School of Business & Economics

Department of Accounting & Finance

BASIC INFORMATION
Course Name: Corporate Finance
Course Code
EMB660 Section 1
& Section No:
Semester: Spring 2018

INSTRUCTOR & DEPARTMENT INFORMATION

1. Instructor Name: Sharif N. Ahkam
2. Office Room: NAC 737

3. Office Hours: Saturday Monday 4:00 – 7:00

And by appointment
4. Office Phone: PABX 55668200 Ext: 1743; Cell # 01943223533

5. Email Address: sharif.ahkam@northsouth.edu

6. Department: Accounting & Finance

7. Links: North South University Website: http://www.northsouth.edu

School of Business Website: http://www.northsouth.edu/academic/sob/

COURSE INFORMATION
Class Time & Saturday 7:00 – 10:30 NAC 992
Location

Course Accounting and Finance

Prerequisite(s)
Course Credit 3.0
Hours
Course The course coverage of this course is fairly broad and somewhat light in
Description
comparison with the regular FIN 639 course. It is fast paced, expects you to
understand basic mathematical reasoning as it applies to finance and accounting.

First, we must build a solid understanding of time value of money and risk and
return. There will be in-depth discussions starts with cost of capital. Then, we
extend the coverage of capital budgeting, cash flow analysis and a quick analysis
of and risk in capital budgeting. We get into some details of capital structure
decisions, financing requirement, and financing of short-term and long-term
financing. After that, we cover working capital management. Next, we spend
some time on cash budgeting and financial forecasting. Forecasting additional
funds need is part of this section.
Student Learning Upon the successful completion of this course, a student will be able to:
Outcomes (1) Demonstrate proficiency in valuation techniques. Apply future value and present
value concepts to single sums, mixed streams, annuities, and perpetuities. Describe what
determines the value of a firm’s securities and how management can influence these
values.
(2) Apply the general concept of risk and return recognize the use of betas, the CAPM and
 SML. Apply techniques for estimating the cost of each component of the cost of capital
and understand how to assemble this information into a cost of capital.
(3) Use Financial Statements to obtain Free Cash Flows for the firm and equity holders.
Identify relevant cash flows, discuss various methods for evaluating capital budgeting
projects, how to apply them, and what to do if there are conflicting recommendations.
(4) Understand the critical issues in leverage decisions. Apply measures of cost of capital
and financial leverage to form long-term financial policies for business.
(5) Apply techniques to project financial statements for forecasting long-term financial
needs, develop budgets, and understand the issues related to working capital management.

More specific outline is given in Intended Learning Outcome Pages for each lecture
posted on the NSU Resources. It is important that you have a copy of the right page
for each class.

REQUIRED TEXT BOOKS

Author Title Edition & Year Publisher ISBN
Primary Textbook: An Introduction to
Sharif Nurul Ahkam Corporate Finance
First Edition - 2013 Merlin Books 978-984-90118-0-4
Stephen A. Ross, 978-0-07-017158-9/
Fundamentals of 9th Ed. - 2010
Randolph Westerfield McGraw Hill
Corporate Finance (or 8th Ed. - 2008) (978-0-07-066702-0)
Bradford D. Jordan

REQUIRED CALCULATOR
Texas Instrument BAII Plus. Instructions on NSU Resources. You need to practice many problems to
acquire a comfortable level of skill in using the calculator. There is a handout on NSU Resources on
how to use the calculator. Make a copy and practice the examples.

TEACHING STRATEGY
Technology: One of the following calculators is strongly recommended: Texas Instrument BAII Plus or
Sharp EL 735. You will be at a disadvantage if you don’t carry one. These calculators are also very
useful for statistics and accounting functions. Students are also strongly recommended to learn the
corresponding Excel or Lotus functions. Bring your Laptop or Tab to class. (Not to Exam)
Text Book: I will use my own Text Book titled, “Introduction to Corporate Finance, with Applications
for Bangladesh” published by Merlin Books. Please bring the book to every class meeting. Make sure
that you note the corrections.
Instruction Methods: I will rely on PowerPoint slides, handouts, assignments. Lecture, cases,
examples and problem solutions are heavily utilized in the class. In some of class meetings, the class
will be broken up in groups and the group will work together to solve some assigned problems. Your
participation in the group will be counted toward total grade for the course.

