Course Outline - Centennial College · 2015-04-29 · Course Outline Chairperson/Dean Students are expected to review and understand all areas of the course outline. ... 6 Risk and

Course Outline

Chairperson/Dean

Students are expected to review and understand all areas of the course outline.

Retain this course outline for future transfer credit applications. A fee may be charged for

additional copies.

This course outline is available in alternative formats upon request.

School: Business

Department: Accounting

Course Title: Corporate Finance 2

Course Code: ACCT 334

Course Hours/Credits: 56

Prerequisites: ACCT 224

Co-requisites: N/A

Eligible for Prior Learning,Assessment and Recognition:

Yes

Originated by: Basil Chen

Revised by: Basil Chen, Ann Overton

Revision Date: Winter 2015

Current Semester: Summer 2015

Approved by:

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Course DescriptionThis course follows ACCT224 Corporate Finance 1. The student studies advanced topics in the financial

management of profit-seeking organizations. A major objective is the development of analytical/decision-

making and information presentation skills through the use of theory questions and practical problems.

Many of the problems/assignments will require the application of an electronic spreadsheet program such

as Excel.

Program OutcomesSuccessful completion of this and other courses in the program culminates in the achievement of the

Vocational Learning Outcomes (program outcomes) set by the Ministry of Training, Colleges and

Universities in the Program Standard. The VLOs express the learning a student must reliably demonstrate

before graduation. To ensure a meaningful learning experience and to better understand how this course

and program prepare graduates for success, students are encouraged to review the Program Standard by

visiting http://www.tcu.gov.on.ca/pepg/audiences/colleges/progstan/. For apprenticeship-based programs,

visit http://www.collegeoftrades.ca/training-standards.

Course Learning OutcomesThe student will reliably demonstrate the ability to:

Evaluated the entity's cost of capital.Calculate an organization’s weighted average cost of capital

and use this information to rank investment opportunities.

Apply capital budgeting methods such as Net Present Value (NPV), cost-benefit analysis, payback

period and internal rate of return (IRR) and evaluate investments.

Evaluate capital investments at various levels of risk.

Apply risk management analysis to generate information for decision.

Define primary, secondary, money, and capital markets.

Evaluate decisions affecting long-term debt and outline the distribution process, the allocation of

securities amongst syndicate participants, and the calculation of the spread as cost or a return.

Analyze a lease versus buy decision and recommend the most financially advantageous course of

action.

Calculate the value of rights, shares, and shareholders wealth during right-offering process.

Determine whether internally generated funds should be reinvested or paid out as dividend.

Evaluate International considerations and foreign exchange risks.

Essential Employability Skills (EES)

Global Citizenship and Equity (GC&E) Outcomes

The student will reliably demonstrate the ability to*:4. Apply a systematic approach to solve problems.5. Use a variety of thinking skills to anticipate and solve problems.7. Analyze, evaluate, and apply relevant information from a variety of sources.

*There are 11 Essential Employability Skills outcomes as per the Ministry Program Standard. Of these 11 outcomes, the following will beassessed in this course.

ACCT 334 CENTENNIAL COLLEGE Corporate Finance 2

THIS COURSE ADHERES TO ALL COLLEGE POLICIES (See College Calendar) 2

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Text and other Instructional/Learning MaterialsText Book(s):

Foundations of Financial Management Ninth Canadian Edition, Block, Hirt, Danielsen, Short, Peretta.

Publisher: McGraw-Hill Ryerson

Foundations of Financial Management with Connect Access Card ISBN 9780071320566

Connect + eBook Stand Alone ISBN 9780071062626

Online Resource(s):

e.centennialcollege.ca

Material(s) required for completing this course:

Financial calculator (BA II Plus; HP 10)

Evaluation SchemeConnect Assignment #1: Online assignment using publisher support (Connect)

Chapter 11

Connect Assignment #2: Online assignment using publisher support (Connect)

Chapter 12

Test #1: Chapter 11,12


Chapter 13,5

Test #2: Chapter 13,5


Chapter 14,15,16


Chapter 17

Final Exam: Comprehensive Exam

If students are unable to write a test they should immediately contact their professor or program Chair for

advice. In exceptional and well documented circumstances (e.g. unforeseen family problems, serious

illness, or death of a close family member), students may be able to write a make-up test.

