MBAC-6450 OnCampus Syllabus

CONCORDIA UNIVERSITY CHICAGO
COLLGE OF BUSINESS
MASTER OF BUSINESS ADMINISTRATION (MBA)
On Campus Syllabus
MBAC 6450 Financial Management
University Mission:
As a distinctive, comprehensive university of the Lutheran Church—Missouri Synod, centered in the
Gospel of Jesus Christ and based in the liberal arts, Concordia University Chicago (CUC) equips men and
women to serve and lead with integrity, creativity, competence, and compassion in a diverse,
interconnected, and increasingly urbanized church and world.
College of Business Mission Statement:

The mission of the College of Business is to develop ethical leaders who think critically, communicate
effectively, and promote socially responsible business practice that is innovative and entrepreneurial in
spirit. We strive to prepare students who positively impact the global society they serve through
academically rigorous and relevant business education in a Christian context.
The Four Pillars:

The four pillars serve as the conceptual framework upon which all College of Business programs (and
courses) are developed and delivered.
MBA Program Outcomes:

1. Synthesize concepts from various business disciplines to develop business strategies.
2. Develop a leadership framework to evaluate ethical issues in business.
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3. Analyze organizational and business challenges using critical and creative thinking to develop
innovative business outcomes.
4. Select appropriate information technologies to develop business solutions and improve
organizational performance.
5. Apply professional communication skills to facilitate business relationships.
6. Integrate a global interconnectedness perspective into a business philosophy and practice.
Ethics, Honesty, Participation and CUC Honor Code
Your timely participation in the course is requested and required. If you anticipate problems with your
attendance, please let your instructor know.
By virtue of your enrollment in this course, you are committing yourself to Concordia University’s honor
code. It reads:
As a student of Concordia University Chicago and a member of the larger society, I pledge to
uphold an academic honor code that supports serving and leading with strong personal integrity.
Specifically, this included not cheating or using inappropriate or dishonest means in the
completion of academic requirements. This also includes not giving unauthorized assistance to
others. I understand that it is my responsibility to comply with this honor system.
This honor code is available for review on the Concordia University website. As a result of your
commitment to this honor code, violations of the code will have serious repercussions. Academic
consequences resulting from violations of the Honor Code could range from a zero on the assignment or
examination (which will count in your overall point total for this course) to failure of the course. Multiple
violations will be reviewed by the Honor Code Council and could result in a failing course grade,
suspension or expulsion from the university.
Concordia Honor Code
In accordance with the honor code that you have signed, turning in any piece of work, which includes
your digital signature, constitutes your pledge that your documents are original and that you have not
given or received any unauthorized assistance in completing your assignments.
Plagiarism:
Plagiarism is defined as use of intellectual material produced by another person without acknowledging
its source. CUC faculty members monitor student work.
For example:
 Widespread copying of passages from works of others into an assignment, paper, discussion
board posting, or thesis or dissertation without acknowledgment.
 Using the views, opinions, or insights of another without acknowledgment.
 Paraphrasing another person’s characteristic or original phraseology, metaphor, or other literary
device without acknowledgment.
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Accommodations Statement:
Americans with Disability Act (ADA)
Concordia University Chicago is committed to ensuring the full participation of all students in its
programs, as required under the Americans with Disabilities Act (ADA). Any student who, because of a
disability, requires accommodations to participate in a course should speak with the instructor and contact
the Center for Accessibility and Resource for Excellence (CARE). Disabilities covered by ADA may
include chronic health conditions as well as learning, psychiatric, or physical disabilities. CARE is part of
the Academic Center for Excellence (ACE).
Please contact: ACE/CARE Office – Klinck Memorial Library, Room 025, 708-209-3462
Additional information may be found here: https://www.cuchicago.edu/academics/success/disability-
services/
Class Attendance and Participation Policy:

Research clearly indicates that class attendance is an integral factor in student learning. The importance
of attendance is even more amplified in the Concordia eight-week term. Any student who is absent 25%
or more of the designated instructional time may receive a grade of “F” for the course. If you encounter
an unexpected circumstance that results in an extended absence, you are required to communicate with
your instructor and your academic advisor to request an official leave of absence. Emergency situations
will be considered on a student-by-student basis.
Students are responsible for participating in this course through the following academic activities:
 completing assigned readings from both texts and supplemental articles,
 participating in the discussions with classmates and instructor, and
 submitting assignments for each learning module on the due date.
This course is organized by weekly learning modules. All assigned readings for the module are to be
completed before completing assignments. After completing the assigned readings and any ancillary
materials posted by the instructor, e.g. power points, etc. students will participate in discussions in class.
Observance of Religious Holidays: Absences from Classes Policy

