Page 1 of 23 Curtin University FNCE3000 Corporate Finance 2016 1.0 Unit Overview This unit focuses on aspects of the corporate finance theories and tools and techniques to facilitate financial decision making. It aims to expose students to and familiarise them with corporate sector financial management by examining the main issues faced by financial managers of public companies. Topics covered are: Information asymmetry and signalling, agency theory, capital markets and sources of funds, capital budgeting under uncertainty, capital structure, dividend policy, and market for corporate control and corporate governance. Table 1.1 – Assessment Schedule Task Participants Value (%) Date due Case study Group (Pairs) 20 Week 6 5 Sep Literature Review Individual 35 Week 10 3 Oct Final Exam open book 45 Exam week The aim of these assessments is to assist you to:  gain a deeper understanding of corporate finance concepts;  appreciate current issues discussed/faced in the industry; and  apply your knowledge to investigate real companies. Through these exercises, you will gain a better understanding of how corporate finance concepts can be applied in the real world. This is an excellent opportunity for those who wish to pursue a career as a financial officer/manager. For those who are taking this unit as an elective, it provides the basic foundation and tools needed to investigate the financial health of a company and assist in the decision to purchase its shares for investment. The textbook for this unit is Brealey, R., Myers, S. & Allen, F. 2016, Principles of Corporate Finance, 12th ed, New York: McGraw-Hill. The textbook is essential as it covers all the necessary concepts of this unit. You may purchase and use the older (or other) editions version; however, the chapters will not be in sync and there may be differences in the after chapter questions.Page 2 of 23 1.1 Delivery of Unit Content With the assistance of Curtin's Office of Assessment, Teaching and Learning, the delivery of the unit's content has been altered to facilitate discussion and promote participation. 1.11 Blackboard navigation On Blackboard, the unit's content is delivered via learning modules. There are eleven modules covering the content for this unit. Each module is further divided into three segments; pre-workshop, workshop and post-workshop The learning outcomes are presented at the start of each learning module. Please take time to review these learning outcomes as they will give you an idea of what to focus on when you are reviewing the chapter content. 1.111 Pre-workshop In this segment, you will find the iLecture recording (when available), presentation slides and reference materials (module files). There are also activity tasks, which will guide you as you are reading the relevant chapters in the textbook. The activity tasks are repeated in Appendix A of this assessment booklet. Please note that reading the relevant chapters in the textbook is crucial in the mastery of the concepts. iLectures and the presentation slide merely serve as an overview introduction to the subject matter. They are not to be treated as chapter summaries. The reference materials in each module are not directly examinable. However, they do provide additional explanation and would aid your understanding in specific concepts discussed in the module. Although we do encourage all students to review the reference materials, you are not required to print them out or bring them to the examination. 1.112 Workshop This segment represents the hands-on part of the module. It will contain tutorial questions and case studies for you to apply the concepts that you have reviewed. Answers are provided to assist you in your learning. When there are no answers provided for the case studies, you are to discuss your thoughts with the tutor/facilitator. 1.113 Post-workshop You will be presented with a thought provoking question each week. You are encouraged to discuss this with your tutor/facilitator. Although these questions are not directly examinable, they will help you understand how the concepts learnt are applied in the real life. For the final part of your learning process, short multiple choice questions are available for you to test your understanding. These questions will also give you the needed practice to prepare you for the exams.Page 3 of 23 1.12 Lecture/workshop If the mode of study includes lectures/workshops, you are expected to have read the relevant chapters for the week prior to attending. The lectures/workshops will be interactive and your participation of the activities in the lectures is expected. It is not the intention/goal of the lectures to provide a full summary of the chapter. The purpose is to present the main concepts in way that allows you to gain a better perspective and understanding of the key themes. You are encouraged to engage with the lecturer and clarify when in doubt. You may also have guest lecturers from the industry to present you with industry case studies. Here are what students have said about the delivery of the unit content:Page 4 of 23 1.2 Communication If you have any queries, please try to approach your tutor first, lecturer second and unit coordinator last. Written communication is preferred. When sending emails to the unit coordinator, please use this format in your subject field: CF, , , , .E.g. CF307, Smith, John, 123456A, Bentley. The purpose of the email is written on the first line in the main body of the email. You may not receive a prompt reply if you do not follow this format. 