Welcome to Finance 321Advanced Corporate Finance

Professor Stephen D’Arcy

Spring Semester 2007

Course OverviewIn Fin 221 and 300 you learned some financial

tools and techniquesIn Fin 321 you are going to learn to use themBy the end of this course you will be able to:• analyze the financial condition of a corporation

• calculate the cost of capital for a project

• recognize the various ways the risk of the project can be altered

• determine whether a corporation should invest in a project

• compare debt, equity and alternative financing approaches

• explain how a particular project should be structured and funded

Capital Management and Risk Management

• Capital management deals with determining the best capital structure to minimize the cost of capital

• Risk management deals with the risks an organization faces

• Risk and expected return are related

• Risk management and capital management are similarly related

Introductions

• About me (the instructor)

• About you (the students)– Identify yourself– Tell me where I am most likely to see you on

campus

Index Card Info• Name• Hometown• State if USA• Otherwise Country• Year in School

– Sophomore, Junior, Senior, Grad Student

• Major• Primary extra-curricular activity• Career goal

– Undecided is okay

Course Requirements

• Textbook – Brealey, Myers and Allen – Principles of Corporate Finance, 8th Edition

• i-clicker

Registering Your i-clicker• Go to www.iclicker.com (as listed on the back of your i-

clicker)

• Click on Register ** (on left side of page)

• Enter your name

• For Student ID input your net id (your U of I e-mail address before the @) (This is important!)

• Input your Clicker ID which is listed on the back of your i-clicker

• Input the verification word that appears on the page

• Click Enter

Class Activity 1Jen and Berries

You are planning to open an ice cream shop in town and are trying to decide how best to finance this project. Break up into teams of four to discuss the issues listed on the handout. Write your names and the answers to the questions on the sheet. After 10 minutes we will then discuss this situation. Be prepared to participate in this discussion.

Next Class

• Role of a Financial Manager

• Guest speaker, Dennis Spice– Institutional advisory company– Founding partner of a venture capital firm– Member of several board of directors– Previously Executive Director of the State

Universities Retirement System of Illinois