Concordia University Chicago is committed to accommodating the interests of students who may need to
miss classes or exams to observe their religious holidays, as long as the University receives notification
well in advance of the anticipated absence or conflict and the request does not place an unreasonable
burden upon the institution.
Professors will make accommodating these students a priority and will adjust exams, assignments, and
general attendance requirements to accommodate such requests.
However, the need for accommodation of religious holidays is something you will know in advance and
should report to your professor in advance.
If you are a student who will be missing one or more of the previously mentioned course requirements,
you should notify your professor at least two weeks in advance, which Concordia has identified as the
reasonable period for notification well in advance of the anticipated absence or conflict.
This will afford the professor ample time to provide a substitute assignment or reschedule an exam.
If you do not notify your professor at least two weeks in advance of your absence due to observing a
religious holiday, the professor has the discretion whether to adjust exams, assignments or general
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attendance requirements, and also to determine whether all or partial credit will be received.
Late Policy:
Late assignments will either not be accepted or will incur a grade penalty (recommend 5% per day late)
unless due to documented serious illness or family emergency. Instructors will make exceptions to this
policy on an as needed basis. Assignments over 7 days late will not be accepted.
In Class Participation:
Discussions require a response to specific questions that results in collaborative conversations and
construction of knowledge that builds and expands learning of the course. As a master-level student, it is
expected that you will reply as a practitioner-scholar.
Every week, students will be required to submit documentation to show preparation for the week’s
discussion(s). This is a required assignment and will count towards participation points for the week.
Failure to submit this assignment will result in an immediate point deduction. Students should bring this
information to class to participate in class discussions. This will contribute to the participation grade as
well. To get full points, the following will be required:
1. Submit prepared discussion documentation
2. Interact with peers and the instructor in class
3. Complete all in-class activities while showing understanding of the material
You must support your discussion responses with academically appropriate references unless you are
asked to provide an opinion or personal reflection for a specific question. Unless noted otherwise, your
initial discussion preparation document should be approximately 250-300 words in length, substantive
and scholarly in nature. Please refer to the College of Business power point “Engaging in Dialogue.” You
are required to respond verbally in each class to colleagues in the following ways:
 Suggest why you might see things differently.
 Ask a probing or clarifying question.
 Share an insight from having listened to the colleague's points.
 Offer and support an opinion.
 Validate an idea with your experience.
 Make a suggestion.
 Expand on the colleague's discussion.
 Ask for evidence that supports the discussion.
 Always be respectful and collegial.
If you are not in class, you cannot receive full participation points.
Institutional Review Board (IRB):

All research including interviews, assessments, surveys, and/or observations of individuals or groups
must be submitted to the IRB for review. Research conducted by anyone affiliated with Concordia
University Chicago at an off-campus site or in collaboration with a researcher from another institution
must be submitted to the Concordia University Chicago IRB. Any violation of these policies will be
reported to the appropriate academic supervisors. If you have any questions or are unsure whether your
research requires review, please contact the IRB at: IRB@CUChicago.edu
Technology Expectations:
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A. Students will complete assignments using the Internet and library-technology based database,
such as the university’s research database when conducting literature searches and course
assignments and discussions.
B. Students will interact with their instructor and other classmates through the Blackboard virtual
classroom, including: retrieving their syllabus, submitting assignments, and communicating with
their professor.
C. Students are expected to use their Concordia email for all correspondence. Students should log
into Concordia Connect to check their email on a regular basis.
Request for an Incomplete:

Please be aware that incomplete grades are generally not granted, although an expectation may be allowed
for verifiable circumstances. At least 75-80 percent of course work should be completed in order for an
incomplete request to be considered. If you are granted an incomplete, according to University policy,
you have 6 weeks to submit the remainder of your syllabus requirements and receive a final grade
assessment.
Course Description
MBAC 6450 Financial Management
This course provides students with the financial skills and critical thinking necessary to analyze and
evaluate financial policy decisions in a global economy. The course focuses on financial statement
analysis for decision making and includes time value of money; the cost of capital, valuation of
stocks and bonds, management of short-term assets, short-term and long-term financing, capital
markets, and multinational financial management. This course also addresses the impact of legal,
social, technological, and ethical considerations on efficient economic outcomes.
COURSE LEARNING OUTCOMES:
This course should enable the student to:
A. Synthesize concepts of financial statements and valuation

