Page 1 of 4

FINA 463: Case Studies in Corporate Finance Fall 2013

Instructor: Sergey Tsyplakov Time and Room: Section 001: Tue, Thu 4:25PM - 5:40PM, BA 302, Office Hours: Room: BA 471 BFIRE (4th floor, West) Time: Tue 6:00pm-7:00pm and by appointment Phone: 777-4669 E-mail: sergey@moore.sc.edu Required Material: Course textbook is an e-book comprised of 1) several cases from the book “Case Studies in Finance: Managing for Corporate Value Creation” by Robert F. Bruner, Kenneth M. Eades, And, Michael J. Schill from Darden Graduate School of Business, and 2) selected chapters from Corporate Finance, by Stephen Ross, Randolph Westerfield, and Jeffrey Jaffe 9th edition, Irwin/McGraw-Hill. This e-book is available to be downloaded. Instructions are posted on the BlackBoard for the course. Alternative Book: If you have the book from FINA 365 by Ross, Westerfield, and Jordan, Fundamentals of Corporate Finance, it can be used for most of the material, except that it has no Mini Cases that we will be covering in class. Additional Requirements: 1. An advanced (e.g. BA II Plus) calculator is required in class. 2. Familiarity with MS Excel. Purpose: The goal of this course is to provide you with a deep understanding of the financing issues that firms must deal with. The course will include many cases that illustrate different real-world financing situations faced by corporations. The cases we discuss will be from Darden Business School and are used in many of the world’s leading business schools. This course will help prepare students for careers in commercial and investment banking, corporate financial management, as well as more general business careers that have a substantial finance component. By the end of this course you must be able to both conceptually and analytically attack the financing and investing decisions firms make using real-life cases. Excel is a must.

You are responsible for the prerequisite FINA 363, FINA 365 and ACCT 222 material. Course Structure: The course consists of lectures and cases designed to review an advanced elements of corporate finance. The lectures are not note taking drills. I will discuss cases in class instead of presenting them to you. Therefore, it is absolutely essential that you read the assigned cases before coming to class, since the case discussions are designed under the assumption that the material has been read by all students. Moreover, the material needs to be understood, not just read! I reward student participation and sometimes will actively call on students.

Page 2 of 4

Written Case Solutions: There are six Mini Cases from the end of the chapter that I plan to cover in class, plus four related

Darden cases that illustrate the issues that we cover. Six Mini Cases have to be read before the scheduled class. You don’t need to submit the solution to Mini Cases but be ready to discuss it in class.

For the four Darden Cases, you must work in a group of 5-7 people, not less than 4. The group should hand in one assignment for the case solution. These assignments are due at the beginning of the class. In grading case solutions, I will pay attention to the clarity of writing and understanding of the big picture and less of calculations and numbers. The case writing should not be longer than 2 pages (not longer than 800 words) plus 2-3 tables if applicable. Thus, total 3 pages is a max. Points will be taken if the writing is not clear and the text is too long. When cases are submitted, please be prepared to discuss your solutions as I will actively call on students to discuss their answers in class.

For each case solution submitted to me, along with your names on the title, you should put the “participation grade” X, expressed in %, for each member of the group that he/she deserves for his/her participation in the discussion and writing of the case. The percentages are between 0% and 100% (rounded to 10%, i.e. 100%, 90%...), where 100% is assigned when the group member fully participated in the writing of the case, and 0% corresponds to the case when the group member did not participate in the case solution at all. The grade for the case for the member of a group is calculated as the case grade times “participation percentage” X, i.e., (case grade)*X. If the group members encourage “free riding”, the group is free to assign the participation grade of 100% for everybody even if some members never participated. The submitted participation grades are between the members of the group. I cannot be involved in any disputes between members of the group as to who deserve what participation grade %. Students are free to migrate from group to group.

Topic Coverage and Course Sequence: The course will contain three interdependent sections:

1. Cash Flow Valuation; Financial Statement Analysis; 2. Capital Budgeting; 3. Risk; Cost of Capital; Topics Related to Capital Structure.

Exams: Exams 1, 2 and 3 will test your understanding of corresponding class lectures, mini-cases, and

Darden Cases. It is your responsibility to show up on time for the classes or exams. The exams will take approximately 75 minutes and will be held in class. You are allowed to bring a calculator and a “cheat sheet” which is a double-sided 8 ½ x 11 sheet of hand-written notes and formulas to each exam. No printed versions or photocopies of the “cheat sheet” are allowed. There are no make-up exams for any unsatisfactory reason. If an exam is missed for a valid reason, the weights of all other grades will be adjusted proportionately. There is no Final Exam.

