LahoreUniversityofManagementSciences

FINN400AppliedCorporateFinance
FallSemester2017
(TentativeUnderreview)
Instructor Dr.FazalJawadSeyyed,CFA
RoomNo. SDSB307
OfficeHours TBA
Email fazal.jawad@lums.edu.pk
Telephone 04235608030
Secretary/TA BilalHassanAlvi
TAOfficeHours TBA
CourseURL(ifany) http://suraj.lums.edu.pk/~ro/

COURSEBASICS
CreditHours 3
Lecture(s) NbrofLec(s)PerWeek 2 Duration
Recitation/Lab(perweek) NbrofLec(s)PerWeek Duration
Tutorial(perweek) NbrofLec(s)PerWeek Duration

COURSEDISTRIBUTION
Core ACFCore
Elective
OpenforStudentCategory
CloseforStudentCategory

COURSEDESCRIPTION
CourseDescription:AppliedCorporateFinanceisacasebasedcourseinintermediatelevelfinance.Itprovidesinsightsintothe
roleofthefinancialmanager,whoseprimaryresponsibilityconsistsofacquiringfundsneededbythefirmanddirectingthesefunds
intoprojectsthatwillmaximizethevalueofthefirmforitsshareholders.Inreachingthisobjective,financialmanagersperforma
variety of tasks such as financial analysis and forecasting of cash flows; analysis of working capital; project evaluation and risk
analysis; evaluating financing choices available to the firm; valuation of financial and real assets including valuation of M&A
candidates,andcrossbordertransactionsinvolvingforeigncurrenciesandglobalfinancialmarkets.

CourseFocusandModules:Asanappliedcourse,thefocusison:(a)applicationoffinancialconcepts,models,andtoolstoaddress
typical problems faced by financial managers, (b) examining financial theories and concepts in light of corporate practices and
empirical evidence for better understanding of the critical success factors and processes related to financing, investment, and
payoutdecisionsoffirms,and(c)interactionoffinancingandinvestmentdecisionsandhowtheyinterfacewithcapitalmarkets
andimpactfirmvalue.

Thecourseisdividedintofollowingfourmodules:

Module1:OverviewofFinancialAnalysisandFinancialForecasting
Module2:CostofCapital,CapitalBudgeting,andResourceAllocation
Module3:Financing,CapitalStructure,andDividendPolicyDecisions
Module4:FirmValuation,M&A,andSpecialTopicsinFinance

COURSEPREREQUISITE(S)
FINN200 IntermediateFinance
 LahoreUniversityofManagementSciences
COURSELEARNINGOUTCOMES(CLO)
Uponsuccessfulcompletionofthecourse,studentsshould beableto:

1. Demonstrate understanding of the fundamental concepts, mainstream theories, and practices in corporate
finance;
2. Analyzefinancingandinvestmentchoicesfacedbyfinancialmanagersbasedonfinancialtheoriesandempirical
evidence;
3. Apply relevant financial concepts, tools, and theories to critically analyze and evaluate business
problems/financial decisions and recommend action consistent with the objective of creating value for
shareholders;
4. Evaluate the interaction of firm specific variables with wider economic and financial factors in the securities
marketsanditsimpactonfirmschoices;
5. Discussanddebateavarietyoftopicsinfinancerelevanttofinancialmanagersincludingtheethicalandglobal
perspectivesinmakingfinancialdecisions;
6. Present and defend their analysis and recommendations effectively, both in oral and written forms. (General
LearningGoal)

UNDERGRADUATEPROGRAMLEARNINGGOALS&OBJECTIVES

GeneralLearningGoals&Objectives
Goal1EffectiveWrittenandOralCommunication
Objective:Studentswilldemonstrateeffectivewritingandoralcommunicationskills
Goal2EthicalUnderstandingandReasoning
Objective:Studentswilldemonstratethattheyareabletoidentifyandaddressethicalissuesinanorganizational
context.
Goal3AnalyticalThinkingandProblemSolvingSkills
Objective:Studentswilldemonstratethattheyareabletoidentifykeyproblemsandgenerateviablesolutions.
Goal4ApplicationofInformationTechnology
Objective:Studentswilldemonstratethattheyareabletousecurrenttechnologiesinbusinessandmanagement
context.
Goal5TeamworkinDiverseandMulticulturalEnvironments
Objective:Studentswilldemonstratethattheyareabletoworkeffectivelyindiverseenvironments.
Goal6UnderstandingOrganizationalEcosystems
Objective:StudentswilldemonstratethattheyhaveanunderstandingofEconomic,Political,Regulatory,Legal,
Technological,andSocialenvironmentoforganizations.