B. Select appropriate information technologies to evaluate financial analysis and valuation
C. Analyze forecasting and valuation using creative and critical thinking for innovative results
D. Apply leadership to the analysis of risk and return to make ethical business decisions
PRINCIPAL UNITS TAUGHT IN THE COURSE:
A. Ethics and Social responsibility as drivers for the basic principles of fundamental analysis and
investing.
B. Impact of communication on explaining the structure of accounting and how it aids or hinders
valuation analysis.
C. Significance of critical thinking and entrepreneurial mindset in determining the drivers of residual
earnings and earnings growth into the future
D. Effective strategy in calculating and determining the required return in an attempt to value an
organization.
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Diversity:
Students are expected to respect diversity of thought, opinion, and background in all aspects of interaction
and communication. The course incorporates and supports aspects of a diverse learning
Required Text:
Lasher, W. R. (2013). Practical Financial Management, 8th Ed, Cengage Publishing
Course Activity
Outcome
Description/Due in Course Outcome
Activity Name Point value/Percentage
Module # Assessed
#1 #2 #3 #4
√ √ √ √
Participation 1-8 Module 1-8 24 pts. (3 pts. Each)
√ √ √ √
Problem Sets 1-7 Module 1-7 28 pts. (4 pts. Each)
√ √ √ √
Case Studies Module 2-4-6 15 pts. (3 pts. Each)
Course Reflection Module 8 8 pts.

√ √ √
Portfolio Assignment Module 8 25 pts.
Total 100 pts.
Grading Scale
100-93% A 4.00 82-80% B- 2.67 69-67% D+
1.33
92-90% A- 3.67 79-77% C+ 2.33 66-63% D
1.00
89-87% B+ 3.33 76-73% C 2.00 62-60% D-
.67
86-83% B 3.00 72-70% C- 1.67 59% & below F
.00
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Quick Reference to Module Activities

Start Readings/ Resources
Weeks Topics and Module Assignments and Activities
Date
Monday of Week 1 Module 1  Review Syllabus  Participation Preparation Document
Week 1  Course Introduction #1 Due the night before class by
 Read Chapters 1 & 2 in Textbook 11:59pm – 3 pts
 Participation #1
 Power Points 1 & 2  Problem Set #1 – 4 pts
 Problem Set #1
Monday of Week 2 Module 2  Read Chapters 3 & 4 in Textbook  Participation Preparation Document
Week 2  Participation #2 #2 Due the night before class by
 Power Points 3 & 4 11:59pm – 3 pts
 Problem Set #2
 Problem Set #2 – 4 pts
 Case Study #1
 Case Study #1 -5pts.
Monday of Week 3 Module 3  Chapters 5 & 6 in Textbook  Participation Preparation Document
 Problem Set #3
Monday of Week 4 Module 4  Read Chapters 7 & 8 in Textbook  Participation Preparation Document
 Problem Set #4
 Case Study #2
Monday of Week 5 Module 5  Read Chapter 9 & 10 in Textbook  Participation Preparation
Week 5  Participation #5 Document #5 Due the night before
 Power Points 9 & 10 class by 11:59pm – 3 pts
 Problem Set #5
Monday of Week 6 Module 6  Read Chapter 11 & 12 in  Participation Preparation Document
Week 6  Participation #6 Textbook #6 Due the night before class by
11:59pm – 3 pts
 Problem Set #6  Power Points 11 & 12
 Case Study #3
Monday of Week 7 Module 7  Read Chapter 13 & 14 in  Participation Preparation Document

