BUS5030 Financial modelling - Semester 2 , 2007

Unit leader :

Vincent Lee

Lecturer(s) :

Clayton

  • Vincent Lee

Tutors(s) :

Clayton

  • Eric Shen
  • Lin Chen

Introduction

Welcome to BUS5030 Financial modeling for semester 2, 2007. This 6 point unit is elective to all postgraduate degree programs in the Faculty of IT who have satisified the pre-requisites. The unit has been designed to provide you with an understanding of finance theory, the contexts within which information technologies are used to aid decision support for financial decision making. It explores many aspects of Xcel spread sheet and Crystal Ball for modeling the relationship between theoretical knowledge and its practical application using financial decision making cases.

Unit synopsis

Financial Modelling using modern computer tools. The subject covers both financial theory and modelling and includes computer modelling methodology, DCF analysis, risk measurement, shareholder value analysis, spreadsheet modelling, capital budgeting, project management, optimal capital budgets, short-term planning and financing, accounts receivable and inventory, statement analysis and forecasting.

Learning outcomes

  • To understand the fundamental theories of finance.
  • To be able to apply finance theory to real problems in finance using computing power.
  • To feel comfortable with applying spreadsheets to the solution of financial problems.
  • To be able to formulate and solve financial problems using computing techniques.

Workload

Unit relationships

Prerequisites

Before attempting this unit you must have satisfactorily completed 12 points of postgraduate level Faculty of Information Technology units, or equivalent.

Relationships

BUS5030 is an elective unit in the professional stream of the Master of Business Systems (MBS).

You may not study this unit and BUS4030, BUS3030, GCO5802, BUS5003 in your degree.

Continuous improvement

Monash is committed to ‘Excellence in education' and strives for the highest possible quality in teaching and learning. To monitor how successful we are in providing quality teaching and learning Monash regularly seeks feedback from students, employers and staff. Two of the formal ways that you are invited to provide feedback are through Unit Evaluations and through Monquest Teaching Evaluations.

One of the key formal ways students have to provide feedback is through Unit Evaluation Surveys. It is Monash policy for every unit offered to be evaluated each year. Students are strongly encouraged to complete the surveys as they are an important avenue for students to "have their say". The feedback is anonymous and provides the Faculty with evidence of aspects that students are satisfied and areas for improvement.

Student Evaluations

The Faculty of IT administers the Unit Evaluation surveys online through the my.monash portal, although for some smaller classes there may be alternative evaluations conducted in class.

If you wish to view how previous students rated this unit, please go to http://www.monash.edu.au/unit-evaluation-reports/

Over the past few years the Faculty of Information Technology has made a number of improvements to its courses as a result of unit evaluation feedback. Some of these include systematic analysis and planning of unit improvements, and consistent assignment return guidelines.

Monquest Teaching Evaluation surveys may be used by some of your academic staff this semester. They are administered by the Centre for Higher Education Quality (CHEQ) and may be completed in class with a facilitator or on-line through the my.monash portal. The data provided to lecturers is completely anonymous. Monquest surveys provide academic staff with evidence of the effectiveness of their teaching and identify areas for improvement. Individual Monquest reports are confidential, however, you can see the summary results of Monquest evaluations for 2006 at http://www.adm.monash.edu.au/cheq/evaluations/monquest/profiles/index.html

Unit staff - contact details

Unit leader

Associate Professor Vincent Lee
Associate Professor
Phone +61 3 990 52360
Fax +613-99055159

Contact hours : 11:00-13:00

Lecturer(s) :

Associate Professor Vincent Lee
Associate Professor
Phone +61 3 990 52360
Fax +613-99055159

Tutor(s) :

Failed to retrieve details for Eric Shen

Ms Lin Chen
Postgraduate Student

Teaching and learning method

This unit is on campus. Beside attending lecture and tutorials (compulsory and attendance will be taken), it is expected at least an additional 4 hours per week is required.

Students are to follow all materials posted on unit MUSO site.

Tutorial allocation

On-campus students should register for tutorials/laboratories using Allocate+.

Communication, participation and feedback

Monash aims to provide a learning environment in which students receive a range of ongoing feedback throughout their studies. You will receive feedback on your work and progress in this unit. This may take the form of group feedback, individual feedback, peer feedback, self-comparison, verbal and written feedback, discussions (on line and in class) as well as more formal feedback related to assignment marks and grades. You are encouraged to draw on a variety of feedback to enhance your learning.

It is essential that you take action immediately if you realise that you have a problem that is affecting your study. Semesters are short, so we can help you best if you let us know as soon as problems arise. Regardless of whether the problem is related directly to your progress in the unit, if it is likely to interfere with your progress you should discuss it with your lecturer or a Community Service counsellor as soon as possible.

