BUS305 Principles of Finance, Fall 2016 Page 1 of 6

UNIVERSITY OF SAN FRANCISCO

School of Management Instructor: Professor Nicholas Tay, Ph.D.

2130 Fulton St., San Francisco, CA 94117 Office: Malloy 229
Tel: 415-422 6100
Fax: 415-422 2502 E-mail: tay@usfca.edu

Office Hours: Mon 5:30p-6:30p, Wed 1:45p-2:45p, and by appointment

BUS 305-07 & 08: PRINCIPLES OF FINANCE

FALL 2016 COURSE SYLLABUS

Section 7 & 8: MWF 9:15a – 10:20a & 10:30a – 11:35a, Malloy LL5

Teaching Assistants
Name: Ms. Meghan Kloeber (mekloeber@dons.usfca.edu) and Ms. Laura Yuan (cyuan10@usfca.edu)
Office Hours: Wed/Thu 11:40a – 12:40p & Thu/Fri 4:45p – 5:45p
Location: Malloy 200

Course Description
This is an introductory course for undergraduate business students in all business disciplines. Since this may
be the only finance course some of you will take at USF, it is designed to give you an overview of finance. It
will cover both the theory behind financial decision-making and the "nuts and bolts" information related to
implementing the theory. The goal is to expose students to a full range of financial decisions affecting a for-
profit business. Key topics discussed will include goal of a firm and agency problems, the financial
environment, financial statements analysis, working capital management, the time value of money, the
relationship between risk and return, stock and bond valuation, capital budgeting, and cost of capital. Since
this is a survey course, the treatment of some of the topics will be cursory. If you are a finance major, don't
worry, those topics will be given more thorough treatments in advance finance courses.

Prerequisities:
BUS 201, ECON 101, ECON 102, MATH 106, junior standing or permission of the College.

Course Objective and Learning Outcomes

The primary focus of the course is the role of the financial manager in creating economic value for the firm.
At the completion of the course all students should be able to identify relevant information and apply specific
knowledge and analysis skills to assess the economic value of real or financial assets and make appropriate
decision to create value. This includes demonstrating the ability to:

a) explain the decisions facing a finance manager, the normative goals of the manager and how agency
costs may inhibit managers from attempting to achieve normative goals, and the advantages and
disadvantages of various business organizations.
b) describe the role of the financial system in the economy and features of financial institutions and
markets and explain their importance to business,
c) explain the determinants of real rates of interest and compute the nominal and real rates of interest
using the Fisher equation.
d) analyze financial statements – compute financial ratios, identify/construct appropriate benchmarks, and
interpret the financial ratios in relation to the benchmarks.
e) compute metrics to measure working capital efficiency and costs of short-term financing and make
appropriate current asset management and financing decisions to create value.

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BUS305 Principles of Finance, Fall 2016 Page 2 of 6

f) explain the relationship between risk and return and how risk impacts value and compute risk-adjusted
discount rate or cost of capital.
g) construct relevant cash flows for valuing a financial asset or a capital project.
h) estimate the intrinsic value of a common stock, preferred stock or bond, and make appropriate
investment decision to create value.
i) estimate the value of a capital project and explain how such factors as risk and other qualitative factors
affect economic value and make appropriate capital budgeting decision to create value.

To accomplish the above, students must:

 be able to perform basic mathematical operations and do algebra
 have a working knowledge of excel (you will learn how to use a financial calculator in this course)
 be able to communicate effectively, both orally and in writing
 keep informed of the current economic and financial environment through regular reading of the
Economist, WSJ, and/or other periodicals

Required Materials
a) Parrino, Kidwell and Bates, Fundamentals of Corporate Finance, 2nd or 3rd edition
b) Financial Calculator: Texas Instrument BA II plus
A financial calculator is necessary to solve the complex financial problems that you will see on your tests.
The ability to use a financial calculator is critical to your success in this course. I require the Texas
Instrument BA II plus financial calculator because it offers the best value for your money and it is
approved for use on CFA exams.

Honor Code and Exam Rules

As a Jesuit institution committed to cura personalis- the care and education of the whole person- USF has
an obligation to embody and foster the values of honesty and integrity. USF upholds the standards of
honesty and integrity from all members of the academic community. All students are expected to know
and adhere to the University’s Honor Code and my Exam Rules. You can find the full text of the Honor
Code online at https://myusf.usfca.edu/academic-integrity/honor-code and my Exam Rules at
https://usfca.instructure.com/courses/1562632/pages/exam-rules?module_item_id=16349663.

Policy on Academic Dishonesty

If you violate the Honor Code or my Exam Rules for the first time, you will receive a failing grade on that
assignment (this includes test, homework, or extra credit). If it is your second violation, you will receive a
failing grade in the course. Such incident will be reported to the Dean and the Committee on Student
Academic Honesty. In addition, a letter may be sent to the Associate Dean for Student Academic Services; the
letter will remain in your file for two years after you graduate, after which you may petition for its removal.