MAKEUP POLICY
Quizzes and assignments cannot be made up. Mid-term exams can be made up with a proper documented
reason. The make-up exam must be taken within one week of the mid-term.
ASSESSMENT STRATEGY AND GRADING SCHEME

Grading tool Points

Assignments 15%
Quizzes/Short Exam 20%
Class Participation/Professionalism 5%
MID 1 20%
MID 2 20%
FINAL 20%

Course Outline:

Week 1: (January 27) Introduction: The finance function, goals of financial

management, forms of business organization, agency problems. Financial
Statement Analysis.

Week 2: (February 3) Time value of money (Chapter 3) and Stock and Bond
Valuation (Chapter 5).

Week 3: (February 10) Risk and Return. (Chapter 4)

Week 4: (February 17) Cost of Capital (Chapter 6). Cost of components of long-term
capital. Weighted average cost of capital (WACC), target or optimal capital
structure and capital structure weights. Relevance (irrelevance) of optimal
capital structure decisions. Capital structure in Bangladesh and component
costs.

Week 5: (February 24) Capital Budgeting (Chapter 7): Capital budgeting decision
criteria, payback period, internal rate of return (IRR), modified internal rate
of return (MIRR), Net present value (NPV), NPV profile. Mid-Term 1

Week 6: (March 3) Capital Budgeting Continued. Unequal project lives. Basic risk
analysis in capital budgeting decisions.

Week 7: (March 10) Estimating Project Cash Flows (Chapter 8): Separation of
investment and financing flows. Incremental cash flows. Estimating initial
investment, periodic operating cash flows, and terminal year non-operating
cash flows. Comprehensive capital budgeting problems.

Week 8: (March 24) Capital Structure Decisions (Chapter 9): Operating leverage and
financial leverage. Optimal capital structure and the issue of relevance of a
capital structure decisions. Capital Structure in Bangladesh. Operating
leverage and financial leverage. The concept of EBIT-EPS trade-off. Lease
versus buy.

Week 9: (March 31) Week 9: Working Capital Management (Chapter 10) : Cash
flow cycle, Cash management (Baumol’s model, Miller-Orr model),
inventory management (EOQ models, safety stock), receivables management.
Maturity Matching. Mid-term 2
 Week 10: (April 7) Financial Forecasting and Budgeting (Chapter 11). Cash budgets.
Ratios and pro-forma statements. Forecasting additional funds need.
Sources of Finance. Debt ratio test, TIE test, current ratio test. (Excel
spreadsheet needed).

Week 11: (April 21) Week 12: Dividend policy and Financial Forecasting and
Budgeting Continued (Chapter 12-14). Long-term Financing, Short-term
Financing

Final exam will be offered according to the schedule offered by the school. Final Exam is
comprehensive.

Exam Policies: Mid-terms are one and half-hour long and are given at the end of the scheduled
class. Exam will generally cover material since the last exam. All exams are closed book. You
will be allowed to bring in one page of notes (both sided). You should have the suggested
calculator. Consultation with your friends is strictly prohibited during the test. Final Exam is two
hours long. You will be allowed two pages of notes. Use of cell phones or laptops not allowed
during the exams.

All tests will be mostly problem solving. You must prepare well for the exams and you should take
time to prepare your one (two) page notes, and should have your calculator ready. Don’t count on
copying someone else’s answer. In exam questions, your answer must be supported with a sentence
and interpretations. If you forget to write your name on the test, your test will not be graded.

Class Conduct Policy: Please turn off your cell phones. You are expected to participate
extensively in class discussions. Shyness is not an excuse. Ask questions if you are not certain
about something. All class discussions, exams are in English.