1.3 Assessment submission All assessments are to be submitted on Turnitin; no exceptions. They are to be professional typed; no handwritten submissions. Your work must be assessable through Turnitin. Scanned graphics will not be marked. Do not email your assignment or additional attachments to your tutors/lecturer; it will not be marked. You are responsible to ensure that the assignment submitted is the correct and final version. As you are allowed to make multiple submissions prior to the due date, you are encouraged to submit your assignment the day before the due date. You would have a submission in the system should an unforeseen circumstance occur on the due date. If it is a group assignment, only one student of the group needs to submit the assignment. You have to ensure that the names and student IDs of all members of the group are clearly written on the cover page of the assignment. No marks will be awarded to students if their names are not on the assignment. Your assessment filename must be in the following format: , , , , . E.g. Smith, John, 123456A, Bentley, LR.docx. Assessments without this filename format will automatically receive a 2 marks penalty. No pre-marking will be done for your assessments.Page 5 of 23 1.4 Plagiarism Plagiarism, including Self-plagiarism is a serious offence. All work above 20% similarity index will be referred to the student disciplinary panel (SDP) for investigation. The investigation may take up to two months to finalise. The process of an alleged plagiarism case is as follows: 1. Marker identifies suspected plagiarism cases and forwards them to the unit coordinator 2. The unit coordinator will review and submit them to the student advisers 3. The student advisers will compile and prepare the documentation and will submit the cases to the head of department/school for approval prior to sending the files to the SDP 4. The SDP will conduct the investigation 5. The SDP will contact the student via Oasis 6. The student will be required to make a response to the evidence from the investigation 7. The SDP make a final assessment before awarding the verdict 8. The student is notified of the verdict 9. The unit coordinator and school is informed via an email report Your unit coordinator/tutors are not involved in the SDP investigation and is unable to provide you with a progress report. You will be notified of the outcome before the unit coordinator. Please refer to Curtin's plagiarism guide and utilize the checklist provided below: o http://academicintegrity.curtin.edu.au/local/docs/StudentPlagiarismGuide.pdf o http://academicintegrity.curtin.edu.au/local/docs/StudentChecklist.pdf 1.5 Assignment extensions Please read the extension instructions detailed in the unit outline. In addition to the necessary paper work, you must also submit your work completed to date together with your extension request. This is to show evidence that you have started doing your assignment and have followed the recommended time frames as described in this document. We will accept it in any format; regardless of how incomplete your work is. This will enable us to give a better assessment of your case; Please note that if you have been granted an extension, the system will not allow you to make multiple submissions on Turnitin after the initial due date.Page 6 of 23 1.6 Exam information All exam information will be provided on the first page of the mock exam paper which would be made available to you on Blackboard. Additional help may be provided through your lecturer/facilitator on the last lecture/workshop. You may bring in any non-electronic reference material, which includes but not restricted to:  Textbooks  Printed lecture slide and tutorial questions  Hand written/typed notes  Hand written/typed chapter summaries and formula sheets You may also write or use post-it notes in your textbook. Reading the textbook and practicing the questions at the back of the book is essential to passing the exams. Majority of the questions in the exams are adapted from the publishers of the textbook. Reading lectures/doing tutorials alone is not sufficient. Practicing the mock exam paper (without looking at the answers) on Blackboard will give you an indication of what to expect in the exams No individual requests for exam tips would be entertained; Details of supplementary and deferred exams (including the release of results) are provided by central administration. Your unit coordinator will not have any information of the dates. Supplementary exams are awarded by the Board of Examiners. Your unit coordinator is not involved in the process.Page 7 of 23 2.0 Assessment Overview There are two ongoing assessments in this unit. This first is a case study. This assessment is structured in a way that is directly relevant your future work in the industry and authentic by using real company information. The second assignment is a literature review which will allow you to explore the selected corporate finance concept in detail and appreciate the various view expressed. Both these assignments are time consuming and you have to follow the recommended start times in order for you to obtain a good score. Here are what students have said about the assignments:Page 8 of 23 3.0 Assessment information - Case study (20%) Objective: To prepare an analyst report on a public listed dividend paying company. Skills acquired:  discipline knowledge;  thinking skills;  learning how to learn Specifically, conduct research on a company and report on key areas of shareholder analysis, risk-return analysis and cost of capital. 