Indian Institute of Management Lucknow

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INDIANINSTITUTEOFMANAGEMENT,LUCKNOW

POSTGRADUATEPROGRAMFINANCIALMANAGEMENT

FN1303TERMIII,201415

InstructorandContactInformation

Faculty Prof.MadhusudanKarmakar Prof.AjayKGargNumberofsections 2 2

RoomNo 113 128Telephone 6624 6609MailID madhu@iiml.ac.in ajaygarg@iiml.ac.in

Faculty Prof.VivekRajvanshi Prof.VikasSrivastava

Numberofsections 2 1RoomNo 213 231Telephone 6615 6665

Email vivekr@iiml.ac.in vikas.srivastava@iiml.ac.inCOURSEDESCRIPTIONFinancialManagement isan introductorycourse inFinanceThiscoursefocusesonthevalueofthefirmandalsothefactorsthatinfluencethisvalue,likevariousrisksthefirmfaceswhileselectinganewproject,changesinlevelofdebtofthefirmtomentionafew.Italsogivesanintroductoryviewofworkingcapitalmanagement. Derivatives and lease financings methods are also discussed to give a fair view ofinstrumentsusedbyinvestorsandfirmstomaximizevalue.Thiscourseistaughtusingexercisesandcases.Itisimportantthatthestudentreadstheintendedreadingmaterialbeforecoming to theclass thoroughly.We repeat,studentshave to read the relevant readingmaterial before attending the class! The students are expected to participate in all of the class roomdiscussions.COURSEOBJECTIVE

Everydecisionthatafirmmakeshasafinancialmanagementcomponenttoitandthecourseattemptstostresstheneedforadequacy,appropriatenessandresponsivenessofsuchdecisions.ThePurposeofthecourseisto:

Providestudentswithcomprehensiveknowledgeofcorefinancetheoriesandmodels. Provideastrongtheoreticalandanalyticalbasethatisgroundedinrealworldapplicationusing

cases and exercises. Among the topics covered in the course are: Investment Decisions,Financing Decisions, Dividend Decisions, Risk and Return, Working Capital Management,Lease/HirePurchaseandFinancialDerivatives.

Developanalyticalandcriticalthinkingskillsofstudentsinfinancialdecisionmakingandmakeuseofspreadsheetsinfinancialmodeling.

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RecognizeandresolvesocialandethicalissuesandagencycostsinStrategicfinancialdecisionmaking.

Enhancecommunicationskillsthroughcaseanalysis,writtenreportsandpresentations.

COURSELEARNINGOUTCOMESBytheendofthecoursethestudentshouldbeableto:

1) Understand and analyse the relationship between strategic decision making and corporatefinancingdecisions.

2) Explainhowtovaluecapitalinvestmentsandusethekeycapitalbudgetingtechniques.3) Understand the mathematics of risk and return and how risk affects the value of the asset in

equilibriumandalsoexplainthecharacteristicsofderivativeassets.4) Learn to compute the cost of capital and discuss the theoretical framework of informational

efficiency in financial markets and understand the tradeoff firms face while choosing capitalstructure.

5) Understandandexplaintherelevance,factsandroleofthedividendpolicy.6) ShouldbeabletocalculateWorkingCapitalrequirementsandUnderstandhowfinancialdecisions

cancontributetofirmvalue7) Understandfinancialmodellingandrealworldapplicationofcoreconceptsoffinance.8)Understandstrategicfinancialdecisionmakinginaglobalcontext.

ALIGNMENTSOFINTENDEDPROGRAM&COURSELEARNINGOUTCOMESSn. ProgramObjectives CourseLearning(CL)outcomes

(seesectionabove)1 Toacquireknowledgeandskillsinkeyfunctionalareas CL262 Tointernalizetheknowledgeandskillsinkeyfunctionalareas CL6,7,8;Assignments3 Tointegrateandapplybusinessknowledge CL1,6,7,8;Cases1114 Todevelopaglobalperspective CL8;CaseStudies5 Toinculcatevaluesofprofessionalism,ethicalleadershipand

socialresponsivenessCL1,6

6 Tomasterrelationalandinterpersonalcommunicationskills CasereportsandPresentationsREQUIREDCOURSEMATERIALSANDREADINGS

BasicText(BT) RichardA.BrealeyandStewartC.Meyers,FranklinAllenandPitabasMohanty,PrinciplesofCorporate