Week 7  Participation #7 Textbook #7 Due the night before class by
11:59pm – 3 pts
 Problem Set #7  Power Points 13 & 14
Monday of Week 8 Module 8  Read Chapter 18 in Textbook  Participation Preparation Document
 Power Point 18 11:59pm – 3 pts
 Course Reflection
 Portfolio Assignment – 25 pts
 Portfolio Assignment
 Course Reflection – 8 pts
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Assignments:
Must be uploaded into the Backboard Learning Module via excel or word document
Problem Sets
Problem Set #1: Problems From Chapters 1 & 2 4 pts. Due at the end of Module 1
CH 1 - An Overview of Finance
 Problems: CH 1- 1, 2
CH 2 - A Review of Accounting, Financial Statements, and Taxes
 Problems: CH2- 1, 2, 14, 16, 20
Course Learning Outcomes: A, B, C & D
You must show all of your work for each problem. Failure to do so will result in partial credit.
Make sure your work flows logically and solutions are identified clearly.
If any problems involve writing, please use complete sentences.
CH 3 – Cash Flows and Financial Analysis
CH 4 – Financial Planning
Course Learning Outcomes: A, B, C
CH 5 – The Financial System, Corporate Governance, and Interest
 Problems: CH 5- 2, 4, 5
CH 6 – Time Value of Money
 Problems: CH 6- 1, 2, 3, 4, 6, 10, 18, 21
Course Learning Outcomes: A, B, & D
CH 7 - The Valuation and Characteristics of Bonds
 Problems: CH 7-1, 11, 22
CH 8 - The Valuation and Characteristics of Stock
 Problems: CH 8- 1, 2, 5, 21 (A thru E)
Course Learning Outcomes: A, B, & C
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CH 9 - Risk and Return
 Problems: CH 9-1, 3, 5, 9, 10
CH 10 - Capital Budgeting
 Problems: CH 10- 1, 2, 5, 13
Course Learning Outcomes: A, B, & C
CH 11 - Cash Flow Estimation
 Problems: CH 11-1, 2, 3, 4
CH 12 - Risk Topics and Real Options in Capital Budgeting
 Problems: CH 12- 1, 10, 12, 16
CH 13 - Cost of Capital
 Problems: CH 13-1, 4, 10, 13, 17
CH 18- International Finance
 Problems: CH 18- 1, 6, 10, 11
If you have questions about these problems, please email your professor.
Case Studies
Case Study #1: Chapter 4 Business Analysis - 5pts. Due at the end of Module 2
Ed Perez has always wanted to run his own restaurant. He worked part-time in the food service business
during high school and college and has worked for a large restaurant chain since graduating from college
four years ago. He's now ready to open a franchised family style restaurant. However, to get started, a
large investment is required. Ed has saved some money, but will also have to secure a substantial loan.
Fortunately, Ed's old college roommate, Joe Dixon, is now a loan officer with the local bank. Besides
being a good friend, Joe knows that Ed is a stable, hard-working businessman and an excellent credit risk.
Ed is now meeting with Joe to apply for the loan. After exchanging pleasantries, Joe asks to see Ed's
business plan. In response Ed tells him all about the idea and shows him the written information from the
franchisor, which Joe glances at briefly.
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Joe listens politely, leans back in his chair, and says, "Ed, I've known you for years. I'm sure this is a
great idea, and that you'll make a terrific restaurateur, but we can't even begin to consider a loan until we
see a fully developed business plan that looks at least five years into the future."
 Why is Joe (the bank) insisting that Ed prepare a business plan?
o What will it show the bank?
o List some specific concerns that the bank might have that a plan would answer outside of
the financial section.
o List several concerns that the financial plan might answer for the bank.
o Why is the bank insisting on such a long planning horizon? Does that imply the bank is
looking for a strategic plan?
 What will preparing a business plan do for Ed?
o Before he gets started.
o After he gets started.
o What will he learn by doing the financial plan?
 What kind of thinking is the bank looking for in Ed's plan? That is, should the plan be strategic
or operational or very short term?

In at least one page, answer the case study’s proposed prompt or questions. Use size 12, Times New
Roman font. Cite references from the textbook where necessary. Provide a graduate level response
complete with APA citation Failure to meet this expectations will result in partial credit.
Harry, a friend of yours, is taking a course in economics, and has become confused by some of the
terminology because of the way people commonly use the same words. The economics professor says
investment occurs when companies buy equipment and build factories. Yet Harry has always heard
people talk about investing as a method of saving when they put money in the bank or purchase securities.
He's confused by these dissimilar uses of the word, and has asked you to explain. After asking for your
help, Harry happily states that there's one thing he does understand perfectly about what the econ prof
says, and that is "savings equals investment." Since investing in stocks and bonds is also saving money,
it's obvious that savings equals investment!
 Write a brief explanation to help Harry out.