3.1 Submission instructions This assignment is due on Monday of week 6 (5 Sep) at 5pm. It would be in a group of no more than 2 students. It is your responsibility to find a partner to work with; although your tutor will facilitate this is your tutorial class. Please submit the names of the members in your group to your tutor by week 2. If you are unable to find a partner by week 3, you will have to complete this assignment on your own. Please ensure that all members' names are clearly stated on the front page of your assignment and filename of your document. Please allow at least 3 weeks to complete this assignment. You will have to commence your case study assignment from week 3 (15 Aug). The presentation of the case study should be in 1.5 lines spacing and 12pt font. It should not be more than 4,000 in words. The word count excludes tables, diagrams, charts, footnotes and references. Your document must be typed and submitted through Turnitin on the Blackboard by the due date. No email copies will be accepted. Your submission on Turnitin must be done using the following document FILENAME format: , , , , CS. This refers to the actual document that you are working on, not the Turnitin submission title. Assessments without this filename format will automatically receive a 2 marks penalty. For example: SmithJ, 12345A, JonesT, 67899B, HarrisonF, 4567458C, Bentley, CS.docPage 9 of 23 3.2 Case study details You are to select a public listed dividend paying company from the country of your study location (e.g. Australia for the Bentley campus) and conduct a detailed analysis on it. You may not select Dominos as this is the company that will be used in the lecture. The purpose of this assignment is to use your acquired knowledge from this unit to investigate the financial strength of a public listed company. Your research should cover the areas of:  shareholder analysis;  risk-return analysis; and  cost of capital. In each of the areas, you are to report your findings using the questions provided below as a guide. If the information is not from the company's annual report, you will have to provide details on 1. where you sourced the information; and 2. comment on how you have verified its reliability. The report must be written completely by you. You are not to purchase or reproduce commercial stock reports. 3.21 Shareholder analysis (20%)  Who are the typical investors in this stock?  Who are the marginal investors in this stock? 3.22 Risk-return analysis (40%)  What are the risks of this company? (Where is this risk coming from (market, firm, industry or currency)? How is the risk profile of the company changing?  What return would you have earned investing in this company's stock?  How much would you have under or out-performed the market in the short term?  In your view, how much of the performance can be attributed to management? 3.23 Cost of capital (40%)  Calculate the company's cost of equity using various methods (at least 2); showing your calculations and detailing the source of your data.  Calculate the company's cost of debt; showing your calculations and detailing your assumptions and the source of your data.  Calculate the company cost of capital; showing your calculations.Page 10 of 23 3.3 Additional guidelines  You are preparing an analyst report for a client. Do not merely answers the questions in the case study.  It should be written professionally in sentences and paragraphs; not in bullet point form.  The questions 3.21 – 3.23 serve as a guide and are not to be repeated in your report.  Where possible, calculations must be shown and assumptions must be clearly stated. Use of an appendix is recommended; however, there must be clear reference made to the main body.  Where possible, use figures from the annual report; this is the most accurate source of information. For example, some websites may give you the ROE of the company, however, if you do not show your workings, you will not be awarded the marks for it.  It is preferable that you reference your work using footnotes. This will help the marker to identify your source without referring to the back of your report. Please refer to the following document for additional help on footnotes: http://writing.wisc.edu/Handbook/PDF/chicago_turabian_uwmadison_writingcenter_j une2013.pdf 3.31 Shareholder analysis guide (Bentley campus)  Choose an Australian company listed on the stock exchange.  Download the annual report from www.asx.com.au or the company's website. Please use the latest available annual report. If the latest annual report is not available for the company, please select another company. Figures from last year's annual report will not be accepted.  Read the summary of the business. o What type of investor would invest in this company?  Read the chairman's/director's message to the shareholders. o To whom is the message directed towards?  Locate the top 20 shareholdings table in the annual report. o Identify who the major shareholders are. o What do you think is their motivation for investing in the company? o What type of activity do you expect from the majority of the shareholders that you have identified?  From the above exercise, you would now be able to describe the profile of the marginal investor in this stock and ascertain the impact of their activities on the company's long term share price.Page 11 of 23 3.32 Risk-return analysis guide  Read the risk disclosure section in the annual report. o Summarise where the risks are coming from. o From your understanding of the business describe the top three risks that investors should be mindful of and how will these risks will change in the future.  