Finance,TataMcGrawHill.LatestEdition(BM)

Pandey,I.M,FinancialManagement,VikasPublishingHousePvtLtd,LatestEdition Kester,RubackandTufana,CaseProblemsinFinance,,12thEd,TataMcGrawHill

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Referencebooks LawrenceJGitman,PrinciplesofManagerialFinance,PearsonEducation.. Benninga,Simon,PrinciplesofFinancewithExcel,Oxford,OxfordUniversityPress. Damodaran,AswathCorporateFinance:Theory&Practice,JohnWiley Ross,S.A.,RWWesterfield,J.Jaffe&RKKakani.CorporateFinance,TataMcGrawHill.EVALUATION

Exams:Therewillbetwoexaminations. Quizzes:Tobeannouncedbythefaculty. Group Assignments/ Project Report: Each student will be assigned to a group. More

details of this group project report will be posted on and will also be discussed inclass.

Class Participation: Students are responsible for all materials covered and readingsassigned. Be prepared to answer certain questions that had been emphasized in priorclassesorfromthereadingassignments.

GRADINGSCHEME

MidTermExam 30EndTermExam 30Quizzes/Assignments/GroupProject/CP

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Total 100ACADEMICDISHONESTY

Academicdishonestyormisconductischeatingthatrelatestoanacademicactivity.ItisaviolationoftrustbetweentheInstituteanditsstakeholders.Plagiarism,fabrication,deception,cheatingandsabotageareexamplesofunacceptableacademicconduct.PleaseconsultthePGPManualforthesectiononacademicdishonesty

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COURSESCHEDULESessions Details Case TentativeDates(SecC

&FOnly)1 FinancialManagement:Functionsand

ObjectivesRead:Chapter1(BM)

Lecture 3rdJan

23 LongtermInvestmentDecisionanalysisNPV,IRR,Paybackperiod,andProfitabilityIndex:ConceptsRead:Chapters5,6&11(BM)

Case1:NewHeritageDollCompany:CapitalBudgeting(InPolycopy)

5th,6thJan

47 LongtermInvestmentDecisions:ApplicationsRead:Chapters5,6&11(BM)

Case2:LockheedTriStarCase3:SuperProject.

7,11,12,13Jan

8 ComplexInvestmentDecisions(Investmentdecisionsunderinflationaryconditionsandadjustmentforinflation)Read:(Tobeprovided)

Lecture&Exercise 18Jan

910 CostofCapital:Approaches&WACCRead:Chapters4,7&8(BM)

Case4:NikeInc.(Inpolycopy)

19,20Jan

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Risk,ReturnandCAPMRead:Diversification,CAPMandCostofEquityCapital(Readingmaterial)Chapters7&8(BM)

Case5:MariottCorporation(Abridged)

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1314 RiskAnalysisinLongterminvestmentdecisionsRead:RiskAnalysisinCapitalBudgeting(Readingmaterial)Chapter9&10(BM)

Case6:AirbusA3XX:DevelopingtheWorldsLargestCommercialJet(A)(Inpolycopy)

28Jan,10feb

15 MarketEfficiencyandFinancingDecisionsRead:Chapter13(BM)

Lecture 11feb

MIDTERMEXAM

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1620 Financingdecisionsa) FinancialandoperatingLeverageb) Capitalstructuretheoriesc) CapitalStructureplanningandpoliciesd) Raisinglongtermfundsfromcapital

marketsandfinancialinstitutionsRead:Chapters17,18,23&24(BM)

Case7:ContinentalCarriers.Case8:AmericanHomeProductsCorporation.

18,23,24,25feb,2ndMar

2123 DividendTheoriesandPoliciesRead:Chapters16(BM)

Case9:DividendPolicyatFPLGroup,Inc.

3,4,9Mar

24 LeaseFinancingvisvisBorrow&BuyRead:Chapter26(BM)

10mar

2528 ShorttermfinancingandWorkingcapitalmanagementRead:Chapters30&31(BM)

Case10:DellsWorkingCapitalCase11:HamptonMachineTools

11,16,17,18mar

2930 FinancialDerivativesRead:(Tobeprovided)

Lecture&Exercise 23,24mar

ENDTERMEXAM