Course Grading Structure and Grade Distribution

Test 1 280 points
Test 2 280 points
Test 3 280 points
Class Participation 160 points
Total 1000 points

In addition to the above, you are required to complete and submit all the homework assignments to pass this
course. You will be able to replace a low score for either the class participation or one of the tests with the
average score on all your homework assignments. Please note that I reserve the right to change the above
weighting scheme, and there may not be opportunity for extra work to improve your grade. Hence it is
important that you keep up with the class.

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BUS305 Principles of Finance, Fall 2016 Page 3 of 6

Grade Distribution
The grade distribution is as follows:
Above 1000 A+ 768 -- 800 C+
950 -- 1000 A 735 -- 767 C
901 -- 949 A- 701 -- 734 C-
868 -- 900 B+ 668 -- 700 D+
835 -- 867 B 635 -- 667 D
801 -- 834 B- 601 -- 634 D-
Below 600 F

Regrade Policy
I want to ensure that your grades are as accurate as possible. If you disagree with your grade on your exam,
you must make your regrade request within one day of the return of the exam. You must provide a clear and
concise written explanation of why you believe the exam was graded incorrectly. I will regrade the entire
exam; therefore your exam score may go up, stay the same, or actually go down as a result of a regrade. In
my experience, regrade requests often reveal that the regrade requester does not understand the material
well.

The only exception to the “regrade the entire exam policy” is if I make a math error adding up the exam
score. If you believe I added up your points incorrectly, then you can submit the exam for a recount. In such a
case I will only check to see if the points were added up incorrectly. However, you still must submit the
recount request within a day.

Assessment
Tests
There will be three tests that jointly contribute 840 points (84 percent) to your overall grade. Each test is
worth 280 points. You must take all three tests to pass the course. Please see the schedule on the last
few pages of this handout for the test dates and the material that will be covered on these tests.

Class Participation
Class participation contributes 160 points (16 percent) to your overall grade. The intent is to give you the
incentives to keep up with the readings and review what you have learned. To earn credits for class
participation, you are required to answer questions in class and keep a record of your class participation. In
addition, you will need to write down what the muddiest point is for you. Participation for each class is
graded using the scale - No participation (0%), Trivial (80%), Good (90%) and Excellent (100%). At the end of
the semester, the percentage scores from class participation will be averaged and multiplied by 160 to
convert to points earned for Class Participation. You are required to submit on Canvas the “Muddiest Point”
and a journal of your class participation by 6:00pm each Friday. In your journal, you need to provide the date
of your participation, a statement of the question you answered, your response to the question and any
follow up comments to clarify your understanding. If you did not participate in class, just write down no
participation. You will receive a zero if you fail to submit your class participation on time.

Homework Assignments
The homework component is comprised of assignments for the first 13 chapters (excluding chapter 12)
of your text book. You must submit all the homework assignments to pass the course. Homework
assignments are to be submitted on Canvas on the due date (see schedule at the end of this handout for
details on when each homework assignment is due). You will receive a zero if you fail to submit a
homework assignment on time. You may use the homework component to replace either your low score
on the class participation or one of the tests. At the end of the semester, the percentage scores from all
your homework assignments will be averaged and either multiplied by 160 to convert to points to
replace your low class participation score or multiplied by 280 to replace your low test score.

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BUS305 Principles of Finance, Fall 2016 Page 4 of 6

Your Responsibility
All material information pertaining to this course will either be announced in class, posted on the
announcement page on Canvas, or e-mailed to your USF e-mail accounts. It is your responsibility to
ensure that you receive, understand, and respond to my communication in a timely fashion. If you do not
understand any part of the communication, you need to check with me promptly. I advise you to check
your e-mails and Canvas’s announcements regularly and check with your classmates in the event you are
not able to attend class.

Methodology
Class time will be used for lectures as well as group/individual exercises and discussion. To enhance your
learning experience, you should form study groups so that you will have the opportunity to work with your
peers and learn from each other. You are expected to participate in the learning process while you are in
class. To this end, you may be given exercises to be completed in class. To ensure your full participation in
class, you are expected to keep up with the reading/homework assignments on the course schedule and
other material mentioned in class or handed out to you.

The structure of this class makes your individual study and preparation outside class extremely important.
The lectures will generally focus on the more difficult material and stress the most important issues
addressed in the textbook. You are expected to read and learn the easy material on your own. Reading the
assigned chapters and having some familiarity with them before class will greatly assist your understanding of
the lectures.

You are responsible for all materials covered in class, and in your reading assignments. Lectures may go
beyond the scope of the textbook for certain topics. Therefore, it is important for you to attend class. Since
class lectures and exercises will in most cases involve working through problems, you should always bring a
financial calculator to class.

