BUSAD 526: Current Issues in Corporate Finance
BUSAD 526 focuses on current issues in corporate finance involving strategic financial decisions, including capital structure policy and cost of capital, payout policy, financial planning and forecasting, valuation methods including real option, venture capital and IPO, and topics on corporate control. Students will develop an ability to analyze and solve complex financial decision problems by applying financial theories and tools discussed in this course.
Prerequisite: ACCTG 512, FIN 531
Overview | Structure | Objectives | Materials | Library Resources | Technical Requirements | Assignments | Grading | Course Schedule | Academic Integrity | Accommodating Disabilities | Additional Policies | Program Residency
Overview
BUSAD 526 covers topics in financial modeling for valuation utilizing advanced corporate finance, such as capital structure and cost of capital, and financial forecasting. The ability to understand and build working financial models is one of the most essential skills in finance fields, including commercial banking, corporate financial management, investment management, and investment banking. Estimating the current value and projecting the future performance, of a company require building accurate and flexible financial models. This course bridges the gap between theory and real-world practices through a step by step hands-on approach in financial modeling using EXCEL and a Monte Carlo simulation software. The course will focus specifically on model building for financial statement projections (pro-forma financial statements) and capital budgeting analysis. The modeling exercises in this course will employ a variety of techniques employed in financial model building, such as sensitivity and scenario analysis, regression analysis, and Monte Carlo simulation.
The software for the Monte Carlo simulations will be @Risk™, an Excel add-in software. @RiskTM enables modeling of probability distributions of key assumptions (input variables, such as the sales growth rate) in forecasting and calculates the distribution(s) of output variables relevant to decision making, such as the value of a project or an enterprise. Monte Carlo simulations will be applied in model building throughout this course and other courses such as FIN 532 and BUSAD 585.
The main learning in this course will be accomplished through a hands-on five-day residency session supplemented by online study. The students are expected to have acquired an intermediate level of proficiency in Excel before the start of this course.
Course Structure
The course will be five-weeks long with online learning during the first two weeks, hands-on learning during the 5-day residency week (the third week), with the last two weeks reserved for the final exam and the final team project analysis. During the residency week, students will work closely with the faculty and the team members to learn through hands-on, model-building experiences, including Monte Carlo simulations. Students will analyze a range of possible outcomes based on uncertain input variables with specified probability distributions. It is therefore extremely important that each member of the class is prepared to work actively on the computer for model building. The instructor will be available for individual assistance throughout the residency period.
Course Objectives
After completing the course, students should be able to model and solve financial decision problems using Excel. Specifically, you should be
- proficient in advanced Excel techniques in financial problem solving;
- able to build a functional and dynamic working model for pro forma financial statements;
- able to solve capital budgeting problems;
- able to apply Monte Carlo simulations using @RISK in estimating firm values and analyzing capital budgeting problems under uncertainty; and
- able to value an enterprise based on forecasting model, simulation, and advanced corporate finance theories.
Required Course Materials
Most World Campus courses require that students purchase materials (e.g., textbooks, specific software, etc.). To learn about how to order materials, please see the Course Materials page. You should check LionPATH approximately 3–4 weeks before the course begins for a list of required materials.
Required Course Materials from eReserves:
The chapters from the following textbooks are required and may be accessed through the Penn State Library eReserves system:
- Brealey, R., Myers, S., & Allen, F. Principles of Corporate Finance. 10th edition. McGraw-Hill. (BMA). ISBN#: 978-0-07-353073-4. Chapters 9, 17, 18, and 19.
- Holden, C. W. (2012). Excel Modeling in Corporate Finance. 4th edition. Prentice Hall. ISBN-10: 0-13-249784-0. Chapter 16.
- Winston, W. (2008). Financial Models using Simulation and Optimization II. Palisade Corporation. Chapters 20 and 23.
Choose the Student Resources link in the main menu and then click on the Library Reserves link to access the readings through the library's site. Another access route is to go to the Penn State University Libraries home page, click on the Course Reserves tab at the top and search for "BUSAD 526." See below for further information about the library.
Reference Material:
The following reference materials are excellent resources for the course:
- Welch, I. (2011). Corporate finance (2nd ed.). Anderson Graduate School of Management University of California. ISBN: 978-0984004959. Retrieved from http://book.ivo-welch.info/fcgi-bin/ed2.fpl?PPage1. (A free corporate finance graduate level textbook is available online.)
- Koller, T., Goedhart, M., & Wessels, D. (2010). Valuation - Measuring and Managing the Value of Companies (5th ed.). Hoboken, NJ: McKinsey & Company. John Wiley & Sons, Inc. ISBN: 978-0-470-42465-0
Software
Microsoft Excel will be used extensively in this course, and students are expected to have acquired an "intermediate level of skills in Excel by the end of the first week, including the time value of money functions such as NPV(), PV(), PMT(), and IRR()." In addition, a Monte Carlo simulation software, @RISK, will be used to model uncertainty in capital budgeting analysis.