A business can be valued by capitalizing its earnings stream (see example 6.15).
 How might you use the same idea to value securities, especially the stock of large publicly held
companies?
 Is there a way to calculate a value that could be compared to the stock’s market price that would
tell an investor whether it’s a good buy? (If the market price is lower than the calculated value,
the stock is a bargain.)
 What financial figures associated with shares of stock might be used in the calculation. Consider
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the per share figures and ratios discussed in chapter 3 including EPS, dividends, book value per
share etc.
 Does one measure make more sense than the others?
 What factors would make a stock worth more or less than your calculated value.

Course Reflection
Reflective Paper: Course Reflection – 8pts: Due at the end of Module 8
It is expected that you will share your lessons learned. It is important that your lessons learned
demonstrate your learning and critical thinking. Here are some suggestions to ensure you provide
appropriate depth and breadth:
 Process Evaluation: What was the most valuable concept you learned about in this class?
 Content Highlights: Discuss what you have learned in this class and how it will assist you in
achieving further professional goals.
 Spirit of Inquiry and Continuous Learning: What questions will you carry forward, either
because of their inherent value to continue to inform or just because they remain perplexing?
 Improvements: What enhancements could be made to this class and how would they improve
the overall learning experience? What would you keep the same about this course?
Take the time to craft a well-written and thoughtful reflection that contains relevant reference to the
course concepts and readings. 450-500 words
Portfolio
Final Portfolio Assignment: 25 pts. Due at the end of Module 8
Assignment: This is your final assignment and will become part of your CUC MBA ePortfolio.
In this assignment you will complete a paper on the following situation:
Ed Draycutt is the engineering manager of Airway Technologies, a firm that makes computer systems for
air traffic control installations at airports. He has proposed a new device the success of which depends on
two separate events. First the Federal Aviation Administration (FAA) must adopt a recent proposal for a
new procedural approach to handling in flight calls from planes experiencing emergencies.
Everyone thinks the probability of the FAA accepting the new method is at least 98%, but it will take a
year to happen. If the new approach is adopted, radio makers will have to respond within another year
with one of two possible changes in their technology. These can simply be called A and B. The A
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response is far more likely, also having a probability of about 98%. Ed’s device works with the A system
and is a stroke of engineering genius. If the A system becomes the industry standard and Airway has Ed’s
product, it will make a fortune before anyone else can market a similar device.
On the other hand if the A system isn’t adopted, Airway will lose whatever it’s put into the new device’s
development.
Developing Ed’s device will cost about $20 million, which is a very substantial investment for a small
company like Airway. In fact, a loss of $20 million would put the firm in danger of failing.
Ed just presented his idea to the executive committee as a capital budgeting project with a $20 million
investment and a huge NPV and IRR reflecting the adoption of the A system.
Everyone on the committee is very excited. You’re the CFO and are a lot less excited. You asked Ed
how he reflected the admittedly remote possibility that the A system would never be put in place. Ed,
obviously proud of his business sophistication, said he’d taken care of that with a statistical calculation.
He said adoption of the A system required the occurrence of two events each of which has a 98%
probability. The probability of both happening is (.98x.98=.96) 96%. He therefore reduced all of his
cash inflow estimates by 4%. He maintains this correctly accounts for risk in the project.
In this assignment you will:
1. Evaluate Ed’s analysis. Does Ed have the right expected NPV? What’s wrong with his analysis?
2. Suggest an approach that will give a more insightful result.
3. Discuss why the firm might consider passing on the proposal in spite of the tremendous NPV and
IRR Ed has calculated?
4. Evaluative if Ed’s case be might be helped by a real option. If so, what kind? How would it help?
You have two options for how you may present your Signature Project, including the following:
 A written essay (8-10 pages-not including the CUC cover, title, or reference pages)
 PowerPoint or Prezi presentation (20 slides-not including the reference slide) (click here for
help in creating a PowerPoint presentation, and Prezi for creating a Prezi.)
All presentations must be submitted via Word document. For all presentations that are not in an
essay format, insert your presentation slides into a Word document or paste the link to your online
presentation into a Word document and submit that document as your assignment. Notes in the
form of a professional-quality handout must accompany all presentations other than essay format.
The handout should contain what you would say if you were presenting to a board of directors or
senior leadership of an organization.
Your well-written and well-developed submission should meet the following requirements,
regardless of the presentation format you choose:
 Include the CUC cover page, introduction, a conclusion, and a references page.
 Use a minimum of 8 credible sources that are cited within the essay or presentation.
 Include proper citation of any graphs or figures that you do not create yourself.
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Be formatted according to the 6th edition APA form and style. If using the essay format, please use the
provided writing template.
Course Learning Outcomes: A, B, C, & D.
Course Calendar
Module 1
The Role and Objective of Financial Management