MajorSpecificLearningGoals&Objectives
Goal7(a)ProgramSpecificKnowledgeandUnderstanding
Objective: Students will demonstrate knowledge of key business disciplines and how they interact including
applicationtorealworldsituations.(includingsubjectknowledge)
Goal7(b)Understandingthesciencebehindthedecisionmakingprocess(forMGSMajors)
Objective: Students will demonstrate ability to analyze a business problem, design and apply appropriate
decisionsupporttools,interpretresultsandmakemeaningfulrecommendationstosupportthedecisionmaker

 LahoreUniversityofManagementSciences
Indicatebelowhowthecourselearningobjectives/outcomesspecificallyrelatetoanyprogramlearninggoalsandobjectives.

PROGRAMLEARNINGGOALSAND COURSELEARNINGOBJECTIVES COURSEASSESSMENTITEM

OBJECTIVES
Goal1EffectiveWrittenandOral
Communication
Goal2EthicalUnderstandingand
Reasoning
Goal3AnalyticalThinkingandProblem
SolvingSkills
Goal4ApplicationofInformation
Technology
Goal5TeamworkinDiverseand
MulticulturalEnvironments
Goal6UnderstandingOrganizational
Ecosystems
Goal7(a)ProgramSpecificKnowledge
andUnderstanding(SubjectKnowledge)
Goal7(b)Understandingthescience
behindthedecisionmakingprocess
Students getanumberof opportunitiesto CP,Cases,andExam
demonstratetheirabilitytocommunicate
effectively(CLO#6)
Ethicalperspectivesinsomeofthecase CasesandExam(minor component)
studiesarehighlighted(CLO#5)
MajorGoal: Analyticalthinkingand CP,Quizzes,Assignments,Cases,and
problemsolvingskillsareessentialfor Exam
successinthiscourse(CLO#14)
Applicationofinformationtechnologyin Assignments,Cases
preparingcasesanalysesandassignments
Studentsworkingroupsof34 persons Cases
eachtopreparecaseanalysesandcase
briefs.Mostcasesettingsareglobaland
multicultural.
Developstudentsunderstandingofthe CP,Quizzes,Assignments,Cases,and
interactionoffirmspecificvariableswith Exam
thesecuritiesmarkets,industry,andthe
economy(CLO#4)
MajorGoal: Comprehensivecoverageof CP,Quizzes,Assignments,Cases,and
topicsinAppliedCorporateFinance(CLO Exam
#15)
NA NA

GRADINGBREAKUPANDPOLICY
Thecoursegradeisbasedonthefollowingcriteria:
Source %ofTotal
ClassParticipation 15
Quizzes/Assignments 30
MidTermExam 25
FinalExamination(comprehensive) 30

Total 100
ClassParticipationandAttendance:Studentsareexpectedtoattendallclasses.Ifyouarenotpresentatthebeginningofaclassor
leaveclassduringthesessionwithoutinstructorspriorpermission,youwillbeconsideredabsentfortheday.Youmustreviewthe
assignedmaterialsinadvanceoftheclassinordertocontributemeaningfullytoclassdiscussions.

Quizzes:Severalunannouncedquizzeswillbegivenontheassignedmaterial(readings,casesassignments,etc.)duringtheterm.
Nomakeupquizzeswillbegiven.However,thelowestquizgradeincludingazeroforamissedquizwillbedisregarded.

Assignments: Spreadsheetbased assignments are designed to sharpen your financial analysis skills. The format and other
requirementswillbespecifiedbytheinstructor.Allassignmentsmustbesubmittedontheduedate.Latesubmissionswillnotbe
accepted.

Examination: Both exams (midterm and final) will comprise a blend of MCQs and openended questions, caselets, or caselike
situations.
Calculator Requirement: You will need a financial calculator capable of performing present value/future value functions. For
example,TexasInstrumentBAIImeetsthesecriteria.Manyotherbrandsareequallysuitableforthiscourse.
 LahoreUniversityofManagementSciences
EXAMINATIONDETAIL

Yes/No:Yes
Combine/Separate:Combined
Midterm
Duration:3Hours
Exam
PreferredDate:
ExamSpecifications:Financialcalculatorand1PageA4sizeformulasheetisallowed


Yes/No:Yes
CombineSeparate:
FinalExam
Duration:3Hours
ExamSpecifications:Financialcalculatorand1PageA4sizeformulasheetisallowed