Class Participation/Attendance

It is essential that you attend every class, be on time, and be prepared to participate. I’ll be running a random attendance list and will record your attendance and your participation. For each class, when I have an attendance list, you will get 8 points if you attend, 9 points if you speak up during the class at least once, 10 points if you speak up two or more times. Your attendance and the quality of your questions and observations will provide a helpful feedback to me. If you are late for class or miss the class, it is your responsibility to keep up with the material. Unexcused absences may have a negative effect, if your grade is close to a cutoff. If you have four or more absences I reserve the right to lower your final grade for the class beyond low attendance grade. If you have to miss class, you have to inform me via e-mail and explain the excuse prior to the class.

Page 3 of 4

Grade Exam 1 20 points (20% of total grade) Exam 2 20 points (20% of total grade) Exam 3 20 points (20% of total grade) Written Cases 20 points (20% of total grade) Class Participation 20 points (20% of total grade) Grade cutoffs are approximately as follows: A: ≥ 90 B: ≥ 80 C: ≥ 66 D: ≥ 55 F: < 55 Blackboard: I will use the Blackboard to post class related links and materials including copies of my presentation used in the lectures. The class presentations are in MS PowerPoint format and will be available prior the day of the lecture in which they are used. Course Policies and Procedures: Exams will include mostly multiple-choice questions. All grades are assigned after a careful examination of the work submitted. Any grade disputes should be discussed with the instructor within two weeks of the receipt of the disputed exam. No adjustments will be made after this two-week period. Academic Dishonesty The University’s policy regarding academic dishonesty will be strictly enforced. You are responsible for reviewing the information at http://www.sc.edu/academicintegrity/honorcode.html. Suspected violations of the honor code will be reported to office of academic integrity. The office of academic integrity’s web site (http://sc.edu/academicintegrity) has useful information about the process that is followed when a suspected violation has occurred.

Page 4 of 4

Course Outline I will try to proceed in the order listed below. However, I will adjust the pace of the class as we go along. I will announce any changes in the outline.

Date Day Topic

Reading: chapters Written Cases

in RWJ/Cases to submit

22-Aug Thu Financial Statements, Cash Flows (review)

27-Aug Tue Financial Statement Analysis and Financial Models 3

29-Aug Thu Financial Statement Analysis and Financial Models 3

3-Sep Tue MINI CASE: Ratios and Financial Planning at East Coast Yachts Read MINI CASE, ch 3.

5-Sep Thu CASE#1: The Financial Detective CASE#1 is due

10-Sep Tue Discounted Cash Flow and NPV (review)

12-Sep Thu MINI CASE: BETHESDA MINING COMPANY Read MINI CASE, ch 6.

17-Sep Tue MINI CASE: GOODWEEK TIRES, INC. Read MINI CASE, ch 6.

19-Sep Thu TEST 1      24-Sep Tue Making Capital Investment Decisions 6

26-Sep Thu Risk, Real Options, and Capital Budgeting 7

1-Oct Tue Capital Budgeting and Equivalent Annual Costs 7

3-Oct Thu MINI CASE: Bunyan Lumber, LLC Read MINI CASE, ch 9.

8-Oct Tue Cost of Capital: CAPM and Cost of Debt (review) 16

10-Oct Thu Capital structure: Basic Questions 16   

15-Oct Tue Capital structure: Basic Questions 16   17-Oct Thu FALL BREAK -- NO CLASSES

22-Oct Tue MINI CASE: STEPHENSON REAL ESTATE RECAPITALIZATION

Read MINI CASE, ch 16.   

24-Oct Thu CASE#2: Nike Inc.: Cost of Capital CASE#2 is due

29-Oct Tue TEST 2      

31-Oct Thu Capital structure: Limits to the Use of Debt 17

5-Nov Tue Capital structure: Limits to the Use of Debt 17

7-Nov Thu MINI CASE: McKENZIE CORPORATION’S CAPITAL BUDGETING

Read MINI CASE, ch 17

12-Nov Tue CASE#3: WORLDWIDE PAPER COMPANY CASE#3 is due

14-Nov Thu Valuation of Capital Budgeting of the Levered Firm 18   19-Nov Tue Valuation of Capital Budgeting of the Levered Firm 18   

21-Nov Thu MINI CASE: THE LEVERAGED BUYOUT OF CHEEK PRODUCTS, INC.

Read MINI CASE, ch 18.

26-Nov Tue TBA      28-Nov Thu THANKSGIVING--NO CLASSES

3-Dec Tue CASE#4: The Wm. Wrigley, Jr. Company: Capital Structure, Valuation, and Cost of Capital.

CASE#4 is due

5-Dec Thu TEST 3

Page 5 of 4