However, it is highly recommended that you view the following Excel resources to practice your skills and use as reference material.
Essential Topics for Beginners (Excel 2007):
- Baycon Group, Inc. (1999-2011). Microsoft Excel 2007 tutorial - Free & online. Retrieved from http://www.baycongroup.com/el0.htm
- Florida Gulf Coast University. (2007). Excel 2007 tutorial homepage. Retrieved from http://www.fgcu.edu/support/office2007/excel/
Basic and More (Excel 2010):
- Goodwill Community Foundation, Inc. (1998-2012). Excel 2010. Retrieved from http://www.gcflearnfree.org/excel2010
- Benninga, S. (2008) Financial Modeling (3rd ed.). Cambridge, MA: The MIT Press. ISBN: 978-0-262-02628-4. Benninga’s book Chapter 1 offers a review of basic Excel functions for concepts in Time Value of Money.
For Additional Support:
- The Pennsylvania State University. (2011). Free online software training. Retrieved from http://www.lynda.psu.edu/. Use the tutorial from the online training library at Lynda.com Microsoft Training and Tutorials. (Note: You will need to be logged in to the "lynda.psu.edu" site first and you will be prompted to do so if necessary. click on Browse the library and then click on Software. From the list scroll down and select Microsoft from the menu and select Excel. Then select the version of Excel that is on your computer.)
Library Resources
Many of the University Libraries resources can be utilized from a distance. Through the Libraries website, you can
- access magazine, journal, and newspaper articles online using library databases;
- borrow materials and have them delivered to your doorstep—or even your desktop;
- get research help via email, chat, or phone using the Ask a Librarian service; and
- much more.
You must have an active Penn State Access Account to take full advantage of the Libraries' resources and service. The Off-Campus Users page has additional information about these free services.
Technical Specifications
Note: Courses that are designated as running in Canvas have different technical requirements. For those courses, please review the Canvas Technical Requirements for MFIN courses.
|
|
|
| Operating System | Windows Vista, Windows 7, Windows 8* Macintosh users may have problems using the specialized software required in some courses. *Windows 8 support excludes the tablet only RT version |
| Processor | 1 GHz or higher |
| Memory | 2 GB of RAM |
| Hard Drive Space | 500 MB free disk space |
| Browser | We recommend the latest Angel-supported version of Firefox or
Internet Explorer. To determine if your browser fits this criteria and
for advice on downloading a supported version, please refer to the
following ITS knowledgebase article:http://kb.its.psu.edu/cms/article/6
Note: Cookies, Java, and JavaScript must be enabled. Pop-up blockers should be configured to permit new windows from Penn State web sites. Due to nonstandard handling of CSS, JavaScript, and caching, older versions of Internet Explorer (such as IE 6 or earlier) do not work with our courses. |
| Plug-ins | Adobe Reader [Download from Adobe]
Flash Player [Download from Adobe] |
| Additional Software | Microsoft Office 2007 or higher |
| Internet Connection | Broadband (cable or DSL) connection required |
| Printer | Access to graphics-capable printer |
| DVD-ROM | Required |
| Sound Card, Microphone, and Speakers | Required |
| Monitor | Monitor (Capable of at least 1024 x 768 resolution) |
If you need technical assistance at any point during the course, please contact the Service Desk.
For registration, advising, disability services, help with materials, exams, general problem solving, visit World Campus Student Services!
Assignments
Team Projects
Each team will analyze two companies, Wal-mart (WMT) during the residency period and a company to be announced (TBA) as the final project, which will be completed online. Please see the course schedule for due dates for each of the team projects. Details of the projects will be discussed in class during the residency week. A Stock Report Valuation Template and a Team Project Presentation Evaluation Rubric will be distributed during the residency week (the third week).
Wal-mart (WMT) Team Project
The WMT project experience during the residency period will serve as practice to prepare you for the final project, and as such the WMT project has only a 10-point weight. Each team will prepare a financial analysis, financial projection, and valuation for each company, including pro forma financial statements and a valuation in Excel, a written report in Word, and a presentation in PowerPoint. The report should not exceed 5 pages, double spaced, font size should be 12 points for headings and 10 points for text. Appendix can be attached without any limit on the number of pages. Each team will present the WMT project in class during the residency week.