A Review of Accounting, Financial Statements, and Taxes
Finance is the art and science of handling money. In the modern world, virtually every organization,
public and private, runs on money. That includes families, businesses, governments, and nonprofit
enterprises like colleges and churches. Money touches everything we do. And finance, the management of
money, is behind most everything we see each day. We don’t physically observe the financing behind a
building or a new car or a house, but it’s there, and without it most of the things we do see wouldn’t exist.
That’s because without money to pay for resources and a financial system to make trading possible, no
one could organize more than a few people to work together at one time.
Some knowledge of accounting is necessary to appreciate finance. That’s because financial transactions
are recorded in accounting systems, and financial performance is stated in accounting terms. In other
words, if we want to deal with money in business, we have to deal with the system that keeps track of it,
and that’s accounting. Some knowledge of taxes is also necessary, because tax considerations influence
most financial decisions.
Module Outcomes: A, B, C, & D
Required Readings/Resources:
Read Chapters 1 & 2 in Textbook
Power Points 1 & 2
Participation #1a: 0 pts
Introduce yourself. Tell us something about yourself. What motivates you to succeed? Share why you are
pursuing the MBA, what you expect to learn from this course. Feel free to share photos.
Participation #1b: 3 pts
Is the corporate tax schedule progressive? Why or why not?
Refer to the MBA Discussions power point presentation for tips on how to gain maximum learning and
points from your discussion engagement.
 Your participation preparation document should be a substantive response to the question
(minimum 250-300 words) in the participation assignment for the week. It should be
substantive and scholarly in nature including academically appropriate references (unless you
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are asked to provide your opinion or a personal reflection on a specific question).

 The participation preparation document is due the night before class at 11:59 pm CST.
 Your participation preparation document must contain a citation of the course concepts. This
can be in the form of one of the videos you watched, the text, or other appropriate and relevant
literature.
 You will be required to bring this document to class and use it during the in class discussion to
get full participation points.
Problem Set #1 Due – 4 pts

Module 2
Cash Flows and Financial Analysis

Financial Planning
Planning is a big part of modern corporate life, especially in large companies. Firms plan their futures
constantly, addressing everything from cash flow and short-term profitability to long-run strategy.
Generally, the higher in management people are, the more time they devote to planning. It isn’t unusual
for top executives to spend a good deal of their time thinking about the future. At the same time, some
planning functions involve virtually everyone in management. For example, one thing you can be sure
you’ll do in your first management job is prepare a budget. This module deals primarily with financial
planning. Simply put, that means projecting a company’s financial statements into the future. However,
financial planning is a part of a broader activity known as business planning. To really appreciate
financial planning, we have to understand the nature and purpose of business planning and see how the
financial element fits into the broader concept.
Power Points 3 & 4
Participation #2: 3 pts
Why is planning for a new business harder than planning for an established operation? In which do you
have to make more assumptions? Why? What implicit assumption provides a shortcut in one situation?
literature.
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Case Study #1 Due – 5 pts
Module 3
The Financial System, Corporate Governance, and Interest