The total return to the shareholder is the capital growth plus the dividend received. o Use the ASX website, Yahoo Finance or other research sites to determine the one year change in share price of the stock. Use the closing price. o Use the ASX website or annual report to determine the dividend paid for the year. If the share is franked, you will have to gross it up to account for franking credits. If the stock pays dividends in foreign currency, you will have to convert that home currency using the exchange rate of the date of dividend payment. o Most Australian companies pay twice a year: interim and final dividend. o Some companies may pay a special dividend. This should be included in calculating your total one year return. o The dates used should match the dates of the annual report. o DO NOT select a company that does not pay dividends.  You can use the All Ordinaries (AORD) as a proxy for the market. Make sure the date selected for your start and end date correspond to the one you used to calculate your return for the stock.  Review the summary of projects undertaken by the company in the annual report. Identify if there is a link to the under or over-performance of the stock relative to the benchmark due to capital investments/projects. How successful are the finance managers of the company in selecting good investments?Page 12 of 23 3.33 Cost of capital guide  Use figures from the annual report to calculate the company's cost of equity. o CAPM (you will have to either calculate or source for the beta of the company. You can try www.morningstar.com.au or www.reuters.com. o You can use the 10 year Australian government bond for the risk-free rate. o Dividend growth model (DGM).  Refer to the textbook for formulas and example.  All information needed to calculate Rd using the DGM can be found in the annual report  Do not include any special dividends as it is a once-off occurrence o Select between CAPM and DGM method. Which one do you feel is more accurate/appropriate and why? Use this to calculate the WACC.  Business loans rates vary with the terms of the contract. However, you can use the public available information as an estimation. o Read the annual report to find the breakdown of the loans and the providers. o Identify the long term liabilities; not short term and overdrafts. This is usually found in the balance sheet. o Read the notes and fine print. Companies sometimes detail the lending institution or provide the interest rates if they are fixed. o List the various borrowings and rank them in order (low to high interest rate). If there are no notes on the rates, you will have to make reasonable assumptions. Investigate if the loan is secured/unsecured, fixed/variable or straight/hybrid. If you are unable to determine the actual breakdown of fixed and variable rates assume it to be 100% variable. o Establish a base rate. This can be a bank variable lending rate or cash rate. If your company is a bank, you cannot use another bank's lending rate. You can however, use the chosen bank's lending rate less a margin as your starting point. o Assume a margin for each type of loan. Provide some form of evidence/research to support your assumption. o Do not use the interest expense from the profit and loss statement to work out the interest rate. o We do not expect you to source for exact rates. o Ensure that you show your workings and include your source as footnotes.  We are looking to see evidence of research and logical reasoning.  What does your calculated cost of capital tell you about the type of future projects that the company can consider?  How does knowing the cost of debt and capital help the financial managers in deciding the optimum capital structure?Page 13 of 23 3.4 Marking rubrics Below expectations (0 – 49%) Meets expectations (50 – 69%) Exceeds expectations (70 – 100%) Shareholders analysis 20% - reproduced substantial sections of annual report, websites, commercial reports - revealed little understanding of the scope of the case study - made no attempt to analyse the company's annual report - showed little evidence of analysis of the chairman's message in the annual report - contained irrelevant material - went beyond simple description of the investor of the selected company - attempted to analyse the investor's profile and motivation - made assumptions that show the level of investigation taken - showed evidence of analysis of the chairman's message in the annual report - showed some evidence of application of the unit's concepts - contained no irrelevant content - explained clearly why the analysis is justified with clear reference to the annual report - showed evidence of planning and effort, reading and understanding - showed evidence of deeper level research and currency of response - provided detail analysis and description of the typical investor of the company - explored and discuss in depth the investor's profile and motivation - showed clear evidence of analysis of the chairman's message in the annual report - showed clear evidence of application of the unit's concepts and explore extensions - provided clear assessment of the impact of marginal investors in the context of the chosen company - explained clearly with aid of diagrams and charts why the analysis is justified with clear reference to the annual report Risk-return analysis 40% - reproduced substantial sections of annual report, websites, commercial reports - revealed little understanding of the implications of the risks - made no attempt to link risks to future returns of the company - wrong usage and application of formulas - did not show full workings - omitted tax consideration; eg. franking credits - excluded some dividend payments - showed little evidence of research into the company's investment projects - provided a weak argument to link the performance to - clear and succinct summary of the company's risks - showed deep understanding of the implications of the risks - provided clear linkage of the risks to future returns of the company - correct usage and application of formulas - included tax