All submitted work may be reviewed for authenticity and originality utilizing Turnitin®. Students who do not

N/A

Evaluation Name CLO(s) EESOutcome(s)

GCEOutcome(s)

Weight/100

Connect Assignment #1 1 4, 5 3Connect Assignment #2 2 7 3Test #1 1, 2 4, 7 20Connect Assignment #3 3, 4 4 3Test #2 3, 4 4, 5 20Connect Assignment #4 5, 6 4 3Connect Assignment #5 7, 8, 9 4 3Final Exam 2, 4, 5, 6, 7,

8, 9, 104, 5 45

Total 100%



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wish to have their work submitted to Turnitin® must, by the end of the second week of class,

communicate this in writing to the instructor and make mutually agreeable alternate arrangements.

When writing tests, students must be able to produce official College photo identification or they may be

refused the right to take the test or test results will be void.

Student AccommodationIt is College Policy to provide accommodation based on grounds defined in the Ontario Human Rights

Code. Accommodation may include modifications to standard practices. Students with disabilities who

require academic accommodations must register with the Centre for Students with Disabilities. Students

requiring accommodation based on other human rights grounds should talk with their professors as early

as possible. Please see the Student Accommodation Policy.

Use of DictionariesAny dictionary (hard copy or electronic) may be used in regular class work.

Dictionaries may be used in tests and examinations, or in portions of tests and examinations, as long

as they are non-electronic (not capable of storing information) and hard copy (reviewed by the

invigilator to ensure notes are not incorporated that would affect test or examination integrity).

Program or School PoliciesN/A

Course PoliciesNA

College PoliciesStudents should familiarize themselves with all College Policies that cover academic matters and student

conduct.

All students and employees have the right to study and work in an environment that is free from

discrimination and harassment and promotes respect and equity. Centennial policies ensure all incidents

of harassment, discrimination, bullying and violence will be addressed and responded to accordingly.

Academic honesty is integral to the learning process and a necessary ingredient of academic integrity.

Academic dishonesty includes cheating, plagiarism, and impersonation. All of these occur when the work

of others is presented by a student as their own and/or without citing sources of information. Breaches of

academic honesty may result in a failing grade on the assignment/course, suspension or expulsion from

the college.

For more information on these and other policies, please visit www.centennialcollege.ca/about-

centennial/college-overview/college-policies.

Students enrolled in a joint or collaborative program are subject to the partner institution's academic



policies.

PLAR ProcessThis course is eligible for Prior Learning Assessment and Recognition (PLAR). PLAR is a process by

which course credit may be granted for past learning acquired through work or other life experiences. The

PLAR process involves completing an assessment (portfolio, test, assignment, etc.) that reliably

demonstrates achievement of the course learning outcomes. Contact the academic school to obtain

information on the PLAR process and the required assessment.

This course outline and its associated weekly topical(s) may not be reproduced, in whole or in

part, without the prior permission of Centennial College.



Topical Outline (subject to change):Week Topics Readings/Materials Weekly Learning Outcome(s) Instructional Strategies Evaluation

NameEvaluation

Date1-2 Time Value of Money

Cost of Capital

ReviewTime Value of MoneyChapter 9

Cost of CapitalChapter 11

Chapter 9

Review the time value of money:1.Compute future value of single sum.2.Compute present value of single sum.3.Compute future value of an annuity.4.Compute present value of an annuity.

Chapter 111.Emphasize that the investor’s required rateof return translates into the cost of financingfor the firm.2.Explain that the cost of capital representsthe overall cost of financing to the firm.3.Define cost of capital as the discount ratenormally used to evaluate an investment.4.Calculate the weighted average cost ofcapital (WACC) and Capital asset pricingmodel (CAPM):a)Cost of debt (bonds)b)Cost of preferred sharesc)Cost of common equity5.Describe how a firm attempts to minimize itscost of capital by varying the mix of itssources of financing.6.Explain marginal cost of capital.7. Explain Tax Effects on Capital Budgeting

Lecture & discussion

Chapter 9Problems:1,2,3,11,13,38,

Chapter 11Problems:1,3,5,6,7,10,11,12,13,14,15,16,17,18,27

3-5 The Capital BudgetingDecision

Chapter 12 1.Define capital budgeting decisions as along-term investment decisions

2.Explain and emphasize that cash flowsrather than accounting earnings are evaluatedin capital budgeting decision

3.Discuss the use of the cost of capital asdiscount rate in capital budgeting analysis

4.Evaluate investments by:a.Average accounting returnb.Payback periodc.Internal rate of return (IRR)using discounted


Problems:1,2,3,7,8,11,15,20,21,26,40

ConnectAssignment#1 (Chapter11)Due Week3A

ConnectAssignment#2 (Chapter12)Due Week5A

Test #1 Week5B



Week Topics Readings/Materials Weekly Learning Outcome(s) Instructional Strategies EvaluationName

EvaluationDate

cash flow modelsd.Net present value (NPV) using discountedcash flow modelse.Profitability indexPerform NPV analysis to assist in thedecision-making concern of long-runinvestments.