Time Value of Money
The time value of money is based on the idea that a sum of money in your hand today is worth more than
the same sum promised at some time in the future, even if you’re absolutely certain to receive the future
cash. The idea is pretty easy to grasp if you think in terms of having a bank account and being promised
an amount of money a year from now. Money in the bank earns interest, so it grows over time. The value
today of the sum promised in one year is an amount that will grow into that sum if deposited in the bank
now. In other words, a sum promised in a year is worth only as much as you’d have to put in the bank
today to have that sum in a year. That value obviously depends on the interest rate the bank is paying. The
higher the interest rate, the faster money grows, so the less you’d have to deposit today to get a given
amount next year. The present value of a sum at a future time is the amount that must be deposited at
interest today to have the sum at that time. The time value of money is one of the most important
principles in finance and economics today. It’s based on the simple ideas we’ve just stated, but the
applications can get quite complicated.
Power Points 5 & 6
Discuss mortgage loans in terms of the time value of money and loan amortization. What important points
should every homeowner know about how mortgages work? (Hint: Think about taxes and getting the
mortgage paid off.)
literature.
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Module 4
The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock
The discussion of bonds is presented in two parts. First we concentrate on understanding the calculations
associated with pricing bonds including consideration of call provisions and convertibles. After that we
take a close look at the nature of the bondholder-issuer relationship and the institutional characteristics of
the bond instrument. Like bonds, stocks are worth the present value of their expected future cash flows,
but the process of estimating that value is far less precise than it is for bonds. We begin studying stock
valuation with basic ideas comparing equity cash flows with those associated with bonds. After
mastering these concepts we turn to growth models of valuation beginning with the constant growth case
and moving on to the more complex two-stage model. We conclude our treatment of common stock
valuation by discussing pricing in the context of newly issued securities. To do that we explain
investment banking and the IPO process including an analysis of the IPO pop phenomenon.
Following that we consider some issues of corporate control along with the rights and privileges of
stockholders. The point is made, however, that most equity investors are only in for the money, not for a
voice in running the company. Next we move into preferred stock. Its straightforward valuation is followed
by a discussion of preferred’ s nature which makes it something of a cross between common stocks and
bonds. At this point we briefly outline the nature of securities analysis including a light treatment of the
Efficient Market Hypothesis EMH. The module concludes with a detailed treatment of options and
warrants. This will help you get used to the option concept before taking up a more quantitative treatment
of stock options. We finish with a discussion of the problems created by stock options as executive
compensation.
Power Points 7 & 8
Preferred stock is said to be a hybrid of common stock and bonds. Explain fully. Describe the cash flows
associated with preferred and their valuation.
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literature.

Module 5
Risk and Return

Capital Budgeting
This module explores the relationship between risk and return inherent in investing in securities,
especially stocks. In what follows, we’ll define risk and return precisely, investigate the nature of their
relationship, and find that there are ways to limit exposure to investment risk. The body of thought we’ll
be working with is known as portfolio theory. The ideas behind the theory were motivated by
observations of the returns on various investments over many years. We’ll begin by reviewing those
observations. The money companies spend in the normal course of business can be divided into two
categories. Funds are expended on an everyday basis to buy inventory, pay expenses, and compensate
employees. These expenditures can be thought of as short term in that they support daily activity.
In addition to such short-term expenditures, firms spend large sums on special projects from time to time.
For example, machines normally wear out and need to be replaced every few years. The replacement
expenditures tend to be relatively large, but they are infrequent. New business ventures provide a second
example because they generally require initial spending to get started. Start-up amounts are usually large,
but the opportunities don’t come along often. Spending on things like these is long term because the
projects involved tend to last for long periods. As a general rule, money spent on long-term projects is
called capital. The field known as capital budgeting involves planning and justifying how capital dollars
are spent on long-term projects. It provides methods through which projects are evaluated to decide
whether they make sense for a particular business at a point in time. It also provides a basis for choosing
between projects when more than one is under consideration at the same time.
Power Points 9 & 10
Think about the cash flows associated with putting in the bank for five years, assuming you draw out the
interest each year and then close the account. Now think about a set of hypothetical cash flows associated
with putting the same money in a business, operating for five years, and then selling out. Write an
explanation of why the IRR on the business project is like the bank’s interest rate. How are the
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investments different?
literature.

Module 6
Cash Flow Estimation

Risk Topics and Real Options in Capital Budgeting
Cash flow estimation focuses on the numerical methodology used in putting together an estimate of a
capital project. We keep the question of accuracy and risk in mind throughout, and continue with a
discussion of the methods available to incorporate risk into the process. Traditional capital budgeting
techniques compute point estimates of NPV and IRR with no measure of variability. Hence they don’t
give managers the information necessary to include a tradeoff between risk and expected return in their
decisions. This module is concerned with modern approaches to incorporating risk into capital budgeting.
The techniques considered include probabilistic cash flows, risk adjusted discount rates, decision tree
analysis, and the idea of real options.
Power Points 11 & 12
Why is it desirable to construct capital budgeting rules so that higher-risk projects become less acceptable
than lower-risk projects?
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literature.
Problem Set # 6 Due – 4 pts

