Professor: Kenneth R. Biederman Class Hours: T/TH 11:00 a.m. - 12:15 p.m.

115 Purnell Hall

Office: 216 MBNA Hall

Office Hours: T/TH 9:00 - 11:00 a.m.

T/TH 3:30 - 4:30 p.m.

By appointment

Phone: 831-1761

FAX: 831-3061

E-mail: k.biederman@mvs.udel.edu

Web Address:  http://www.udel.edu/Finance/Biederman

Course Objectives and Description:

The course is an overview of basic principles and theoretical framework leading to sound corporate financial management decisions. The course also deals with the financial manager’s role in achieving the optimal financial position of the firm, including the management of corporate assets and liabilities. Emphasis is placed on the application of fundamental problem-solving procedures to practical situations.

The course is divided into four parts. Part I - Introduction to Financial Management - covers chapters 1 to 4. In the first chapter we get an overview of financial management including career opportunities in finance; the responsibilities of individuals who have jobs in financial management. This chapter also introduces various forms of business structure and organization. Chapter 2 deals with financial statements, cash flow, and taxes. Here we take an overview look at key financial statements, including the balance sheet, income statement, and cash flow statements. In chapter 3 - Analysis of Financial Statements - we focus on key financial ratios which are derived from the financial statements discussed in chapter 2. We look at various financial ratios and the type of information that they convey to us with regard to the financial health of a business. Finally, in chapter 4 we deal with the financial environment: markets, institutions, and interest rates. In this chapter we deal with various types of financial markets for stocks and bonds. We look at interest rates, factors that influence interest rate levels, and how interest rates impact financial markets and financial instruments.

Part II - Fundamental Concepts in Financial Management - includes chapters 5 and 6. In chapter 5, we develop the concept of risk and rates of return, looking at the relationship between the risk associated with an investment and the rate of return required as a result of that risk and other key factors which go into determining rates of return. Chapter 6 deals with the time value of money concepts. Therein we develop the relationship between future income flows from an investment and its current value. We learn to calculate the future value of an income stream and how to discount future income streams back to their present value. Annuities, perpetuities, compounding, and amortization are studied.

Part III deals with key financial assets. Chapter 7 concentrates on bonds and how bonds are valued; chapter 8 takes a similar approach for stocks. Risk, rates of return, and time value of money concepts developed in chapters 5 and 6 are applied in chapter 7 and 8 to determine how bonds and stocks are valued in the marketplace.

In Part IV we move into the area of capital budgeting: investing in long term capital assets. Chapter 9 focuses on determining the cost of capital used by businesses for investment purposes. We look at various forms of capital including debt, preferred stock, retained earnings, and newly issued stock. Chapter 10 establishes the basics of capital budgeting. Here we learn how projects are classified and how capital budgeting decisions are made. Capital budgeting decision rules are developed including net present value (NPV), internal rates of return (IRR) and others.

Finally in chapter 12, capital structure theory and determining the optimal capital budget for a business is developed.

Prerequisite:

ACCT 207 (Financial) ACCT 208 (Managerial)

Course Resources:

Grading:

• There will be three exams: two during the term and the final.

• The final is cumulative.

• There will be periodic "home work" problems which will be assigned, developed and reviewed in periodic lab sessions.

• There may be occasional quizzes, announced and unannounced.
• The weighting scale is as follows:

- 2 Exams...................................................20% each

- Final.........................................................40%

- Quizzes, problems....................................20%

Total.............................................................100%

• The grading scale is:

93% - 100% A 73% - 76% C

90% - 92% A- 70% - 72% C-

87% - 89% B+ 67% - 69% D+

83% - 86% B 63% - 66% D

80% - 82% B- 60% - 62% D-

77% - 79% C+ BELOW 60 F

Policies:

• Students are expected to attend all classes. Attendance will be taken on occasion.

• Students are graded on the items explained in the grading section, and these must be completed at the time specified in the course schedule and as assigned in class. No extra work will be available to any student at any point during the semester or after the semester to help improve grades.

• During class or office hours, feel free to add comments, ask questions or have the instructor clarify points.

• Financial calculators are needed for several portions of this class. There are several good and relatively inexpensive models available. I will be using the Texas Instruments BAII Plus. Others like the HP 10B or 17B can be used.

• The University of Delaware’s policies on academic honesty will be enforced.

* Problems in parenthesis are integrated cases at the end of the chapter to be discussed in class.

Dr. Biederman is a Professor of Finance at the University of Delaware. He was Dean of the College of Business & Economics at the University of Delaware from 1990-1996. During his tenure as Dean, the Executive MBA Program was started as well as the MBA programs at Dupont and MBNA. The full time, on-campus MBA program was greatly expanded during that period. He also oversaw the funding and construction of the new MBNA building and the renovation of Purnell Hall during his tenure as Dean. Dr. Biederman has had extensive experience in the thrift business including serving as Chairman and Chief Executive Officer of Westchester Financial Services Corporation and as Chief Economist and Director of Economic Policy and Research at the Federal Home Loan Bank Board in Washington, DC. He has also had considerable experience in the public sector serving as Financial Economist at the Office of Tax Analysis for the U.S. Treasury Department, and Staff Economist responsible for federal taxation and revenue matters for the U.S. Senate Budget Committee. Dr. Biederman was Treasurer of the State of New Jersey under Governor Thomas Kean in which he had responsibility for and oversight of the State's budget, taxation division, comptrollers operations, investment of State funds, State purchasing and property, debt issuance and management, and financial and fiscal advisor to the Governor. He is or has served as a director of Artesian Resources Corporation, Chase (USA), Institute of Certified Bankers, New Jersey Sports and Exposition Authority, New Jersey Housing Finance Agency, New Jersey Higher Education Authority, Atlantic City Convention Hall Authority, and the Delaware Economic and Financial Advisory Council (DEFAC). Professor Biederman has published numerous articles on taxation, thrift management and regulation, and has been cited and quoted frequently in various publications and media. He has testified on numerous occasions before congressional and state legislative committees. Dr. Biederman received his Ph.D. from Purdue University.