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ACFI2070: Business Finance
OVERVIEW
Course Description
The key intent of business finance is to maximise firm value while reducing firm risk. Focused particularly in the context of the business entity, Business Finance introduces the theory and practice of securities markets, valuation, and execution of optimal investment decisions. Financial mathematics, security valuation techniques, investment goals, investment evaluation techniques, modern portfolio theory, the capital asset pricing model, dividend policies and cost of capital are included with the array of topics.
Contact Hours
Workshop
Face to Face On Campus
Two (2) hour(s) per Week for Full Term
Students are expected to complete 4 hours of guided learning via online preparation, lectures, interactive workshops, tutorials, discussion groups or self-directed learning and an additional 6 hours of independent study per week.
Unit Weighting
10
Pre-Requisites
Students must have successfully completed ACFI1001 and ACFI1003 to enrol in this course.
Workload
Students are required to spend on average 120-140 hours of effort (contact and non-contact) including assessments per 10 unit course.
Please refer to the course CANVAS site for details of teaching staff for ALL course offerings. The primary contact for courses is the Course Coordinator, whose details are listed on the course CANVAS site.
Student Consultation A minimum of one (1) hour of consultation per week. Please see course CANVAS site for details of time and location.
Course Learning Outcomes
On successful completion of this course, students will be able to:
1. Demonstrate a basic understanding of the theory of finance to facilitate the evaluation of investment, financing and dividend decisions of the firm;
2. Comprehend the fundamentals of capital budgeting as applied to the investment decision of a business;
3. Demonstrate a descriptive understanding of the pricing of risky assets;
4. Demonstrate the ability to calculate firms weighted average cost of capital and the effect of imputation tax; and
5. Comprehend the effect of dividend decision and identify the relevant factors that may affect this decision.
ASSESSMENT DETAILS
This course has 3 assessments. Each assessment is described in more detail in the sections below:
|
|
Assessment Name |
Due Date |
Involvement |
Weighting |
Learning Outcomes |
| 1 |
Mid-Semester Test |
Week 6 - Students must sit for the mid-semester test at the allocated workshop in Week 6 |
Individual |
25% |
1, 2 |
| 2 |
Individual Assessment |
Day of workshop - Week 10 by 11:59 pm |
Individual |
25% |
2, 3 |
| 3 |
Final Examination |
Formal Exam Period |
Individual |
50% |
1, 2, 3, 4, 5 |
Time referenced is time in Newcastle NSW
Late Submissions
The mark for an assessment item submitted after the designated time on the due date, without an approved extension of time, will be reduced by 10% of the possible maximum mark for that assessment item for each day or part day that the assessment item is late.
Note: this applies equally to week and weekend days.
Assessment 1 – Mid Semester Test
Assessment Type
In Term Test
Purpose
This is a formative and summative task, providing opportunity for individual review and feedback but also contributing a greater weighting towards final grades. Students apply and demonstrate critical thinking and problem-solving ability using business finance theory and/or key methods to identify and explain the most appropriate answer to each question.
Description
The test will comprise short-medium length questions requiring written answers and some multiple-choice questions. Calculations will be required. When undertaking the test, you must attend the designated time and venue.
Weighting
25%
Length
120 minutes
Due Date
Students must sit for the mid-semester test at the allocated workshop in Week 6.
Submission Method
In Class
Assessment Criteria
The questions will examine theoretical and practical/quantitative aspects of the requisite material and so calculations will be required in some questions. The test is intended to sample and assess your comprehension and competence with regards to key elements of the relevant topic material. You will be assessed upon the relevance, clarity and accuracy of your answers.
Return Method
In Class
Feedback Provided
In Class
Assessment 2 – Individual Assessment
Assessment Type
Written Assignment
Purpose
This task facilitates students understanding and application of securities valuation, optimal investment decisions and modern portfolio theory
Description
Students apply critical thinking and problem solving to answer four problem questions thatrequire numerical calculation and clear written communication of results
Weighting
25%
Length
2000 words
Due Date
Day of workshop - Week 10 by 11:59 pm
Submission Method
Online - Turnitin (via CANVAS).
Assessment Criteria
The assignment will be graded against the following five (5) criteria:
− Correct calculations.
− Depth and relevance of analysis.
− Logic and coherency in information evaluation and organisation.
− Demonstrated understanding of theory and relevant concepts
− Clarity of written expression in communicating outcomes
Return Method
Online
Feedback Provided
Marks and feedback will be returned to students on the assessment item within two weeks after the completion date.
Assessment 3 - Final Examination
Assessment Type
Formal Examination
Purpose
This is a summative assessment task. Students apply and demonstrate critical thinking and problem-solving ability using their acquired knowledge and skills in business finance theory and/or key quantitative methods included in the weekly topics, to identify and explain the most appropriate answer.
Description
The exam requires written answers to a range of short-medium length questions. There may be some multiple-choice questions or true/false questions.
This course has a RESTRICTED OPEN BOOK examination. A memory aid is permitted. The memory aid is a single double sided A4 sheet of handwritten or typed notes for use during the examination. Note: memory aids must be left on the examination table and cannot be removed from the examination venue.
Weighting
50%
Length
120 minutes
Due Date
Formal Exam Period
Submission Method
Formal Examination
Assessment Criteria
The final exam will involve theoretical and practical components requiring written answers and is intended to assess your comprehension and abilities surrounding the course objectives and subject matter. You will be assessed upon the relevance, clarity and accuracy of your answers. All topics are examinable, even if they were included in the earlier quizzes or tests. All textbook reading materials, in-class materials and CANVAS course materials are examinable.
Return Method
Not Returned
Feedback Provided
No Feedback. Examination scripts will not be returned to students. Final examination scripts will be made available for review by students, upon request, in a controlled and monitored setting. Students are required to make requests, directly to the relevant course coordinator. Completed examination scripts are kept by the Newcastle Business School for a period of six (6) months only, from the relevant fully graded date. Requests made after the six (6) month period cannot be considered.
SYLLABUS
Course Content
Topics in the course include but are not limited to the following:
1. Consideration of the goals of organisations and investors
2. Investment evaluation techniques
3. Valuation of equity and debt securities
4. Computation of weighted average cost of capital
5. Effect of dividend policies
6. Relationship between risk and return
7. Portfolio theory
8. Asset pricing models
Course Materials
Required Text:
Ross, S.A., Westerfield, R.W., Jaffe, J. and Jordan, B.D. (2021) Corporate Finance,
13th ed. New York: McGraw Hill
ISBN: 9781265533199
Optional Text:
Peirson, G., Brown, R., Easton, S., Howard, P. and Pinder, S (2015) Business Finance,
12th ed. Sydney: McGraw-Hill.
ISBN: 9781743078976
An additional Readings list will be provided on the course CANVAS site.
SCHEDULE
|
Week |
Topic |
Class Preparation |
Assessment |
| 1 |
Module 1: Financial
Mathematics 1
Discounted CF Valuation
|
Ross textbook: Chapter 4 (section 4.1 – 4.4), Chapter 8 (section 8.4) |
|
| 2 |
Module 1 (cont.): Financial
Mathematics 2
Valuing Stocks and Bonds
|
Ross textbook: Chapter 8 (Section 8.1. and 8.5.), Chapter 9 (Section 9.1 – 9.4)
Peirson textbook: Chapter 4 (Section 4.4)
|
|
| 3 |
Module 2: Project Evaluation 1
(Introduction to Net Present Value; NPV and comparing the NPV approach with other methods of project evaluation)
|
Ross textbook: Chapter 5 (Section 5.1- 5.7)
Peirson textbook: Chapter 5 (Section 5.5)
|
|
| 4 |
Module 2 (cont.): Project
Evaluation 2 (A closer look at NPV e.g. comparing projects)
|
Ross textbook: Chapter 6 (Section 6.1 and 6.4) |
|
| 5 |
Module 2 (cont.) Project
Evaluation 3 (A closer look at the confidence in your NVP-based decision)
|
Ross textbook: Chapter 7 (Section 7.1, 7.2 and 7.4) |
|
| 6 |
No workshop sessions this week
Mid -Semester Test (Modules 1 & 2)
|
|
Assessment 1 due:
Mid Semester Test.
|
| 7 |
Module 3: Modern Investment
Theory 1 (Wealth, utility, return and risk)
|
Ross textbook: Chapter 10 (Section 10.4 and 10.5), Chapter 11 (Section 11.1 -11.3)
Peirson textbook: Chapter 7 (Section 7.3)
|
|
| 8 |
Module 3 (cont.) Modern
Investment Theory 2
(Diversification, systematic risk and introduction to beta)
|
Ross textbook: Chapter 11 (Section 11.4 – 11.6) |
|
| 9 |
Module 3: (cont.) Modern
Investment Theory (the pricing of assets)
|
Ross textbook: Chapter 11 (Section 11.7 – 11.9), Chapter 12 (Section 12.1- 12.2) |
|
| 10 |
Module 4 (cont.) Introduction to Corporate Finance 1
Payout Policy
|
Ross textbook: Chapter 19 (Section 19.4 – 19.8) |
Assessment 2 due:
Individual assessment.
|
| 11 |
Module 4 (cont.) Introduction to Corporate Finance 1 (cont.)
Payout Policy
|
Ross textbook: Chapter 13 (Section 13.1- 13.2, 13.5-13.8) |
|
| 12 |
Module 4: Introduction to Corporate Finance 2
Cost of Capital
|
Ross textbook: Chapter 19 (Section 19.1 – 19.3) |
|
| 13 |
Course and Exam Revision |
|
|