Module 7
Cost of Capital
Capital Structure Leverage
We were introduced to the idea of capital structure in Chapter 13 as a necessary underpinning to the cost
of capital concept. In this module, we’ll discover there’s a great deal more to capital structure than
calculating the WACC. In fact, its management is one of the most important things financial executives
do. Used properly, capital structure management can be an effective approach to improving financial
performance. It can turn good results into better ones, and can even raise the price of a company’s stock.
However, the technique has to be used with caution because its benefits come at a price. The cost of
improving performance with capital structure can be increased risk. And risk, as we’ve already learned, is
a serious problem. In this module, we’ll learn all about the benefits and the costs of managing results
through capital structure.
Power Points 13 & 14
Why are ROE and EPS such important measures of performance to investors?
literature.
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Problem Set # 7 Due – 4 pts

Module 8
International Finance
In the last 60 years, business has become increasingly international. The change has occurred in two
distinct ways. First, we do more import/export business with other countries than ever before. In 1960,
imports and exports were3% and 4% of gross domestic product (GDP), respectively. By 2010, imports
were about 13% of GDP, while exports were about 9%. Second, the nature of international business has
changed. In 1960, doing business with a foreign country generally just meant importing and exporting
goods. Now, international business as often as not implies a direct investment in facilities and equipment
in another country and the operation of a full-scale business there.
Companies that have divisions and branches in other countries are known as multinational corporations,
abbreviated MNCs.
The volume or international business is steadily increasing worldwide.
Financial markets are also increasingly international. Fifty years ago it was very unusual for an investor to
buy the stock of a foreign company. Today people make portfolio investments in foreign stocks and
bonds all the time. International business has changed from import/export to operating full-scale
businesses in other countries. Building a business in another country is a direct investment, while buying
foreign securities is a portfolio investment.
International business is an increasingly large part of commercial activity in the United States. Virtually
all companies of any size have some international dealings. It’s clearly important, therefore, that we
understand the basic financial principles of doing business with companies from other countries. Such
business has all of the problems and challenges of operating domestically but includes several additional
complications and risks. We will examine exchange rates as a base of information for understanding
international and domestic business.
Read Chapter 18 Textbook
Power Point 18
After World War II, the United States was the world’s dominant economic power. We’re still the largest
economy, but the rest of the world has caught up significantly. In some areas, we’ve lost the lead. The
production of consumer electronic equipment, for example, is largely done in the Far East. Is this trend
good or bad for Americans? Explain.
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literature.
Course Reflection Due – 8 pts

Portfolio Assignments Due – 25 pts
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CONCORDIA UNIVERSITY CHICAGO

MBAC 6450 Financial Management

College of Business Mission Statement:

The Four Pillars:

MBA Program Outcomes:

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Ethics, Honesty, Participation and CUC Honor Code

Concordia Honor Code

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Class Attendance and Participation Policy:

Observance of Religious Holidays: Absences from Classes Policy

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Institutional Review Board (IRB):

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Request for an Incomplete:

MBAC 6450 Financial Management

COURSE LEARNING OUTCOMES:

This course should enable the student to:

A. Synthesize concepts of financial statements and valuation

PRINCIPAL UNITS TAUGHT IN THE COURSE:

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Course Reflection Module 8 8 pts.

Total 100 pts.

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Quick Reference to Module Activities

Monday of Week 7 Module 7  Read Chapter 13 & 14 in  Participation Preparation Document

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Course Learning Outcomes: A, B, C & D

Course Learning Outcomes: A, B, & D

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Course Learning Outcomes: A, B, & D

Final Portfolio Assignment: 25 pts. Due at the end of Module 8

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In this assignment you will:

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Course Learning Outcomes: A, B, C, & D.

The Role and Objective of Financial Management

Module Outcomes: A, B, C, & D

Participation #1a: 0 pts

Participation #1b: 3 pts

Is the corporate tax schedule progressive? Why or why not?

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are asked to provide your opinion or a personal reflection on a specific question).

Problem Set #1 Due – 4 pts

Cash Flows and Financial Analysis

Module Outcomes: A, B, C, & D

Participation #2: 3 pts

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Problem Set #2 Due – 4 pts

The Financial System, Corporate Governance, and Interest

Module Outcomes: A, B, C, & D

Participation #3: 3 pts

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get full participation points.

Problem Set #3 Due – 4 pts

The Valuation and Characteristics of Bonds

Module Outcomes: A, B, C, & D

Participation #4: 3 pts

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Problem Set #4 Due – 4 pts

Risk and Return

Module Outcomes: A, B, C, & D