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Assumptions of the WACC
Computing the WACC

Topic 11 - Long-term debt finance
Bonds, debentures and notes
Term loans and leases
The lease or buy decision
Hire-purchase financing

Topic 12 – Equity financing
Equity and other classes of finance
Ordinary and preference shares
Convertible securities
Capital management and hybrid capital

Topic 13 – Capital structure
Business and financial risk
Break-even analysis
Operating leverage and financial leverage
EBIT-EPS analysis
Capital structure 本论文由英语论文网 www.51lunwen.org整理提供theories and practices
Other factors affecting financing mix

Topic 14 – Dividend policy
Three basic views of dividend policy
Factors affecting dividend policy
Dividend decision in practice
Bonus shares and share splits
Share buybacks.

PRESCRIBED TEXT
Keown, A.J., Martin, J. D., et al. (2005) 10th edn; Financial Management. Pearson.

RECOMMENDED REFERENCES

Arnold, G. (2003) Corporate Financial Management, 2nd
edn, Prentice Hall.

Pike, R. and Neale, B. (1999) Corporate Finance & Investment: Decisions and
Strategies, 3rd
edn, Prentice-Hall.

Department : Business Studies Subject Code : FIN202
Lecturer : Selvanadan Muniappan Subject Title : Financial Management

Week Topics References
1 Introduction to financial management and the
taxation system
Chapter 1 & 2
2 The financial markets Chapter 14

3 Financial mathematics Chapter 5

4 Valuation of bonds and shares Chapter 7 & 8

5 Risk and rates of return Chapter 6

6 Capital budgeting concepts and methods Chapter 9
7 Issues in capital budgeting Chapter 10
8 Risk in capital budgeting Chapter 11
9 Sources of short-term本论文由英语论文网 www.51lunwen.org整理提供 finance Chapter 18

10 Cost of capital Chapter 12
11 Long-term debt finance Chapter 24
12 Capital structure and equity financing Chapter 15 & 16
13 Dividend policy Chapter 17
14 Revision

ASSESSMENT:

There are 3 assessment items for this subject.

Assessment Items Value
Due Date
1. Mid-term exam 15% Week 8
2. Assignment 15% 11 May 2009
3. Final exam (Closed Book) 70%

REQUIREMENTS:

To gain a pass in this subject, students must:

 Achieve a passing grade in the final examination i.e. score a minimum of 35 marks
out of 70 if there is an examination for this subject.

 Attempt ALL areas of assessment; and achieve a total result of 50% or better
overall.

** - Please check on the notice board and My Acel for the actual date. HELP
University College reserves the right to make any changes to the above where
appropriate.

ASSIGNMENT QUESTIONS
Due date: Monday 11 May 2009
Value: 15%
Rationale
This assignment covers Weeks 6 - 11, and builds on previous work.
Criteria
Where necessary, state any assumptions you have made. Please note that assumptions have to be valid.
Assignments should show all workings and students will be penalised for failing to do this.
You will be assessed on:
 your understanding of the problem;
 choice of method for solving the problem;
 application of techniques.

Part A (30 marks)

Question 1 (10 marks)
a. Explain what is meant by the time value of money and