consideration; eg. franking credits - included all dividend payments - showed strong evidence of research into the company's investment projects - provided a strong argument to link the performance to managerial abilities - contained no irrelevant material - clear and succinct summary of the company's risks with evidence of additional research beyond the information provided in the annual report - showed deep understanding of the implications of the risks with detailed explanation - provided clear linkage of the risks to future returns of the company using specific examples from the annual report - correct usage and application of formulas - included tax consideration; eg. franking credits - included all dividend payments - showed strong evidence of research into the company's investment projects; providing diagrams or tables where appropriatePage 14 of 23 managerial abilities - contained irrelevant material - provided a strong argument to link the performance to managerial abilities - contained no irrelevant material Cost of capital 40% - reproduced substantial sections of annual report, websites, commercial reports - revealed little understanding of the task requirements - wrong usage and application of formulas - did not show full workings - no assumptions provided to justify the usage of values used for Rf and Rm - did not provide clear reasoning on the selection between CAPM and DGM - used numbers from websites/research houses/analysts' reports instead of the annual report - showed little evidence of research into the company's borrowings and did not provide evidence of where the rates were obtained - provided a weak argument to link the WACC to company projects/investments - contained irrelevant material - demonstrated clear understanding of the task requirements - correct usage and application of formulas - showed full workings - clear assumptions provided to justify the usage of values used for Rf and Rm - provided clear reasoning on the selection between CAPM and DGM - used majority of the numbers from the company's annual report - demonstrated strong evidence of research into the company's borrowings and provided evidence of where the rates were obtained - provided a strong argument to link the WACC to company projects/investments - contained no irrelevant material - demonstrated clear understanding of the task requirements with evidence of critical thinking - correct usage and application of formulas - showed full workings - researched into various theories and methods in ascertaining the cost of capital; with discussion on the use and relevance of each method - clear assumptions provided to justify the usage of values used for Rf and Rm; with commentary on how the data might be improved - provided clear reasoning on the selection between CAPM and DGM and discussion on other methods - used majority of the numbers from the company's annual report and comparing them with other sources - paid particular attention to the date of the datasets and discussed the implications of any mismatch - demonstrated strong evidence of research into the company's borrowings and provided evidence of where the rates were obtained; providing clear assumptions - provided a strong argument to link the WACC to company projects/investments - contained no irrelevant materialPage 15 of 23 4.0 Assessment information - Literature Review (35%) The purpose of this assignment is to critically reflect on corporate finance concepts/theories through the reviewing of existing literature. Skills acquired:  Apply discipline knowledge  Thinking skills  Information skills  International perspective Specifically, you are to write a literature review on Mergers and Acquisition. The structure that you should employ would be as follows:  Abstract (200 words)  Introduction (2 pages)  Body (6 pages)  Conclusion (2 pages) Your assignment will not be marked and you will obtain a zero if you write on the topics of capital structure, dividend policy or corporate governance. Please review following websites for help on writing a literature review: http://writing.wisc.edu/Handbook/ReviewofLiterature.html http://www.writing.utoronto.ca/advice/specific-types-of-writing/literature-review http://www.duluth.umn.edu/~hrallis/guides/researching/litreview.html http://www.rmit.edu.au/library/literaturereview https://academicskills.anu.edu.au/resources/handouts/literature-reviews http://www.canberra.edu.au/studyskills/writing/literature 4.1 Submission instructions This is an individual assignment is due on the Monday of the week 10 (3 Oct) at 5pm. The presentation of the literature review should be in 1.5 lines spacing and 12pt font. Although there is no minimum words limit for the literature review, it should be between 10 - 15 pages (excluding tables, graphs and references). The word limit for this assignment is 8,000. Please allow at least 4 weeks to complete this assignment. This means that you should commence your assignment on the week of Dividend Policy (12 Sep) and aim to complete at least 3 pages per week. Your document must be typed and submitted through Turnitin on the Blackboard by the due date. No email copies will be accepted. Your submission on Turnitin must be done using the following filename format: , , , , LR. This refers to the actual document that you are working on, not the Turnitin submission title. Assessments without this filename format will automatically receive a 2 marks penalty. For example: Smith,J, 12345A, Bentley, LR.docPage 16 of 23 4.2 Additional guidelines  Picking an area: Narrow your area as much as possible. This is to avoid the need to cover an extensive list of journal articles. For example, you may want to identify a variable used in the articles and explore the relevance of its usage.  