Final Team Project - Company (TBA)
For the final team project, your team will analyze a company which will be announced by the instructor during the residency week. The final project has a 40-point weight. There are three parts to this project:
- Written Report Files (This is team-based.): Each team will prepare a financial analysis, financial projection, and valuation for each company, including pro forma financial statements and a valuation in Excel, a written report in Word, and a presentation in PowerPoint. The written report in word should follow the Stock Report Valuation Template and should not exceed 5 pages, font size should be 12 points for headings and 10 points for text. Any report with more than five pages or font size smaller than 10 will not be accepted for credit. Appendix can be attached without any limit on the number of pages. This part will be worth 15% of your grade.
- PowerPoint/Video Presentation (This is team-based.): Each team will submit a recorded video presentation of the final project (incorporating your team's PowerPoint presentation) of the company using YouSeeU. To assist you with team discussions, there will be a team discussion forum set up so only the members of each team can access their team discussion forum as a means to communicate. Feel free to use them as often as you need to when completing the assignment. You can also use other means of communication with your team, such as Collaborate, Skype, e-mail, phone, etc., whichever communication tool works best for your group. The presentation will be evaluated based on the quality of i) argument, ii) analysis, iii) presentation quality, and iv) quality of slides. (see the Team Project Presentation Evaluation Rubric file). The video presentation should not exceed 15 minutes, the slides should not exceed 15 slides, and each slide may have no more than 6 bullet points and a heading. This part will be worth 15% of your grade.
- Peer Evaluation (This is individual-based.): Finally, after your team has completed the final project, each member will need to complete a peer evaluation of each team member. The peer evaluation will be worth 10% of your grade.
Quizzes
Quizzes 1 and 2 consist of problem-solving questions designed to assess your mastery of the main concepts learned from Lessons 1 and 2. Quiz 3 is to assess your understanding of the Monte Carlo simulation. Quizzes 1 and 2 will be completed online where you will download the quiz file to your computer, provide solutions to the problem-solving questions, and then upload the file to a drop box. Quiz 3 will be a 20-minute quiz to be taken in class during the residency week.
Final Exam
The final exam is designed to test your
- ability to build a financial forecasting model;
- understanding of the DCF-based valuation methods; and
- ability to run Monte Carlo simulations and to interpret the simulation results.
Participation
The instructor will post several discusson questions to a general dicussion forum for each of the first two weeks and students are encouraged to participate in the discussion. Your participation is voluntary and you will not be graded on these discussions. The discussions will be used to enhance your learning experience.
Grading
The learning assessment in BUSAD 526 will be based on individual and team assignments, including quizzes, a final exam, two team projects, and class participation. The graded activities and the percentage of your course grade associated with the activities are as follows:
| Assignments | Grading | Timeframe |
|---|---|---|
| Quizzes 1, 2, and 3 (individual) | 15% (5% each) | Weeks 1, 2, and 3 |
| Team Project 1 (Walmart, WMT) | 10% (5% reports, 5% presentation) | Week 3 (Thursday and Friday during the residency week) |
| Final Exam (individual) | 35% | Week 4 |
| Team Project 2 (company - TBA) | 40% (15% report, 15% presentation, 10% peer evaluation) | Week 5 |
Submission Deadlines
Quizzes 1 and 2, the final exam, and the final project on a company - TBA (files and recorded presentation) are to be submitted electronically as specified in the course schedule. Please be advised that the dropboxes in the course website will not accept any reports after 3 a.m. E.T. Monday mornings unless stated otherwise. Quiz 3 and the files and presentation for Team Project 1 on Wal-mart will be completed during the residency week. Note: Late submission of answers will receive no credit. Please see the course schedule for submission deadlines.
Grading Scheme
The course grade will be determined approximately based on the following scale of course composite scores:
| Letter Grade | Percentage |
|---|---|
| A | 93.0 + |
| A- | 90.0-92.9 |
| B+ | 87.0-89.9 |
| B | 83.0-86.9 |
| B- | 80.0-82.9 |
| C+ | 77.0-79.9 |
| C | 73.0-76.9 |
| C- | 70.0-72.9 |
| D | 60.0-69.0 |
| F | below 60 |
Please refer to the University Grading Policy for Graduate Courses for additional information about University grading policies.
BUSAD 526 Course Schedule
The schedule below outlines the associated timeframes and assignments that we will be covering in this course. Note that assignments are due based on the Eastern Time Zone (ET). This deadline ensures that all students have the same deadlines regardless of where they live.
- Course length: 5 weeks
Each assignment is identified as individual (I), team (T), graded (G), or ungraded (U).