Unit Schedule

Week Topic Study guide References/Readings Key dates
1 Introductory to Financial Modelling: Rules Table Methodology Lecture 1 power point material + Chapter 1 of tutorial text Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 19 July 2007
2 Discounted Cash Flow Flows (Time Value of Money) and lecture 2 power point material + Chapter 2 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 26 July 2007
3 Financial Statement , Cash Flow and Taxes Chapter 3 & 4 of Textbook + Lectue 3 power point material + Chapter 3 & 4 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 2 Aug 2007
4 Risk, Return and the Capital Asset Pricing Model Chapter 6 of the textbook + lecture 4 power point material + Chapter 5 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 9 Aug 2007
5 Capital Budgeting - Basic Chapter 11 of the textbook+lecture 5 power point material + Chapter 6 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 16 Aug 2007
6 Cash Flow Estimation and Risk Analysis Chapter 12 of the textbook + lecture 6 power point material + Chapter 7 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 23 Aug 2007
7 Real Options and Corporate Valuation Chapter 13 & 14 of textbook + lecture 7 power point material + Chapter 8 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 30 Aug 2007
8 Class test (one hour) Lecture 1 to 7 Open book 6 Sep 2007
9 Capital Structure Decisions: Basic Chapter 16 of the textbook + lecture 8 power point material +Chapter 9 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 13 Sep 2007
10 Capital Structure Decisions: Extension Chapter 17 of the textbook + lecture 9 power point material +Chapter 10 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 20 Sep 2007
Mid semester break
11 Current Asset and Short Term Financing Chapter 20 & 22 of the textbook + lecture 10 power point material +Chapter 11 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 4 Oct 2007
12   Chapter 22 of the textbook + lecture 11 power point material +Chapter 11 of tutorial text Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 11 Oct 2007
13 Revision All lecture and tutorial covered materials Brigham & Ehrhardt (2008), Financial Management:Theory and Practice (12th ed); and Charnes, J. (2007), Financial Modelling with Crystal Ball and Excel+ Companion web site 18 Oct 2007

Unit Resources

Prescribed text(s) and readings

Bringham E F & Ehrhardt M C (2008), "Financial Management: Theory and Practice" (12th Edition), Thomson, 2008, ISBN -13:978-0-324-42269-6 & ISBN-10:0-324-42269-5 

Text books are available from the Monash University Book Shops. Availability from other suppliers cannot be assured. The Bookshop orders texts in specifically for this unit. You are advised to purchase your text book early.

Recommended text(s) and readings

Tutorial text:

Charns, J. (2007), "Financial Modelling with Crystal Ball and Excel + Companion Web Site, Wiley Finance, 2007, ISBN 13:978-0-471-77972-8 (paper/cd-rom) & ISBN 10: 0-471-77972-5 (paper/cd-rom). 

Required software and/or hardware

You will need access to:

  • Java Version 6 Update 1 (download from Sun Microsystems)
  • Crystal Ball (provided with the text book)
  • Firefox or Internet Explorer browser

On-campus students may use this software which is installed in the computing labs. Information about computer use for students is available from the ITS Student Resource Guide in the Monash University Handbook.

Equipment and consumables required or provided

Students may use the facilities available in the computing labs. Information about computer use for students is available from the ITS Student Resource Guide in the Monash University Handbook. You will need to allocate up to 4 hours per week for use of a computer, including time for newsgroups/discussion groups.

Study resources

Study resources we will provide for your study are:

Library access

The Monash University Library site contains details about borrowing rights and catalogue searching. To learn more about the library and the various resources available, please go to http://www.lib.monash.edu.au.  Be sure to obtain a copy of the Library Guide, and if necessary, the instructions for remote access from the library website.

Monash University Studies Online (MUSO)

All unit and lecture materials are available through the MUSO (Monash University Studies Online) site. You can access this site by going to:

  1. a) https://muso.monash.edu.au or
  2. b) via the portal (http://my.monash.edu.au).

Click on the Study and enrolment tab, then the MUSO hyperlink.

In order for your MUSO unit(s) to function correctly, your computer needs to be correctly configured.

For example :

  • MUSO supported browser
  • Supported Java runtime environment

For more information, please visit

http://www.monash.edu.au/muso/support/students/downloadables-student.html

You can contact the MUSO Support by: Phone: (+61 3) 9903 1268

For further contact information including operational hours, please visit

http://www.monash.edu.au/muso/support/students/contact.html

Further information can be obtained from the MUSO support site:

http://www.monash.edu.au/muso/support/index.html

Assessment

Unit assessment policy

Final Exam:  60%

Individual Assignment: 20%

Class test: 15%

Tutorial participation: 5%

•Students MUST pass the Final Exam to pass the unit

Assignment tasks

  • Assignment Task
    Title :
    Financial Evaluation of New Product Development
    Description :
    Weighting :
    Criteria for assessment :

    Answers all questions objectively. See details of each question's requirements.There is a penalty for late submission.