Number of articles: You are expected to read 8 – 12 articles. Please do not just provide a summary of each article and do not reference articles that you have not read or do not understand. Do not provide more than 12 references.  Motivation: Your main objective is to critically review/comment on what you have read. DO NOT reproduce definitions, explanation of theories, charts and graphs.  Writing: Each section should have at least two or three paragraphs; each paragraph should have at least three or four sentences. Write simple straightforward sentences; one sentence one idea. To avoid having a similarity index on Turnitin, do not paraphrase sentences from the journal articles; use your own words to elaborate.  Abstract: Do this after you completed the conclusion. Condense of your whole literature review, including objective, current issues, future research, and the importance of the literature review.  Introduction: Start with the background and motivation of the literature review. Describe the aim or objective of the literature review, summarise what you have found from the current literature, what are the current unsolved issues that may lead to the future research. Outline the contribution of the literature review to the finance literature (fills a gap, provides knowledge, argues current issues, and sheds a light on, etc). Explain the significance of the literature review, to investors, to managers, to regulators, etc. Finally map or illustrate the layout of the main body section of your review.  Body of the literature review: Do not provide quotes from existing literature. Critique their points and make a reference to it with (Author, year). Try to argue the literature on both sides; do not just summarise. Do not summarise concepts or theories and reproduce diagrams from the textbook; you will be penalised.  Conclusion: Discuss what you have found, summarise unsolved issues and important debates. Reinforce the contributions and significance of this literature review and finally, indicate and discuss the future research areas.  Additional assistance: Approach CBS Communication Skills Centre. Book an appointment and go obtain assistance on your review before you submit.  To search articles, you should use the library journal database, Google Scholar or directly to the home page of the journal.  When to start the literature review: As you are not required to explain concepts and theories, you do not need the topic to be covered in the lecture prior to commencement.Page 17 of 23 4.3 Articles to get you started Overview of mergers and acquisitions Chen, C., and F. Christopher. 2003. A review of cross-border Mergers and Acquisitions in APEC. Asian Pacific Economic literature 17(2): 14-38. Motivation of mergers and acquisitions Gonzalez, P., G. M. Vasconcellos, and R. J. Kish. 1998. Cross-border mergers and acquisitions: The undervaluation hypothesis. Quarterly Review of Economics & Finance 38(1): 25-45. Pradhan, J. P., and V. Abraham. 2005. Overseas Mergers and Acquisitions by Indian Enterprises: Patterns and Motivations. Indian Journal of Economics 85(33): 365-386. Payment method choice Faccio, M., and R. W. Masulis. 2005. The Choice of Payment Method in European Mergers and Acquisitions. Journal of Finance 60(3): 1345-1388. Performance of mergers and acquisitions Alexandridis, G., K. P. Fuller, L. Terhaar, and N. G. Travlos. 2012. Deal Size, Acquisition Premia and Shareholder Gains. Journal of Corporate Finance 20: 1-13. Bouwman, C. H. S., K. Fuller, and A. S. Nain. 2009. Market valuation and acquisition quality: Emprical evidence. Review of Financial Studies 22(2): 633-679. Cakici, N., C. Hessel, and K. Tandon. 1996. Foreign acquisitions in the United States: effect on shareholder wealth of foreign acquiring firms. Journal of Banking & Finance 20(2): 307-329. Fuller, K., J. Netter, and M. Stegemoller. 2002. What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions. Journal of Finance 57(4): 1763-1793. Gonzalez, P., G. M. Vasconcellos, R. J. Kish, and J. K. Kramer. 1997. Cross-border mergers and acquisitions: maximizing the value of the firm. Applied Financial Economics 7(3): 295-305. Huang, Y. S., and R. A. Walkling. 1987. Target abnormal returns associated with acquisition announcements: Payment, acquisition form, and managerial resistance. Journal of Financial Economics 19(2): 329-349.Page 18 of 23 4.4 Marking rubrics (condensed version) Criteria Below Expectations Meets Expectations Above Expectations Introducing the idea, problem statement, and issues (15%) Neither implicit nor explicit reference is made to the topic or purpose of the article. The issue / problem to be considered critically is not clearly stated and described. No discussion of the contribution and significance of the topic. Readers are well aware of the overall problem, challenge, or topic of the article. The issue / problem to be considered critically is stated clearly and described with enough information for an adequate understanding. Well identified at least two contributions and two significance of the topic. The topic is clearly introduced, and groundwork is smoothly and thoughtfully laid as to the direction of the article. The issue / problem to be considered critically is stated clearly and described comprehensively (delivering all relevant information necessary for a full understanding). A number of strong contributions and significance were well identified, discussed and specifically related to the topic. Body: Flow of the review (10%) The summary appears to have no direction, with subtopics appearing disjointed. There is a basic flow from one section to the next, most sections or paragraphs follow in a natural or logical