COURSESCHEDULE
MODULE/ SESSIONOUTCOME(S)
SESSIONTOPICANDCASE READINGMATERIAL
SESSION (STUDENTSWILLBEABLETO)
Module1:OverviewofFinancialAnalysisandFinancialforecasting
Topic:OverviewofCorporateFinance RWJCh1:Introductionto Appreciatethescopeofcorporate
CorporateFinance financeandhowfinancecanbeasource
Reading:NotetotheStudent:Howto (Optional)1 ofvalueforafirm.(CLO#1)
Session1
StudyandDiscussCases Understandhowtostudyandbenefit
fromthecasemethodapproach.(CLO#
16)
Topic:AnalyzingtheFirmsOperations BSChapter6:Analyzing Analyzethefirmsoperationsandits
andEnvironment theFirmsOperations environment.
Session2 (CLO#1)
Case:ZFactorRescuebythe
Numbers
Topic:FinancialAnalysis& BSChapter6:Analyzing Examinelinkagesbetweencorporate
PerformanceAssessment theFirmsOperations strategyandfirmsperformance.(CLO#
Session3 1)
Case:KrispyKremeDoghnts,Inc.;BES
#8
Topic:FreeCashFlowsandBuilding BSChapter4:BuildingPro Estimateandforecastfreecashflowsand
FinancialModels FormaFinancial itsapplicationsinbuildingfinancial
Session4 Statements modelsforvaluation.(CLO#1)
Case:TheThoughtfulForecaster,BES
#6
Topic:FinancialAnalysis& BSChapter4:BuildingPro Evaluatefirmshealthandforecast
Forecasting FormaFinancial performance.(CL#1)
Statements
Session5
Case:TheBodyShopInternational
PLC2001:AnIntroductiontoFinancial
Modeling;BES#9
Topic:CorporateFinancialStrategy MarketEfficiency Understandlinkagesbetweencorporate
andFinancialMarkets financialstrategyandfinancialmarkets.
Session6 (CLO#5)
Case:BillMillerandValueTrust;BES
#2
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Module2:CostofCapital,CapitalBudgeting,andResourceAllocation
Topic:CostofCapitalTheoryand BS:CapitalStructureand Examinevariousapproachesandissues
Practice CostofCapital inestimatingcostofcapitalofafirm.
Session7 (CLO#1)
Case:RocheHoldingAg:Fundingthe
GenentechAcquisition;BES#14
Topic:EstimatingCostofCapitalof Survey:BestPracticesin Applytheoryandinsightsfrompractice
theFirm EstimatingtheCostof toestimateafirmscostofcapital.(CLO#
Session8 Capital:AnUpdate,2013. 3,6)
Case:Nike,Inc.:CostofCapital;BES#
15
Topic:MultifacetedCapital RWJCh67:MakingCapital Planandevaluatemultifacetedcapital
InvestmentDecisions InvestmentDecisionsand investmentprojects.(CLO#2,3)
Session9 RiskinCapitalBudgeting
Case:TheInvestmentDetective (Optional)
BES#18
Topic:CapitalBudgetingRelevant RWJCh67:MakingCapital Estimaterelevantcashflowstoevaluate
CashFlows InvestmentDecisionsand capitalproject(s)ofafirm.(CLO#2,3,6)
Session10
Case:VictoriaChemicalsplc(A):The RiskinCapitalBudgeting
MerseysideProject;BES#24 (Optional)
Topic:RiskinCapitalBudgeting RWJCh18:Valuationand Applyscenarioanalysisincapitalproject
CapitalBudgetingforthe decision.(CLO#2,3)
Session11
Case:TheProcterandGamble LeveredFirm(Optional)
CompanyBES#23
Topic:WorkingCapitalManagement RWJCh2628:ShortTerm Appraiseafirmsworkingcapitalpolicies
Policies Financing,Cash,Receivable andshorttermfinancingrequirements.
Session12
andInventory (CLO#1,2,3)
Case:DellsWorkingCapital Management(Optional)
Module3:Financing,CapitalStructure,andDividendPolicy Decisions
Topic:StructuringCorporateFinancial BS:CapitalStructureand Examineandevaluatevariousfinancing
Policy CostofCapital choicesavailabletomoderncorporations
Session13 andtheirimpactonfirmvalue.(CLO#
Case:StructuringCorporateFinancial 2,3)
Policy;BES#32
Topic:AnalysisofLeverage BES:AnIntroductionto Analyzechangeincapitalstructureand
Restructuring DebtPolicyandValue itsimpactonfirmsvalue.(CLO#2,3,4,6)
Session14 (#31)
*Case:TheWmWrigleyJr.Co.;BES#
34
Topic:FinancialFlexibilityand BES:StructuringCorporate Understandthevalueoffinancial
AlternativeSourcesofFinancing FinancialPolicy(#32) flexibilityanditsimpact.(CLO#3,4)
Session15

Case:DeluxeCorp.;BES#35
Topic:IntroductiontoLeasing RWJCh21:Leasing Understandleasingasanalternativeto
Session16 (Optional) corporateborrowing.(CLO#2,3)

Topic:LeaseFinancingAnalysis RWJCh21:Leasing Evaluateleasefinancingasanalternative
(Optional) toborrowing.(CLO#2,3,6)
Session17 *Case:PrimusAutomationDivision,
2002BES#40