5. Perform NPV analysis to assist in thedecision-making concern of long-runinvestments.

6. Examine asset based approaches tovaluation, including adjusted book value,liquidation value, and replacement cost

7. Discuss effects of tax (CCA) and non-cashitems (depreciation) on capital budget andcash flow analysis

6 Risk and CapitalBudgeting

Chapter 13 1.Describe the concept of risk based on theuncertainty of future cash flows.2.Define risk as standard deviation, coefficientof variation or beta.3.Describe the concept of risk aversion.4.Utilize the basic methodology of riskadjusted discount rates for dealing with risk incapital budgeting analysis.5.Describe and apply the technique ofcertainty equivalents, simulation models,sensitivity analysis, and decision trees to helpassess risk.6.Describe how a project’s risk may beconsidered in a portfolio context.7.Apply decision trees for project financing.


Problems:1,2,3,8,10,12,17,18,19,23

7-8 Operating andFinancial Leverage

Chapter 5 1.Define and calculate:a.operating leverageb.financial leveragec.combined leverage2.Assess the opportunities/limitations of eachtype of leverage.


Problems:1,2,8,11,12,18,

Excel: Set up astandardized worksheetthat will solve problems8,11.

ConnectAssignment#3 (Chapter13,5) DueWeek 8B

Test #2 Week8B




EvaluationDate

9-10 Capital Markets

InvestmentUnderwriting

Chapter 14

Chapter 15

1.Define primary, secondary, money andcapital markets.2.Describe the competition of funds in thecapital markets.3.Outline the organization of the securitiesmarkets.4.Explain the concept of market efficiency andits benefits to the economic systems.Including capital market efficiency (EfficientMarket Hypotheses)5.Describe the role of investment dealers howthey act as intermediaries between lendersand borrowers.6.Evaluate the pros and cons of going publicversus private when raising funds.7.Explain a leveraged buyout.8. Examine other factors in marking pricing.9.Examine Venture Capital, Initial PublicOffering, Bank Loans and GovernmentAssistance, Securitization and Internallygenerated funds


Chapter 14Questions: 1-15

Chapter 15Problems: 5,6,16

11 Long Term Debt andLease Financing

Chapter 16Chapter 16 A

Chapter 16

1.Explain and describe the key features oflong term debt instruments2.Discuss and examine bond yields, pricesand ratings.3.Investigate other forms of financing such asthe Eurobond market4.Examine the advantages anddisadvantages of debt.5.Apply the concept of time value of moneyand capital budgeting to analyze a lease-versus-purchase decision.

Chapter 16 A

1. Discuss Financial Alternatives forDistressed Firms ( technical insolvency orbankruptcy)


Problems: 2,4,6,8,24,26,27,30

ConnectAssignment#4 (Chapter14,15,16) DueWeek 12A

12 Common andPreferred Stock

Chapter 17 1.Outline and describe the rights of commonshareholders.





EvaluationDate

Financing 2.Examine preferred shares from theperspective of a hybrid security and outlineprovisions associated with preferred stocks.3.Explain income trusts.4.Describe the features of various securitiesin the risk-return framework.

Problems: 1,2,3,4,5,6,7,

13 Dividend Policy andRetained Earnings

Chapter 18 1.Examine existing dividend theories:a)The marginal principles of retained earningsb)The residual theory2.Discuss other factors influencing dividendpolicy.3.Describe dividend payment procedures.4.Assess the impact of stock splits and stockdividend on the position of shareholders.5.Explain a dividend reinvestment plan.6. Explain alternatives to cash dividends


Problems: 1-10, 20

ConnectAssignment#5 (Chapter17) Due Week13B

13-14 External Growththrough MergersInternational FinancialManagement

Chapter 20Chapter 21

Chapter 201.Evaluate the forms of expansion anddivestitures2.Discuss the valuation of intangible assets3.Discuss the fair market value concept4.Describe the Portfolio EffectChapter 211.Evaluate International considerations2.Evaluate Foreign Exchange transactionsand their risks.

Discuss the approaches to valuation (assetbased, transaction based and market based)

Lecture & DiscussionReview

Instructor-led high leveloverview of approachesto valuation:Asset based (adjustedbook value, liquidationvalue, replacementcost)Transaction based(capitalization ofearnings and cashflows)Valuation using pricemultiples

Final Exam(Comprehensive)



Documents

Course Outline - Centennial College · 2015-04-29 · Course Outline Chairperson/Dean Students are expected to review and understand all areas of the course outline. ... 6 Risk and