TMGT K4115 -Accounting & Finance for Technology Managers

Instructor Charissa Asbury Office By appointment Hours Course Website: k4115.weebly.com Phone (973) 327-3134 E-mail cda3@columbia.edu

Text: Fundamentals of Corporate Finance Parrino, Robert and David Kidwell John Wiley & Sons, Inc. 2nd Edition (2012) Description: This course explores the central concepts of corporate finance with a focus on the application of the principles of financial valuation in the field of technology management. The interplay between financial decisions, strategic considerations and economic analysis is examined in a case-based exploration of the capital budgeting decisions of the firm in its quest for profit maximization. Topics to be covered include basic financial statement analysis and ratios, time value of money, the cost of capital, capital structure, portfolio theory, and the dynamics of risk and return. particular relevance for technology ventures. At the end of the course students should understand y y y The complex relationship between the technology industry and the global economy The basic techniques of financial statement and ratio analysis as they apply to firms and industries in the business of information technology The principles of financial valuation from the economic perspective of cash flow analysis including a thorough understanding of the time value of money, the cost of capital, the optimal capital structure, the relationship between risk and return, and the Capital Asset Pricing Model The fundamentals of real options pricing and the potential applications to technology ventures Special emphasis will be place on project valuation using real options and other techniques of

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At the end of the course the students will be able to

y y Evaluate the financial performance of firms using financial statement and ratio analysis in the context of strategic global and industry concerns Apply the basic economic techniques used by technology managers in determining the allocation of their company s scarce resources including the determination of Net Present Value and alternative acceptance measures y Identify strategies for valuing technology ventures using real options

Evaluation:
These skills will be demonstrated through: y y y y The preparation of case studies Problems sets Final Examination Participation in Class Discussions (40% of the total grade) (25% of the total grade) (25% of the final grade) (10% of the grade)

Students will be evaluated based on both individual problem sets and group projects. A significant amount of time is devoted to the examination of actual business situations, which are presented in the form of case studies. Student work will be done in small groups with each group preparing an evaluation of the issues and presenting a recommendation for action to senior management. Class discussion is a vital part of the learning process and attendance at discussion sessions is required. You can gain credit for class participation in three ways: participation in class discussion, participation in discussions in the online forum, and by making contributions to the class blog. Detailed information is provided on the website.

Directions for Accessing Class Website:

The class website will be used as a central meeting point for information and discussion. Lectures, assignments, recordings, etc. will all be posted to the site as well as updated meeting information. The class blog and discussion forum are also located here. You can access the site at www.k4115.weebly.com.
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Weekly Lecture Schedule: Please Check Website detailed information. Course Schedule: Required Reading (See Week Topic Introduction to Valuation Techniques Complete Reading List on website) One 1/23 Class Website

Porter, M. E. (2008). THE FIVE Two 1/30 Strategic Analysis COMPETITIVE FORCES THAT SHAPE STRATEGY. Harvard Business Review, 86(1), 78-93. Three Four 2/6 2/13 Ratio Analysis The Time Value of Money Net Present Value and Project Evaluation Risk and Return Portfolio Theory and the Seven 3/5 Capital Asset Pricing Model 03/12 University Holiday Optimal Capital Structure Eight 3/19 & the Weighted Average Cost of Capital Text, Chapter 13 Text, Chapter 4 Text, Chapter 5, 6

Five

2/20

Text, Chapter 10, 11

Six

2/27

Text, Chapter 7

Nine Ten

3/26 4/2

Estimating the CAPM Case Study: American

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Harvard Case Materials

Chemical Eleven 4/9 Options Basic Ideas Text, Chapter 20 Luehrman, T. A. (1998). Twelve 4/16 Option Pricing and the Black-Scholes Model Investment Opportunities as Real Options: Getting Started on the Numbers. Harvard Business Review, 76(4), 51-67. Luehrman, T. A. (1998). Strategy Thirteen 4/30 Valuation Using Real Options as a Portfolio of Real Options. Harvard Business Review, 76(5), 89-99.

Yellow indicates an online class

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