 LahoreUniversityofManagementSciences
Topic:DividendsandAlternative
Payouts
Session18
Case:GainesboroMachineTools
CorporationBES#29
Module4:FirmValuation,M&A,andSpecialTopicsinFinance
Topic:AlternativeMethodsofFirm
Valuation
Session19
Case:MethodsofValuationfor
MergersandAcquisitionsBES#42
Topic:ValuationoftheFirm
Session20
Case:AmericanGreetingsBES#43
Topic:RaisingCapitalThroughPublic RWJCh20:Issuing
Session21 Offerings:IPOValuation
Topic:TheIPOProcess
Session22
Case:TheFirstMeatSectorIPO:Al
ShaheerCorporation,LUMS
Topic:IntroductiontoAdjusted
PresentValue(APV)
Session23
Case:UsingAPV:ABetterToolfor
ValuingOperations
Topic:MergerandAcquisition
Evaluation
Session24
Case:SunMicrosystems;BES#48
Topic:FinancialDistressand
CorporateRestructuring
Session25
Case:MasseyFerguson,1980
Topic:InternationalCorporate
FinanceCurrencyRiskManagement
Session26
Case:CarrefourS.A.BES#37(CDC)
Topic:EthicalPerspectivesinFinance
Session27
Case:EthicsinFinance
FinalExamReview
Sessions28 FinalExamReview
RWJCh19:Dividendand Evaluatecorporatedividendpolicesin
otherPayouts(Optional) lightoffinancetheoryandbusiness
practices.
(CLO#2,3)
BS:ValuationbyMultiples Understandalternativemethodsoffirm
valuation.(CLO#3)
BS:ValuationbyMultiples Applyfreecashflowsandmarket
multiplesapproachestovalueafirm.
(CLO#2,3,6)
Understandwhycompaniesgopublic.
SecuritiestothePublic (CLO#2,3,6)
(Optional)
RWJCh20:Issuing UnderstandtheIPOprocessandapply
SecuritiestothePublic valuationtechniquesinaninitialoffering.
(Optional) (CLO#2,3,6)
RWJCh18:Valuationand Understandadjustedpresentvalue(APV)
CapitalBudgetingforthe anditsapplicationsasanalternativeto
LeveredFirm(Optional) WACCbasedvaluation.(CLO#1,5)
BES#42:Methodsof Applyvariousvaluationmethodsto
ValuationforMergersand appraisemergerandacquisition
Acquisitions) candidates.(CLO#3,6)
RWJCh30:Financial Appreciatespecialsituationssuchas
DistressandRestructuring financialdistressthattypicallyrequire
(Optional) corporaterestructuring&reassessment.
(CLO#5)
RWJCh31:International Appreciateissuesandcomplexitiesin
CorporateFinance evaluatingcrossborderinvestingand
(Optional) financingalternatives.(CLO#5)
Understandtheethicalperspectivein
financialdecisionsanditsimplicationsfor
firmvalue.(CLO#5)

1
Note:ReadingmaterialdesignatedasOptionalisnotpartofthestudypack.YoumayuseanystandardCorporateFinance
textbookofyourchoicetoreviewthesessiontopic.

 LahoreUniversityofManagementSciences
TEXTBOOK(S)/SUPPLEMENTARYREADINGS
Casebook:
Bruner,Eades,andSchill,CaseStudiesinFinance:ManagingforCorporateValueCreation,7thEdition,McGrawHill/IrwinSeriesin
Finance,2014.(BES)

Textbook:
Nospecifictextbookisrequiredforthiscourse.Youmayuseanystandardcorporatefinancetextbooktoreviewtheassignedtopic.
Anumberofcorporatefinancetextbooksarelistedbelow.ThecourseschedulereferstorelevantchaptersfromCorporateFinance
by Ross, Westerfield, and Jaffe (RWJ) for your convenience (indicated as Optional). Material indicated as Optional is not
mandatoryreading.Youcansubstitutethismaterialwithanytextbookofyourchoice.Thestudypackdoesnotcontainreadings
designatedasOptional.

ReferenceBooks:
Ross,WesterfieldandJaffe,CorporateFinance,9thEdition,McGrawHill,2010.(RWJ)
Benninga,SimonandSarig,CorporateFinance:AvaluationApproach,McGrawHill,1997.(BS)
Brigham,EugeneandDaves,P.,IntermediateFinancialManagement,8th(oralateredition),Thomson,SouthWestern.
Brealey,Myers,andAllen,PrinciplesofCorporateFinance,8thEdition,McGrawHill/Irwin,2006.

AdditionalRecommendedReadings:
StudentsareencouragedtoreadfinancialpublicationssuchasTheWallStreetJournal,FinancialTimes;BusinessRecordertostay
abreastofdevelopmentsrelatedtothiscourse.