IMT, Ghaziabad

PGP-1, 2010-11, Term III Section A & G

Corporate Finance II
Course Outline Instructor: Sudhir S. Jaiswall Cell Phone: 94 7767 2156. Email id: sudhir@jaiswall.com, sj.imtg@gmail.com Corporate Finance II deals with many interesting areas of corporate finance, such as valuation, capital structure and dividend decisions, working capital management, risk management and derivatives. It will build upon and reinforce your learning in Corporate Finance I. The pedagogy is participant based group driven learning. Group work is integral part of the learning process in this course. You are expected to read and understand the chapter, work out the problems assigned, and review the chapter power point slides before the session begins. The instructor will act as a facilitator in the learning process. In the class sessions, we will review selected key concepts and work out problems together and wrap up a module with a case analysis. Evaluation: Group Project: 30% Group Case Assignments: 10% x 2 = 20% Surprise Quizzes: 20% Final Exam: 30%

Prescribed Text: Corporate Finance: Ross, Westerfield, Jaffe and Kakani. Tata McGraw-Hill (8th Edition). Other References: 1. Brealey, R. Myers, S. Allen F, Mohanty P. Principles of Corporate Finance, 2007 (8th Edition), Tata McGraw Hill. 2. Brigham E., Houston J. Fundamentals of Financial Management, Cengage Learning. 3. Damodaran, A. Corporate Finance Theory & Practice, John Wiley &Sons. 4. Gitman, L. Principles of Managerial Finance, 11th Edition, Pearson

Preparation for class You are expected to prepare well for the class. I suggest the following approach (you can always follow another better approach) 1. Read the chapter and understand the material. 2. Review the ppt file for the chapter. (I will email this to the class one week in advance). 3. Read the problems assigned for the class from the chapter and work them out. 4. Try other similar problems. I have found that it works well when you study together and work out the problems in your group. When you have difficulty with some material, you can talk about it among your peers. You would be amazed how much understanding they have and how much help they may provide. You can always count on my assistance in the learning process. Feel free to call me at my cell phone. I will be happy to help . Group work In this course we will adopt group centric learning. Students are encouraged to study in their group and must work in group for case assignment & project, which account for half of course grade. They should form groups of 5 persons. Every group should identify a leader and let him or her email me the name and email id of all the group members. I will communicate with him or her about group work. Each group can choose any two HBS cases (out of the first four) and answer the questions that will be provided a week before the due date. The answers should be restricted to two pages. When submitting your assignment include both the pdf file and the excel spreadsheet, which shows the calculations, if any. The email submission deadline of the case assignment is Thursday 23:59 hours of the week in which the case discussion is due. Also, on the date of discussion, you should submit a printout of the pdf file on a single sheet of paper. All email submissions of assignment and project work must be made at sj.imtg@gmail.com For group project, each group must identify a listed company by February 7th. Each group in a section must have separate company. Preferably, this company must have at least 5 years of financial statements and annual reports available. It is not a diversified company. You can access the annual reports of three other firms in its industry. Analyze its performance and forecast its growth rate in sales, its key operating and financial ratios for next five years.. Use these information to forecast its expected cash flows for next five years. Also project the projected price earning multiple at the end of five years and ascertain its terminal value. Use the projected cash flows and terminal values to find the value of the enterprise, value of its equity, target share price. You must clearly state all assumptions with justification. Your written report must be two pages long. When submitting your project include both the pdf file and the excel spreadsheet which shows the calculations, if any. The email submission deadline of the project is March 12. On the last class you should submit a printout of the pdf file on a single sheet of paper.

Session wise plan (Tentative) Trip 1 JAN 29, 30 2 FEB 5, 6 3 FEB 19, 20 4 MARCH 5, 6 5 MARCH 12, 13 Session 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Chapter 5 24 5 5 15 15 15, 16 18 18 26 28 26, 28 22 25 22, 25 Class Problems 10, 11, 34 5, 6,11, 13 9, 25, 29, 38 Case Discussion 1, 6abc, 8, 9 10, 11, 17, 25 Case Discussion 4, 5, 6, 8, 12 Case Discussion 13, 15 1, 3, 5, 16, Case Discussion 6, 10, 11, 15 4, 8, 10, 13 Case (tentative) Topic Area Bond Valuation Valuation of Warrants & Convertibles Common Equity Valuation HBS Case : Spyder Active Sports Leverage & Capital Structure Capital Structure HBS Case : Blaine Kitchenware Dividend Policy HBS Case : Dividend Policy at Linear Technology Working Capital Management Working Capital Management HBS Case : Dells Working Capital Derivatives = Options Derivatives = Forwards, Futures & Swaps HBS Case : Risk Management at Apache Wrap up

Additional Readings: Session 5: o Sihler: Framework for Financial Decisions, HBR, Mar-Apr 1971. o Graham & Harvey: How CFOs Make Capital Budgeting and Capital Structure Decisions, JACF, Spring 2002. Session 13: o A Framework for Risk Management, HBR Nov-Dec 1994. o Derivatives Demystified, HBR Nov-Dec 1994. (Optional)