Valuing Project Achieve

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Evaluation of Financial Information Syllabus (Subject to minor changes) Spring 2012 Prof. Anna Scherbina

UC Davis Graduate School of Management Office: 3212 Gallagher Hall Course Focus

Tel: 530.754.8076 e-mail: ascherbina@ucdavis.edu

We will learn how to use financial information to value firms, projects, and securities in a wide variety of industries, including real estate. The course will be based entirely on the Harvard Business School case studies and will focus on learning techniques of financial analysis, selecting an appropriate valuation model, analyzing the quality of financial data, finding an appropriate discount rate, and forecasting financial variables and cash flows. Corporate Finance course is strongly suggested as a prerequisite. Consult with faculty if this can be waived.

Course Materials Textbooks: 1. Principles of Corporate Finance by R.A. Brearly, S. Myers, and F. Allen, 10th edition* 2. Analysis for Financial Management by R.C. Higgins, 9th edition* *These textbooks will be used for background readings only, and earlier editions are also fine. Cases will be available on study.net Course Format Case analysis will involve building Excel models and conducting sensitivity analysis to assumptions in support of the final recommendation. Due to the labor-intensive nature of case preparation, I strongly encourage students to work in groups to get ready for class. Attendance and participation are essential parts of the learning process for this course. I expect students to attend all scheduled sessions and to come prepared to contribute to the discussion. Reading assignments should be read in advance of class, and everyone is expected to participate in discussions. If you have a compelling reason for missing a

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class, you should inform me in advance (email is best). Missing classes will affect your grade; missing any without reasonable cause is likely to do so significantly (see participation grading scheme below). If you absolutely need to miss a class, please let me know ahead of time, and I will, most likely, ask you to submit written answers to case questions prior to the missed class and evaluate your participation based on this writeup. Class Participation Class participation is a very important part of the learning process in this course. A major large part of your final grade will be based on an assessment of the quality of your contributions to class discussions. Homework Assignment There will be one homework assignment that needs to be turned in in written form. Final Project The final project involves solving a case and preparing a detailed report showing all relevant analysis. Office Hours Office hours are held by appointment. Evaluation Final grades will be computed as: Individual class participation Homework assignment Final Project 50% 10% 40%

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COURSE SCHEDULE The course is comprised of seven modules: Module 1: Buy or rent and own or lease (and the analysis of real estate markets) Recommended reading: 1. R.A. Brealey, S. Myers and F. Allen, Principles of Corporate Finance, Chapter 4, Section 4.9 2. R. C. Higgins, Analysis for Financial Management, Chapters 7 and 9 Module 2: Production strategy (efficiency vs. risk) Recommended reading: 1. R.A. Brealey, S. Myers and F. Allen, Principles of Corporate Finance, Chapters 19 and 20 2. R. C. Higgins, Analysis for Financial Management, Chapter 3 Module 3: Macro forecasting Recommended reading: 1. R.A. Brealey, S. Myers and F. Allen, Principles of Corporate Finance, Chapter 22, Section 22.4 Module 4: Corporate takeovers Recommended reading: 1. R.A. Brealey, S. Myers and F. Allen, Principles of Corporate Finance, Chapter 21 Module 5: Decision trees, real options Recommended reading: 1. R. C. Higgins, Analysis for Financial Management, Chapter 7, Appendix on decision trees Module 6: Subscriber models No recommended reading Module 7: Asset bubbles Recommended reading: 1. R.A. Brealey, S. Myers and F. Allen, Principles of Corporate...
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