SYLLABUS

CORPORATE FINANCE (BUSI 408)

Time: MTWRF 9:45am – 11:15 am (06/21/07 – 07/24/07)                                                    Classroom: McColl 3250

Instructor: Yihui Wang                                                                                                     Email: Yihui_Wang@unc.edu

Office: McColl 5105                                                                                        

Office Hours: Tue & Thu 11:30am – 12:30pm, or by appointment

Course description: In this course we will learn basic techniques of financial analysis. We will introduce the time value of money, and then discuss how to apply the concept in valuation of stocks and bonds. We will then look at capital budgeting decisions concentrating on the Net Present Value (NPV) Rule. Up to here we focus mainly on cash flows. From this point, however, we will begin to focus on discount rate or risk-adjusted rate of return.  We begin by introducing Efficient Market Hypothesis (EMH) and then analyze the inevitable trade-off between risk and return by developing and using the Capital Asset Pricing Model (CAPM). We then discuss firm valuation based on cash flows and cost of capital. Finally, we will finish the course with a look at capital structure theory. If time permits we will also take a brief look at options and its application in corporate finance. A tentative course schedule is listed below. The exact schedule of topics is subject to change, but you will be notified in advance of any changes.

Course objectives: This course is designed to teach the fundamental analytical tools of valuation and capital budgeting in finance. The major objective is to develop skills in financial analysis, valuation, and decision-making.

Textbook: “Fundamentals of Corporate Finance”, S.A. Ross, R.W. Westerfield, and B.D. Jordan, Seventh Alternate Edition, Irwin/McGraw-Hill.

Homework: There will be four homework assignments, two before the midterm and two after. Assignments will be distributed in class and you can also have access to them through Blackboard (http://blackboard.unc.edu). You are reminded to submit your homework at the beginning of the class on the due date.  If an assignment is turned in late, it will not be accepted and you will not receive a credit for your work. Solutions to assignments and end-of-chapter problems in the textbook will also be provided on Blackboard. E-mails will be sent to class about updates on Blackboard.

Exams: There will be an in-class midterm exam and a final exam. The midterm exam will cover chapter 2, 3, 5, 6, 7 and 8, and the final will be comprehensive. A review session will be given before each exam to solve some sample questions.

Grading: Your grade will be based on class participation (5%), four homework assignments (20%), midterm exam (30%) and final exam (45%).

Honor code: You are reminded that the Honor Code is in effect for all academic work at this university. You are expected to do your work in a manner consistent with the guidelines of the Honor System.

Tentative course outline: