Principles of Finance
Sanjay Kudrimoti Office Hours: W 3:00 – 4:00 p.m.
Office: BSN 3115 5:30 – 6:00 p.m.
Course Web page: http://coba.usf.edu/departments/finance/fin3403/home.htm
Course Description: This is an introductory course in managerial finance in which you should attain a clear, basic understanding of the essentials of financial decision making. Emphasis is given to the underlying principles of corporate finance and their associations to the decision-making framework faced by a financial manager who is charged with maximizing shareholders’ wealth. However, a great deal of the
material in this course is presented so that the fundamental concepts of financial decision making can be related to personal financial situations. In essence the course covers topics related to financing and investment decisions; that is, how to raise cash and how to invest cash. The focus of the course is to provide an understanding of the tools and techniques required to make informed decisions about which assets a firm should purchase and how such purchases should be financed.
When you finish this course, you should understand (1) the general framework for financial decision making, (2) the role of financial decision making in maximizing the value of a firm, (3) in general, how to determine whether an investment should be made and how to finance acceptable investments, (4) what is meant by the risk/return tradeoff and how risk and return affect investment decisions, and (5) how external factors, such as financial markets, affect financial decisions made by the firm. You will find that much of the information provided in this class can be applied to make informed personal financial decisions.
Prerequisites: Principles of Managerial Accounting (ACG 2071) and Economic Principles -
Microeconomics (ECO 2023), or their equivalents, must be completed prior to taking this course. If you have not already completed these prerequisites you should drop the course immediately.
Required Text: Scott Besley and Eugene F. Brigham, Essentials of Managerial Finance, 12th ed. (Fort
Worth, TX: Harcourt, Inc., 2000).
Other Course Materials:
； Optional Printed Materials
; Scott Besley, Eugene F. Brigham, and Dana Aberwald Clark, Study Guide: Essentials of
Managerial Finance, 12th ed. (Fort Worth, TX: Harcourt, Inc., 2000).
; Scott Besley, Comprehensive Notes for Essentials of Managerial Finance, 2003 Edition, (Fort
Worth, TX: Harcourt, Inc., 2003). The notes are provided at no charge with the purchase of a new
text and online at http://coba.usf.edu/besley/fin3403/notes.htm. They are also available at Pro
Copy, which is located in the Terrace Ridge Plaza shopping center at the corner of 53rd street and
Fowler Avenue. The notes that are available online are in PDF format; you must have Adobe
Acrobat Reader to view the online notes. If you have problems viewing the notes, click on the
Adobe Acrobat Reader icon at the bottom of the Web page that contains the index for the notes
and download the current version of Adobe Acrobat Reader.
; Wall Street Journal—this is recommended reading for all business courses. Sign-up sheets for the
WSJ and such business magazines as BusinessWeek and Fortune are available in the Department
of Finance office.
； Pedagogical (Helpful) Materials
; Self-test quizzes, calculator tips, and other pertinent information concerning this course can be
found at the course Web page, titled Principles of Finance, which is located at
; The PowerPoint presentations are available online at: http://coba.usf.edu/besley/fin3403/ppt.htm
; Web sites related to the material contained in each chapter in the Online Essentials box can be
found at: http://coba.usf.edu/besley/websites.htm
Student Responsibilities: To get the most out of this course, you should attend every class meeting. Much of the understanding of the material contained in the text will be presented in class and the solutions assigned problems will be provided in class. Therefore, you should make every effort to attend all class meetings.
The chapters that will be covered and the end-of-chapter questions and problems for which you are responsible each week are provided on the course outline attached to the end of this syllabus. It is expected that you have read the material and have at least attempted to work all of the questions and
problems assigned prior to coming to the next class period. Conscientious attention to these assignments is essential for satisfactory performance in this course. To encourage adequate preparation for class and to enhance your understanding, some of the assignments will be collected. In addition, short quizzes will be given.
Class time will be use to clarify, support, and enhance the material presented in the text. If you miss class, it is your responsibility to obtain the information covered during your absence.
Student Evaluation: You will be evaluated according to your performance on three non-cumulative exams and weekly assignments/quizzes. The computation of your average numerical score for the course will be based on the following weighting scheme:
Percent of grade
Exam 1 28
Exam 2 28
Exam 3 28
The exams will consist of a combination of multiple-choice definition/concept questions and multiple-choice problems. The questions and problems are designed to test your understanding of both fundamental and more complex topics covered in class and contained in the text. Most of the questions
on the exams are structured to test your understanding of the concepts rather than how well you can work problems. As a result, try to understand the concepts presented in class.
The plus/minus grading system will be used in this course. Course grades will be based on the weighted average score you receive for the term using the following scale:
95% < A+ 85% < B+ < 87% 75% < C+ < 77% 65% < D+ < 67%
90% < A < 95% 80% < B < 85% 70% < C < 75% 60% < D < 65%
87% < A– < 90% 77% < B– < 80% 67% < C– < 70% 57% < D– < 60%
F < 57%
The course outline indicates when the exams will be given. If you miss an exam for any reason you will be required to take a comprehensive make-up exam administered at the end of the semester (see the course outline for the date) to determine the grade you will receive for the missed exam. You must have grades
for all three exams to pass this course—that is, if you do not have grades for all three exams, you
will receive a grade of F for the course!
； Make-Up Exam: A make-up exam that covers the material presented in class throughout the semester
will be given at the end of the semester (see the course outline for the date). Three exam scores will
be used to determine your grade for the course. As a result, if you miss one of the three
non-cumulative exams, you must take the make-up exam. However, if you take all three
non-cumulative exams, you can take the comprehensive make-up exam to try to improve your average
exam grade. If you take all the non-cumulative exams and elect to take the comprehensive make-up
exam, the score you receive on the make-up exam will replace the lowest score you received for the
three non-cumulative exams, even if the make-up exam score is lower than the non-cumulative exam
score that is replaced. Therefore, you should take the comprehensive make-up exam only if you miss
one of the non-cumulative exams, in which case your score for that exam is zero, or if you take all
three of the non-cumulative exams and believe you can improve one of the exam scores you received.
But, keep in mind that the score you receive on the comprehensive make-up exam will count as one
of the three scores used to determine your grade for the course—the other two scores will be the
highest two scores received on the three non-cumulative exams. (If you take all the non-cumulative
exams, then, as you will discover in the course, the decision to take the comprehensive make-up exam
represents a risk/return tradeoff—that is, you can increase the average of your exam scores, but you
can also decrease the average.) The make-up exam will only be given at the time designated on the
course outline—no exceptions will be made, so make your end-of-semester travel plans accordingly.
； Extra-Credit Project: You will have the opportunity to earn extra credit to improve one of the three
test scores used to compute your final grade in the course by completing an extra-credit project. The
extra-credit project will be an assignment (to be completed individually outside class) that will be
based on the concepts presented in class. The requirements for the extra-credit project will be handed
out in class and posted on the course Web site after the appropriate material has been covered in class.
； Assignments: To ensure you are keeping up with the material in the course, some of the
end-of-chapter questions and problems that are listed on the course outline will be collected in class.
Other assignments might be handed out during the semester. The assignments will be evaluated on the
basis of a total of 10 points, with points awarded in increments of one half—that is, the grade will be
a 0.5, 1.0, 1.5, 2.0, ？, 10.0. The numerical grade you receive will be based on the effort shown to
complete the assignment rather than accuracy of your final answer. YOU MUST SHOW YOUR
WORK (COMPUTATIONS) FOR THE PROBLEMS TO RECEIVE FULL CREDIT!
Showing your work means setting up the problem and showing the steps, along with the intermediate
results, necessary to attain the answer—it does not mean describing the keys and the inputs used to
solve the problem on your calculator (unless that is what the problem asks). Solutions to the assigned
problems will be given in class. Working the problems prior to seeing the correct solutions will help
ensure that mistakes you make at this stage will not be repeated on the exams.
HINT: If you have difficulty working a problem, there are a couple of steps you can take to help
solve the problem. First, look in the body of the chapter to see if a numerical example is provided that
is similar to the problem you are trying to work. Second, look at the Self-Test Problems at the end of
the chapter to see if there is one that is similar to the problem you are solving. The complete
solution—that is, from start to finish—for each Self-Test Problem is given in Appendix B at the end
of the book.
； Quizzes: A short quiz that covers assigned reading material will be given each week, except for the
weeks the exams are scheduled. The purpose of the quizzes is to ensure you are keeping up with the
reading assignments. Each quiz will include five multiple-choice questions worth two points each. The
quiz will be administered at the beginning of each class, so you should make an effort to be on time.
The ending time for the quizzes, and the exams for that matter, will be the same for everyone in the
class; that is, all quizzes and exams will be collected at the same time. If you arrive late, you will reduce
the time you have to take the quiz or exam. If you arrive after a quiz has been given, you will not have
an opportunity to make up the missed quiz. IMPORTANT NOTE: The questions given on the
quizzes are not representative of the questions you will see on the exams. The questions on the quizzes
are not intended to test your understanding of the concepts; rather they are intended to ensure you
keep current with the reading assignments. As a result, the quizzes will have questions that are
oriented toward definitions, whereas the exams will have questions that are based on concepts.
At the end of the semester, the assignments/quizzes grade you receive for the course will be based on the highest ? of all the grades you received for the assignments that were collected and the quizzes that were administered in class. Thus, the lowest ? of your assignments/quizzes grades (including missed assignments and quizzes) will be dropped before determining the overall average score you receive for the assignments/quizzes portion of the course. For example, if 16 assignments and quizzes are graded during the semester, only the highest 12 grades will be used to compute your assignments/quizzes score for the course.
If you attend class and keep up with the assignments (reading, questions, and problems), you should receive a fairly good score for this portion of your overall course grade. However, if you do not attend class, and as a result do not take any quizzes and do not hand in any assignments, you will receive a score of zero for 16 percent of your overall grade. To see how this would affect the grade you receive in this course, assume that the average score you received on the three regular exams was 78, but you didn’t take any quizzes and didn’t turn in any assignments. Even though the 78 average on the exams is a B–