Note: I will have office hours via Collaborate during the following times:
- Weeks 1 and 2: Wednesday and Friday, 7:00 p.m. - 8:00 p.m. ET
- Weeks 4 and 5: Wednesday, 7:00 p.m. - 8:00 p.m. ET
| Week 2 Topic: | Lesson 2: Valuation: Free Cash Flows and DCF Valuation |
|---|---|
| Timeframe: |
Week 2 |
|
Readings:
|
|
| Assignments: |
All assignments are due by 3:00 AM Eastern Time (ET) on Monday unless noted otherwise. Mid-Course Survey (I, U): Complete the mid-course survey. |
|
Residency (Tuesday)
Lesson 3: Residency Day 2 - Modeling Valuation I (CostCo) & Introduction to Monte Carlo Simulation |
|
| Timeframe: |
Residency Day 2: Tuesday |
|
Lecture/Readings:
|
Lecture:
Readings:
*Note: This reading can be accessed through the library's electronic reserves system. |
| Assignments: |
|
|
Residency (Wednesday)
Lesson 3: Residency Day 3 - Modeling Valuation II (CostCo) with Monte Carlo Simulation |
|
| Timeframe: |
Residency Day 3: Wednesday |
|
Lecture/Earnings Call/Readings:
|
Lectures:
Recorded Earnings Conference Call Readings:
*Note: This reading can be accessed through the library's electronic reserves system. |
| Assignments: |
|
|
Residency (Thursday)
Lesson 3: Residency Day 4 - Group Work on Wal-Mart |
|
| Timeframe: |
Residency Day 4: Thursday |
| Lecture/Readings: |
Lecture:
Team Project Readings:
|
| Assignments: |
|
|
Residency (Friday)
Lesson 3: Residency Day 5 - Team Project Presentation |
|
| Timeframe: |
Residency Day 5: Friday |
| Lecture/Readings: |
|
| Assignments: |
MFIN Residency Survey (I, U): Complete the MFIN Residency survey. |
Academic Integrity
According to Penn State policy G-9: Academic Integrity , an academic integrity violation is “an intentional, unintentional, or attempted violation of course or assessment policies to gain an academic advantage or to advantage or disadvantage another student academically.” Unless your instructor tells you otherwise, you must complete all course work entirely on your own, using only sources that have been permitted by your instructor, and you may not assist other students with papers, quizzes, exams, or other assessments. If your instructor allows you to use ideas, images, or word phrases created by another person (e.g., from Course Hero or Chegg) or by generative technology, such as ChatGPT, you must identify their source. You may not submit false or fabricated information, use the same academic work for credit in multiple courses, or share instructional content. Students with questions about academic integrity should ask their instructor before submitting work.
Students facing allegations of academic misconduct may not drop/withdraw from the affected course unless they are cleared of wrongdoing (see G-9: Academic Integrity ). Attempted drops will be prevented or reversed, and students will be expected to complete course work and meet course deadlines. Students who are found responsible for academic integrity violations face academic outcomes, which can be severe, and put themselves at jeopardy for other outcomes which may include ineligibility for Dean’s List, pass/fail elections, and grade forgiveness. Students may also face consequences from their home/major program and/or The Schreyer Honors College.
How Academic Integrity Violations Are Handled
World Campus students are expected to act with civility and
personal integrity; respect other students' dignity, rights, and
property; and help create and maintain an environment in which all
can succeed through the fruits of their own efforts. An environment
of academic integrity is requisite to respect for oneself and
others, as well as a civil community.
In cases where academic integrity is questioned, the Policy on Academic Integrity indicates that procedure requires an instructor to inform the student of the allegation. Procedures allow a student to accept or contest a charge. If a student chooses to contest a charge, the case will then be managed by the respective college or campus Academic Integrity Committee. If that committee recommends an administrative sanction (Formal Warning, Conduct Probation, Suspension, Expulsion), the claim will be referred to the Office of Student Accountability and Conflict Response.
All Penn State colleges abide by this Penn State policy, but review procedures may vary by college when academic dishonesty is suspected. Information about Penn State's academic integrity policy and college review procedures is included in the information that students receive upon enrolling in a course. To obtain that information in advance of enrolling in a course, please contact us by going to the Contacts & Help page .
Accommodating Disabilities
Additional Policies
For information about additional policies regarding Penn State Access Accounts; credit by examination; course tuition, fees, and refund schedules; and drops and withdrawals, please see the World Campus Student Center website.
Program Residency
One of the most unique aspects of the Penn State online Master of Finance degree program is the on-campus residency. In this interactive residency, you will work closely with the program faculty to receive hands-on, model-building experience, using a complex simulation tool. Even though the residency will not take place until BUSAD 526, we would like to introduce you to this information so you can begin making arrangements. Please access the MFIN Online Residency Overview for more information.
Disclaimer: Please note that the specifics of this Course Syllabus are subject to change, and you will be responsible for abiding by any such changes. Your instructor will notify you of any changes.