    No. of working day late:

    1 working day late 80% of Grade

    2 working day late 60% of Grade

    3 working day late 40% of Grade

    4 working day late 20% of Grade

    5 working day late 0% of Grade

    Due date :
    4.00 pm 5 Oct 2007 (week 11)

Examinations

  • Examination
    Weighting :
    60 %
    Length :
    2 hours
    Type ( open/closed book ) :
    Closed book

Assignment submission

Assignments will be submitted by paper submission to assignment box locate on first floor foyer, building 63. The assignment must be accompanied with the appropriate cover sheet correctly filled out and attached. Do not email submissions. The due date is the date and time by which the submission must be received/the date by which the submission is to be posted.

Assignment coversheets

Download assignment coversheet from Faculty of IT's home page

http://www.infotech.monash.edu.au/resources/student/

University and Faculty policy on assessment

Due dates and extensions

The due dates for the submission of assignments are given in the previous section. Please make every effort to submit work by the due dates. It is your responsibility to structure your study program around assignment deadlines, family, work and other commitments. Factors such as normal work pressures, vacations, etc. are seldom regarded as appropriate reasons for granting extensions. Students are advised to NOT assume that granting of an extension is a matter of course.

Late assignment

Assignments received after the due date will be subject to a penalty. Assignments received later than one week after the due date will not normally be accepted.

Return dates

Students can expect assignments to be returned within two weeks of the submission date or after receipt, whichever is later.

Assessment for the unit as a whole is in accordance with the provisions of the Monash University Education Policy at:

http://www.policy.monash.edu/policy-bank/academic/education/assessment/

We will aim to have assignment results made available to you within two weeks after assignment receipt.

Plagiarism, cheating and collusion

Plagiarism and cheating are regarded as very serious offences. In cases where cheating  has been confirmed, students have been severely penalised, from losing all marks for an assignment, to facing disciplinary action at the Faculty level. While we would wish that all our students adhere to sound ethical conduct and honesty, I will ask you to acquaint yourself with Student Rights and Responsibilities (http://www.infotech.monash.edu.au/about/committees-groups/facboard/policies/studrights.html) and the Faculty regulations that apply to students detected cheating as these will be applied in all detected cases.

In this University, cheating means seeking to obtain an unfair advantage in any examination or any other written or practical work to be submitted or completed by a student for assessment. It includes the use, or attempted use, of any means to gain an unfair advantage for any assessable work in the unit, where the means is contrary to the instructions for such work. 

When you submit an individual assessment item, such as a program, a report, an essay, assignment or other piece of work, under your name you are understood to be stating that this is your own work. If a submission is identical with, or similar to, someone else's work, an assumption of cheating may arise. If you are planning on working with another student, it is acceptable to undertake research together, and discuss problems, but it is not acceptable to jointly develop or share solutions unless this is specified by your lecturer. 

Intentionally providing students with your solutions to assignments is classified as "assisting to cheat" and students who do this may be subject to disciplinary action. You should take reasonable care that your solution is not accidentally or deliberately obtained by other students. For example, do not leave copies of your work in progress on the hard drives of shared computers, and do not show your work to other students. If you believe this may have happened, please be sure to contact your lecturer as soon as possible.

Cheating also includes taking into an examination any material contrary to the regulations, including any bilingual dictionary, whether or not with the intention of using it to obtain an advantage.

Plagiarism involves the false representation of another person's ideas, or findings, as your own by either copying material or paraphrasing without citing sources. It is both professional and ethical to reference clearly the ideas and information that you have used from another writer. If the source is not identified, then you have plagiarised work of the other author. Plagiarism is a form of dishonesty that is insulting to the reader and grossly unfair to your student colleagues.

Register of counselling about plagiarism

The university requires faculties to keep a simple and confidential register to record counselling to students about plagiarism (e.g. warnings). The register is accessible to Associate Deans Teaching (or nominees) and, where requested, students concerned have access to their own details in the register. The register is to serve as a record of counselling about the nature of plagiarism, not as a record of allegations; and no provision of appeals in relation to the register is necessary or applicable.

Non-discriminatory language

The Faculty of Information Technology is committed to the use of non-discriminatory language in all forms of communication. Discriminatory language is that which refers in abusive terms to gender, race, age, sexual orientation, citizenship or nationality, ethnic or language background, physical or mental ability, or political or religious views, or which stereotypes groups in an adverse manner. This is not meant to preclude or inhibit legitimate academic debate on any issue; however, the language used in such debate should be non-discriminatory and sensitive to these matters. It is important to avoid the use of discriminatory language in your communications and written work. The most common form of discriminatory language in academic work tends to be in the area of gender inclusiveness. You are, therefore, requested to check for this and to ensure your work and communications are non-discriminatory in all respects.

Students with disabilities

Students with disabilities that may disadvantage them in assessment should seek advice from one of the following before completing assessment tasks and examinations:

Deferred assessment and special consideration

Deferred assessment (not to be confused with an extension for submission of an assignment) may be granted in cases of extenuating personal circumstances such as serious personal illness or bereavement. Special consideration in the awarding of grades is also possible in some circumstances. Information and forms for Special Consideration and deferred assessment applications are available at http://www.monash.edu.au/exams/special-consideration.html. Contact the Faculty's Student Services staff at your campus for further information and advice.