Attendance/Class Participation/Classroom Etiquette

Note that attendance and classroom etiquette will also factor into the grading especially in the event that a
student is on the border between grades. Poor attendance and breaches of classroom etiquette will
negatively impact a student on a border. In particular, students carrying cell phones or pagers should ensure
that these devices are switched off before coming into the classroom.

Helpful Advice
You should attend all class sessions and never allow yourself to fall behind because it will always take much
more effort and time for you to learn the material on your own. If you have difficulty understanding any part
of the materials, you should have your questions addressed promptly. You can ask my TA or me in class,
during our office hours, or e-mail us your questions so we can address those questions promptly.

Accommodation Policy
To ensure that you will receive a quality education, any student who has a disability that may prevent him or
her from fully demonstrating his or her abilities should contact me personally as soon as possible so that we
can discuss accommodations necessary to ensure your full participation and facilitate your educational
opportunities. Confidentiality will be maintained. For additional support services, please contact the
University Office of Disability Related Services.

Administrative Details
1. Make-up exams will only be given for legitimate health reasons. However, an athlete/student representing
USF in official games or events will be allowed to make up an exam if he/she is able to provide proper
documents to support his/her absence on the day of the exam. Unless it is an unforeseen circumstance, all
arrangements for make-up exams must be made prior to the date of the scheduled exam.
2. This course will adhere to University guidelines concerning attendance, withdrawals, incompletes and
academic dishonesty. It is the student’s responsibility to be familiar with the policies and procedures as laid
out in the University Catalog and the appropriate deadlines as outlined in the Schedule of Classes.

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BUS305 Principles of Finance, Fall 2016 Page 5 of 6

Outline

Notes:
1. The following schedule is extremely tentative, and subject to change. Any variations will be announced
in class or communicated via e-mails.
2. Unless stated otherwise, homework assignments are due by 6:00 pm. You need to submit your
homework assignment on Canvas.
3. To prepare for class, you need to keep up with the reading assignment below. I will not discuss chapters
marked with asterisk in details, you need to read these materials carefully on your own and ask me if
you have questions.

Date Schedule
Course Overview
Wednesday, 8/24
Ch. 1 Financial Manager and the Firm*
(Week 0)
 Read Lynn Stout “New Thinking on Shareholder Primacy”
Monday, 8/29 Ch. 2 The Financial Environment and the Level of Interest Rates*
(Week 1) Ch. 3 Financial Statements, Cash Flows, and Taxes*
LABOR DAY 9/5 (NO CLASS)
Monday, 9/5
Ch. 4 Analyzing Financial Statements
(Week 2)
Ch.1 & 2 Homework Due on Friday
Ch. 4 Analyzing Financial Statements (cont’d)
Monday, 9/12
Ch. 14 Working Capital Management
(Week 3)
Ch. 3 & 4 Homework Due on Friday
Ch. 14 Working Capital Management (cont’d)
Monday, 9/19
TEST 1 REVIEW
(Week 4)
Ch. 14 Homework Due on Friday
Monday, 9/26 TEST 1 (Chapters: 1,2,3, 4 & 14)
(Week 5) Ch. 5 Time Value of Money
Monday, 10/3 Ch. 6 Discounted Cash Flows and Valuation
(Week 6) Ch. 5 Homework Due on Friday
Monday, 10/10 Ch. 8 Bond Valuation and the Structure of Interest Rates
(Week 7) Ch. 6 Homework Due on Friday
FALL BREAK 10/17-18 (NO CLASS)
Monday, 10/17 TEST 2 REVIEW
(Week 8) Ch. 7 Risk and Return
Ch. 8 Homework Due on Friday
TEST 2 (Chapters: 5, 6 & 8)
Monday, 10/24
Ch. 7 Risk and Return (cont’d)
(Week 9)
Ch. 7 Homework Due on Friday
Monday, 10/31
Ch. 9 Stock Valuation
(Week 10)
Ch. 9 Stock Valuation (cont’d)
Monday, 11/7
Ch. 10 Fundamentals of Capital Budgeting
(Week 11)
Ch. 9 Homework Due on Friday

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BUS305 Principles of Finance, Fall 2016 Page 6 of 6

Date Schedule
Ch. 10 Fundamentals of Capital Budgeting (cont’d)
Monday, 11/14
Ch. 11 Cash Flows and Capital Budgeting
(Week 12)
Ch. 10 Homework Due on Friday
Monday, 11/21 THANKSGIVING 11/24-25 (NO CLASS)
(Week 13) Ch. 11 Cash Flows and Capital Budgeting (cont’d)
Ch. 11 Cash Flows and Capital Budgeting (cont’d)
Monday, 11/28 Ch. 13 Cost of Capital
(Week 14) TEST 3 REVIEW
Ch. 11 & 13 Homework Due on Friday
Monday, 12/5
TEST 3 (Chapters: 7, 9,10, 11 &13): Monday, Dec 5, 2016, 8p – 10p
(Week 15)

Copyright © 2016 by Nicholas Tay