1.866.281.PEER (7337)

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A confidential listening, referral, and information line available during evening hours to provide
support and resources. Sunday to Thursday, 12pm 2am | Friday to Saturday 12pm 3am
http://www.wlusu.com/peer-help-line/
The Wellness Centre | 519-884-0710, x3146
The Wellness Centre supports students physical, emotional and mental health needs. Located
on the 2nd floor of the Student Services building, booked and same-day appointments are
available Monday to Wednesday 8:30 am 7:30 pm, Thursday to Friday 8:30 am-4:15 pm.
Contact: x3146, wellness@wlu.ca or @LaurierWellness. After hours crisis support available 24/7
- Good 2 Talk
1-866-925-5454.

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