25 Apr ACFI3203 – Business Finance Academic Level 6

ACFI3203 – Business Finance

Academic Year 2023-24

Overview:

ACFI3203 – Business Finance Academic Level 6

Welcome to Business Finance. This is a 30-credit final year module.

 

In this exciting module we will study several aspects of financial decision making and use a variety of financial techniques, methods and terminology along the way.

 

Do not worry if you are new to finance. We will gradually build the techniques and get used to the terminology as we progress through the module.

 

During the course of the module, please ensure you follow through with all the required activities. This module is technical in nature and therefore to be successful you must practice and work through the questions, problems and activities.

 

Module Leader: Adam Brown

 

Email: [email protected]

 

Office: HU 3.60

 

Telephone: 0116 207 8975

 

Module Teaching Team

 

Please refer to the Module Information pages on LearningZone.

 

Learning Outcomes

Subject specific skills and knowledge

 

1. Understand what contemporary finance theory can offer to the key functions of modern financial management.

 

2. Understand the developing finance function within the normative context of shareholder wealth maximisation and stock market efficiency.

 

3. Review the capital investment decision under risk and non-risk conditions.

 

4. Evaluate the dividend decision within the context of competing theories of security price determination.

 

5. Evaluate the financing decision within the context of competing theories of capital structure and value.

 

6. Evaluate the portfolio decision within the context of linear models that comprise Modern Portfolio Theory.

 

7. To review the normative objective of business finance with reference to stock market volatility, inefficiency and non-linear theories.

 

8. Explain how practising financial managers and investors can combine theory and empirical research with informed judgement to make optimal investment, dividend, financing and portfolio decisions, which add value to their corporate stock of wealth.

 

Non-subject specific / cognitive and core-academic skills

 

1. To critically evaluate competing theories and arguments.

 

2. To manipulate numerical data in evaluating the different theoretical models.

 

3. To use information technology (IT) to analyse and communicate information.

 

4. To use communication skills to present quantitative and qualitative information together with analysis, argument and commentary.

 

5. To interpret case study material.

 

6. To work as members of a learning set/group.

 

7. To develop the capacity for independent and self managed learning Comment by Adam Brown – BAL:

 

Timetabled Classes

All learning material will be delivered over twenty-two (22) two-hour lectures using the following structure.

 

2-hours lecture per week delivered face to face but also recorded

 

1-hour seminar per week delivered face (it will not be recorded)

 

Seminars will not function as a continuation/repetition of the lecture but rather they serve the purpose of solving students’ queries regarding the material taught and the topic under review. Therefore, you are expected to have studied the relevant topic prior to the session.

 

Activity based learning, using case studies, class discussion, group work and directed private study will be a key feature of the module.

 

Surgery workshops can also be arranged at short notice in cases where it appears to be appropriate for improving students’ understanding of the topics examined.

 

Provisional Teaching Plan

Week

 

Seminar Week

 

Topics (of lecture)

 

Lecturer

 

WC

 

1

 

Introduction to module

 

Introduction to Business Finance, Basic Concepts in Financial Mathematics; Time Value of Money; Compounding and Discounting; The Mathematical Properties of Annuities and Perpetuities.

 

LS

 

02-Oct-23

 

2

 

Week 1 Material

 

The Corporate Investment Process; Traditional Techniques for Evaluating Capital Investment Decisions; Discounted Cash-Flow Techniques; NPV; IRR; MIRR.

 

LS

 

09-Oct-23

 

3

 

Week 2 Material

 

Cash Flow and Applications; The Replacement Decision; Defining Replacement Cycles Using AEA; Evaluating Buy-or-Lease Decisions.

 

LS

 

16-Oct-23

 

4

 

Week 3 Material

 

Capital Rationing and Project Appraisal; The Treatment of Taxation and Estimating Capital Allowances.

 

LS

 

23-Oct-23

 

5

 

Week 4 Material

 

Risk and Project Appraisal; The Expected Net Present Value Method; Risk Standardisation; Mean-Variance Analysis and CoV. Dealing with Uncertainty: Sensitivity Analysis; Scenario Analysis (What if); Decision Trees.

