Dr. NICHOLAS WATSON

PROGRAMME:  Business Administration

  COURSE TITLE:    Business/Project Financing 

CODE:     PDM 422

DURATION:   1 Semester

CONTACT HOURS: 45 

CREDITS:   3

PRE-REQUISITE: Financial Accounting II, Risk Management I & II, Banking & Financial Services 
RATIONALE:  

Business finance is a study of the ways in which the modern project/business manages money to create value for the project/organization. In order to assist in making proper financial decision on the above issue, the business seeks to deal with the issue of appropriate financing. 
AIMS:

The aim of this course is to  • provide the student with an overview of the most important issue in business/project finance from the viewpoint of the corporate and project manager;  • provide understanding of what is driving basic financial choice in a project/business and provide application of standard technique in project/business financing.  • lay a foundation of the basic theory of finance such as time value of money;  • give a basic understanding of corporate source of funding, long term and short term financing, cost of capital, capital budgeting and the interrelated topics of choosing between different investment alternatives, working capital management  and international finance.  
OBJECTIVES:

The student will be expected to: • recognize and apply the main method for measuring the time-value of money; • develop an appreciation of the comprehensive role of finance and financing in project/business development; • evaluate borrowing and investment alternatives and their implication for wealth; • develop a rational approach to financial decision-making and planning; • estimate a firm's cost of capital;  • describe the issue involved in determining a firm's optimal capital structure;  • demonstrate practical knowledge, tactics and techniques of project financing.  
CONTENT: Week 1 Overview of Business/Project Financing • The Why of Financing • Investment decision-making
 Week 2 Review of the Time value of money   
Week 3 Calculation of Present Value as an Investment Criterion 
Week 4 Introduction to Valuation:  • Discounted Cash Flow Valuation  • Bond Valuation  • Stock Valuation  
Week 5 Capital Budgeting: Investing in Capital Asset • Net Present Value and Other  • Making Capital Investment Decision  • The Modigliani and Miller irrelevance proposition 
Week 6 Alternative Investment Criteria and their Limitations • Payback, IRR • Average return on book value • Profitability index Week 7 Cost of Capital 
Week 8 Capital Structure decision • Basic technique and refinement • Capital restructuring: initial public offering, merger and acquisition 
Week 9  Risk and Return • Capital Asset Pricing Model • Arbitrage Pricing Theory 
Week 10 Capital Budgeting & Risk • Hedging Financial Risk 
Week 11  Project Finance and Investment appraisal • Project value
 Week 12 Short-term financing; Working Capital Management • Short-term external financing sources: suppliers, banks, factoring • Short-Term Financial Planning • Importance of managing cash, improving collection of cash  • Managing account receivable, inventory, marketable security  • Managing current liability   Week 13 Overview of Intermediate & Long-term financing Source • Public offering, long-term debt, venture capital  • Government financing, leasing  
Week 14 Multinational Finance • International aspect of financial management 
Week 15 Review  
DELIVERY STRATEGY:
Class presentation  Class discussion  Practice example of problem by students; individually and in groups  Tutorial 
LEARNING RESOURCE:   Selected textbook Handout Newspaper Article  Journal  
ASSESSMENT STRATEGY: Course work   60% Pre-Course Assignment 10% Group Presentation  20% Case study   30% Examination   40% 
BIBLIOGRAPHY:
Ross, Westerfield, Jordan, Essentials of Corporate Finance, 5th Canadian edition, McGraw-Hill Ryerson, 2005.  
ADDITIONAL READING WEBSITES Institute of Chartered Accountants of Jamaica - www.icaj.org The Jamaica Stock Exchange (JSE) - www.jamstockex.com Statistical Institute of Jamaica  - www.statinja.com Ministry of Finance (MOF) - www.mof.gov.jm Planning Institute of Jamaica – www.pioj.gov.jm The Jamaica Deposit Insurance Corporation (JDIC) - www.jdic.org The Financial Sector Adjustment Company (FINSAC) - www.finsac.com Jamaica Bankers Association (JBA) - www.jba.org.jm Caribbean Association of Indigenous Banks - www.caibinc.org