TITLE: Capital Investment Analysis
 

Content Outline

Grading Procedures

Text & References

Prerequisites

1. CATALOG DESCRIPTION:
   Capital Investment Analysis (3). An in-depth examination of long-term investment and financing decisions. The material to be covered will include financial analysis and forecasting, the theories and techniques employed in capital investment analyses and capital structure decisions, and the sources and uses of long-term financing. Prerequisite: FIN 330.
2. PURPOSE:
   To develop the capital investment analysis skills necessary for success in working with the financial function within a firm.
3. COURSE OBJECTIVES:
   
   1. To develop an understanding of the role capital investment analysis and capital structure decisions have in today's business environment.
   2. To ensure students have a working knowledge of the techniques (e.g., spreadsheet analysis) used to make long-term investment decisions.
   3. TENTATIVE COURSE OUTLINE:
      

      January 13	Introduction - Ch. 1, 2 Project Overview
      January 20	No Class
      January 27	Time Value of Money (Ch. 3) Asset Valuation (Ch. 4)
      February 3	Cost of Capital (Ch. 16)
      February 10	Project Evaluation Criteria (Ch. 5-6)
      February 17	Exam 1 (Ch. 1-4, 16)
      February 24	Ranking Projects (Ch. 7)
      March 3	Estimating Cash Flows (Ch. 8)
      March 10	Taxes (Ch. 9), Lease Analysis (Ch. 21)
      March 17	No Class
      March 24	Other Capital Budgeting Methods (Ch. 20)
      March 31	Inflation and FX Issues (Ch. 9-10)
      April 7	Exam 2 (Ch. 5-8, 20, 21)
      April 14	Risk Analysis (Ch. 11-15)
      April 21	Capital Structure (Ch. 17-19)
      April 28	Real Options Analysis
      May 5	Final Exam

   4. INSTRUCTIONAL ACTIVITIES:
      Course material will be presented by combining lectures and homework problem discussions with emphasis placed on building problem-solving skills as related to the capital investment or project analysis process.
   5. FIELD, CLINICAL, AND/OR LABORATORY EXPERIENCES:
      None
   6. RESOURCES:
      Textbook: Seitz and Ellison, Capital Budgeting and Long-Term Financing Decisions, 3rd Edition, Dryden, 1999.
      
      Blackboard: PowerPoint slides and all course handouts are available on Blackboard at bb5.murraystate.edu. You should find a plethora of useful materials there, some of which is duplicated on my website.
      
      Other Resources: Financial calculator (recommended are the TI BA-II Plus or HP 10B; the TI-83 is also acceptable). DO NOT BUY the TI BA-35 or TI Solar BA-35, since neither is adequate for our purposes.
      
      Access to and use of computer spreadsheet software is expected. You must also have an e-mail account and access to the Internet, specifically the Blackboard system. I frequently communicate via Blackboard or e-mail, especially to provide additional information on class topics, PowerPoint lecture notes, homework answer keys, project assistance, etc.

4. GRADING PROCEDURES:
   Your grade will reflect your performance on two case problems, three exams, and a valuation project. Class participation is encouraged and may be included as a possible bonus.


1. The grading weights are as follows:

   Exams (2)	200 points
   Case Analyses (2)	100 points
   Project	100 points
   Final Exam	100 points
   Total	500 points

   
   
2. Final grades will be determined as follows:

   Total Points		Grade
   450-500 (90%)		A
   400-449 (80%)		B
   350-399 (70%)		C
   300-349 (60%)		D
   Less than 300		E

   
   To receive a grade of AU for auditing this class, you must take the exams, and have at least a 60% average. Otherwise, you will receive a failing grade.
   
   Make-Up Policy: You will only be allowed to take a make-up in the event of an excused absence. This means that you must personally notify me in advance that you are going to miss an exam or other scheduled activity because of illness, death of an immediate family member, job interview, university trip or some job-related commitment. Even if you have a valid excuse, but fail to notify me, I reserve the right not to grant a make-up exam.


5. ATTENDANCE POLICY:
   Attendance is expected, although your grade is not lowered directly because of missing classes. However, missing class activities will likely negatively affect your performance on the exams and project.
6. ACADEMIC HONESTY POLICY:
   Academic dishonesty such as plagiarism and cheating on exams will not be tolerated. Academic dishonesty will be discouraged by enforcing the College's Academic Dishonesty Policy that is posted in each classroom and is printed in the University Bulletins.
   
   Examples of cheating that I find particularly troubling include using work product supplied by other students, copying from another student's exam, and using data and language from sources without proper citation.
7. HANDICAP PROVISIONS:
   Students with disabilities that might inhibit them from full and equal participation in class and in demonstrating their full potential and abilities should contact me immediately. Necessary accommodations may then be arranged to assist the student's participation in the class.

8. PREREQUISITES:
   FIN 330