 

LS

 

30-Oct-23

 

6

 

Week 5 Material

 

Equity Valuation and Analysis: NAV; DVM; P/E; DFCF

 

LS

 

06-Nov-23

 

7

 

Week 6 Material

 

The Fundamentals of Bond Valuation; Valuation of Redeemable and Irredeemable Debt; Methods for Computing Bond Yields.

 

LS

 

13-Nov-23

 

8

 

Enhancement / Reading Week (No lectures or seminars)

 

20-Nov-23

 

9

 

Week 7 Material

 

The Weighted Average Cost of Capital; WACC and Capital Investment Appraisal.

 

LS

 

27-Nov-23

 

10

 

Week 9 Material

 

Adjusted Present Value (APV)

 

LS

 

04-Dec-23

 

11

 

Week 10 Material

 

Mid-Year Test – (carrying 0% marks; ie a mock)

 

LS

 

11-Dec-23

 

12

 

Christmas / New Year Break Holidays (No lectures or seminars)

 

18-Dec-23

 

13

 

Christmas / New Year Break Holidays (No lectures or seminars)

 

25-Dec-23

 

14

 

Christmas / New Year Break Holidays (No lectures or seminars)

 

01-Jan-24

 

15

 

Week 11 Material

 

Introduction to Stock Market Efficiency: Operational Efficiency; Informational Efficiency; Implication of EMH for Investors and Companies.

 

AB

 

08-Jan-24

 

16

 

Week 15 Material

 

Dividend Policy1: Alternative Dividend Policies; Modigliani and Miller’s Dividend Irrelevance Theory; Other Theories on Dividend Policy; Share Buybacks.

 

AB

 

15-Jan-24

 

17

 

Week 16 Material

 

Dividend Policy 2, Introduction to Capital Structure Theory1

 

AB

 

22-Jan-24

 

18

 

Week 17 Material

 

Capital Structure Theory 2: The Nature and Characteristics of Financial, Operating and Capital Gearing. Modigliani and Miller Capital Structure Proposition; Capital Structure and Corporate Taxes;

 

AB

 

29-Jan-24

 

19

 

Enhancement / Reading Week (No lectures or seminars)

 

05-Feb-24

 

20

 

Week 18 Material

 

Merger/Acquisition Decision; M&A Motives and Processes; Evaluation of M&A; Takeover Defence Mechanisms and Anti-takeover Tactics.

 

AB

 

12-Feb-24

 

21

 

Week 20 Material

 

Portfolio Analysis 1: Concept of Diversification. The Markowitz Model. Techniques for Calculating the Efficient Frontier.

 

AB

 

19-Feb-24

 

22

 

Week 21 Material

 

Portfolio Analysis 2: Asset Portfolio using Risk-Free Borrowing and Lending. The Security Market Line.

 

AB

 

26-Feb-24

 

23

 

Week 22 Material

 

Relationship between Systematic Risk and Return, The Capital Asset Pricing Model (CAPM) and the Security Market Line.

 

AB

 

04-Mar-24

 

24

 

Week 23 Material

 

The Capital Asset Pricing Model (CAPM) and Multifactor Models.

 

AB

 

11-Mar-24

 

25

 

Week 24 Material

 

Short Term and Medium Term Finance/ Working Capital: Measuring, Strategies, Ratios & Management of Receivables & Payables Management of Cash and Inventory.

 

AB

 

18-Mar-24

 

26

 

Easter Break Holidays (No lectures or seminars)

 

25-Mar-24

 

27

 

Easter Break Holidays (No lectures or seminars)

 

01-Apr-24

 

28

 

Easter Break Holidays (No lectures or seminars)

 

08-Apr-24

 

29

 

Revision

 

Revision Lecture – Term 1

 

LS

 

15-Apr-24

 

30

 

Revision

 

Revision Lecture – Term 2

 

AB

 

22-Apr-24

 

Using LearningZone

The module will be supported by DMU’s online learning on Learning Zone and by DMUreplay. Students can gain access to the modules on which they are enrolled by visiting https://my.dmu.ac.uk. Access to Learning Zone can be obtained from any computer connected to the Internet and does not necessarily have to be within the University. You are advised to consult the relevant module pages regularly for any new information or announcements.

