Finance | 3 Credits

Students will prepare a report for a fictional business that includes an executive summary with several mathematical computations. Students will analyze a simplified project income statement and compute the project’s after-tax cash flow. They will also compute and interpret the business’s proposed project’s net present value (NPV), internal rate of return (IRR), and profitability index. Students will then determine whether or not the proposal should be accepted. Lastly, students will analyze the minimum required rate of return.

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• Differentiate between different capital budgeting techniques and decision criteria based on them.
• Evaluate potential sources of capital using cost of capital concepts.

Prerequisites

• MATH 105C Application of Algebraic Methods to Model and Solve Business Problems

Students will prepare a report on the performance of the stock market that addresses several key issues. Students will analyze three indexes that track the performance of the stock market: the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ composite index. Students will review how well they track in order to analyze stock market performance over a specific day and the last five years. Students will be responsible for identifying which index has been most volatile over the last five years, which index has posted the greatest gains, and which has been the least volatile. Students will then identify which index has performed the best that day and which has been the most volatile. Lastly, students will explain how diversification applies to the above scenarios.

Required text: None.

• Differentiate between various capital budgeting techniques and decision criteria based on them.
• Articulate the concept of diversification, different risk measures, and the relationship between risk and return.

In this course, students select a firm of their choice and prepare an executive report. Within this report students demonstrate financial ratio analysis skills and mastery using financial calculators. Through their detailed analysis using financial calculators students will determine the valuation of the selected firm. Students will conduct a financial ratio analysis given a data set, which is an important step because this is what businesses must do regularly. Students will learn about the four different financial calculators. A sample exercise where students calculate their own personal finances will provide a clear understanding of the three different business valuations.

Required text: None.

• Apply financial ratio analysis as a tool for business decision making.
• Use financial calculators to analyze financial scenarios.
• Describe methods for determining the valuation of a firm.