 

Frequently Asked Questions (FAQs) will be posted on Learning Zone, and you are encouraged to read these before emailing the module team.

 

Learning Zone will have copies of the handbook, lecture notes, assignment and seminar questions and any other material deemed relevant by the module team. Learning Zone is not a substitute for attending lectures and seminars.

 

Lecture material will be provided on Learning Zone a minimum of 48 hours in advance of the lecture to allow you to review if desired, and to print out in the format suitable for your learning requirements.

 

Learning Zone will also act as a form of communication between the module team and students. Please check the announcements regularly.

 

DMUReplay is system that gives students access to recorded audio or visual material from lectures. This system allows students to access recordings of the key concepts and theories discussed within the lectures. This does not replace the interactive face to face session but does allow students to enhance their understanding of topics and/or obtain further understanding of technical or complex subjects.

 

Reading Resource List

Each module will have a Reading Resource list which contains recommended books, videos and other resources which will be of value to you whilst studying this module. You can find your modules reading resource list on your module shell within Learning Zone.

 

Within a module shell you have two options in which you can locate the Resource List.

 

1. Select the orange tile on the front screen under Table of Contents, named Resource List – This will take you to the Contents page where you will find a link to the Resource List at the bottom left hand side menu.

 

2. Select ‘Content’ from the ribbon across the top of the page – This will take you into the contents page where you will find a link to the Resource List at the bottom left hand side menu.

 

Click on Resource Lists tab with the Lego/brick icon, this will open the Resource List.

 

Assessment

The course will be assessed through one examination, with the following detail

 

Type: Unseen examination

 

Length: 3 hours

 

Weighting: 100%

 

Deadline / examination date: TBC

 

Pass mark: 40%

 

Students must achieve a mark of 40% or more to pass the module

 

Reassessment:

 

Students will be given an opportunity to be reassessed on a failed module in accordance with standard De Montfort University regulations.

 

The examination paper will be unseen and of three hours duration. Appropriate financial and statistical tables will be provided as well as a formulae sheet. The exam will have three sections (A,B and C). The first (Section A) will contain short open question worth 10 marks in total. There will be two other sections (Sections B & C), one for the syllabus from each term. Each of the final two sections (Sections B&C) both contain a choice of TWO 45 mark questions; students must only attempt and submit one question per section, i.e. one question from section B & one question from section C. All sections must be attempted

 

The generic mark descriptors can be found in the Assessment and Feedback policy (link here).

 

Anonymous Marking

The assessments for this module are marked anonymously.

 

Feedback

For the Unseen Examination, your final module marks will be available when the final results are published via the MyDMU Portal.

 

Given that the assessment on this module is an examination, there will be no feedback provided, marks will be released after the relevant Examination and Assessment Board has sat. (This is typically after all the examinations have been sat and all assessment have been submitted and marked. (The relevant Examination and Assessment Board may be in mid-late July 2024.))

 

Academic Offences and Bad Academic Practice

These include but are not limited to plagiarism, cheating, contract cheating, exam cheating, collusion, copying work and reuse of your own work, poor referencing or the passing off of somebody else’s ideas as your own (as defined in Chapter 4 of the General Regulations and Procedures Affecting Students )*.

 

For modules containing a research element, please note that the conduct of research without an ethics review will be treated as an academic offence.

 

In the first instance, you need to liaise with your module leader as the module may have block ethics module approval which will not require an individual student application. Your module leader will be able to confirm this. If the module does not have block ethics module approval, you may be required to submit an individual ethics application. Please complete an ethics screening form and return this to your module leader for review. Should you have any questions please contact your module leader.

 

If you are in any doubt about what constitutes an academic offence or bad academic practice, you must check with your tutor.

 

If you are suspected of committing an academic offence you will be called to a meeting with an Academic Practice Officer (APO). APOs are based within in each faculty and it is their role to advise on how to prevent bad academic practice and academic offences and to deal with serious cases*.

 

For further information please visit the Academic integrity webpage.

 

* Please note that this information is under review and may be subject to change

 

For advice on this matter please contact [email protected] .

 

An overview of Assessment and Good Academic Practices can be found in DMU BaseCamp.

 

More information, as well as information on appeals, exams and more, can be found on the Academic Support webpage.