order. The summary goes from general ideas to specific conclusions in a smooth and excellent manner. Transitions fluently and exceptionally tie sections together, as well as adjacent paragraphs. Coverage of content, content development, and perspective (40%) Major sections of pertinent content have been omitted or greatly run-on. The topic is of little significance to the course. No discussion and critiques to articles. The perspective is unclear and does not account for the complexities of the issue. Others' perspectives are not acknowledged. Did not use appropriate and relevant content to develop and explore ideas within the context of the discipline. All major sections of the pertinent content are included, but not covered in as much depth, or as explicit, as expected. Significance to the course is evident. Mainly summarizing articles, but with some discussions and critiques. The perspective is clear and takes into account most of the complexities of an issue. Others' perspectives are acknowledged. The limits of the position are acknowledged. Uses appropriate and relevant content to develop and explore ideas within the context of the discipline. The appropriate and important content in consideration is widely covered in depth without being redundant. Sources are broadly cited when specific statements are made. Significance to the course is clear, strong and unquestionable. Exceptional discussions in opinion and critiques relevant to articles and practice rather than summarizing articles. The perspective is comprehensive taking into account all of the complexities of the issue. Others' perspectives are completely analyzed and synthesized. The limits of the position are completely acknowledged. Uses appropriate, relevant, and compelling content to illustrate mastery of the subject. Clarity of writing and writing technique, genre and disciplinary conventions, and control of syntax and It is hard to know what the writer is trying to express. Writing is convoluted. Misspelled words, incorrect grammar, and improper punctuation are evident. Did not use language that conveys meaning to readers with sufficient Writing is generally clear, but a few unnecessary words are used. Meaning is sometimes hidden. Paragraph or sentence structure is quite repetitive. Few spelling, grammar, or punctuation errors are made. Writing is very crisp, clear, and succinct. The writer excellently incorporates the active voice when appropriate and supports ideas with examples. Various vocabularies and professional sentence structures are used. NoPage 19 of 23 mechanics (10%) clarity and includes numerous errors. Did not demonstrate consistent use of relevant and important conventions particular to a specific discipline and /or writing task (s) including organisation, content, presentation, and stylistic choices. Uses language that generally conveys meaning to readers with clarity although writing may include some errors. Demonstrates adequate use of relevant and important conventions particular to a specific discipline and /or writing task (s) including competent organization, content, presentation, and stylistic choices. spelling, grammar, or punctuation errors are made. Uses language that skillfully and effectively communicates meaning to readers with clarity and fluency, and is virtually errorfree. Demonstrates consistent use of relevant and important conventions particular to a specific discipline and /or writing task (s) including expert organisation, content, presentation, and stylistic choices. Conclusion: A synthesis of ideas and application. Sources and evidence (15%) No indications of research gaps and suggestions of future research ideas. The conclusions or solutions are unclear. They are not logically supported by the evidence and the process of analysis. There is no indication the author tried to synthesize the information or make a conclusion based on the literature under review. No application to library media center program (reading journals) is provided. Or, did not demonstrate consistent use of credible, relevant sources to support ideas that are situated within the discipline and genre of the writing. Mentioned some research gaps and some future research ideas. The conclusions or solutions are clear and relevant. They are generally supported by the evidence and the process of analysis. The author provides concluding remarks that show an analysis and synthesis of ideas occurred. Majority of the conclusions were supported in the body of the report. The application to library media center program (reading journals) is stated. Or, demonstrates consistent use of credible, relevant sources to support ideas that are situated within the discipline and genre of the writing. Well identified important research gaps and logically discussed significant future research ideas. The conclusions or solutions are comprehensive, relevant, significant and organized. They are logically supported by the evidence and the process of analysis. The author made very succinct and precise conclusions based on the review. Insights into the problem are appropriate, important and significant. Conclusions and the application to library media center program (reading journals) are strongly and significantly supported in the review. Demonstrates skillful use of highquality, credible, relevant sources to develop ideas that are pertinent to the discipline and genre of the writing. Citations/References (10%) Citation for the article did not follow APA format/Chicago referencing style and was missing essential information. Most citation for the article did follow APA format/Chicago referencing style; however; a few (less than 3) errors in essential information were evident. All citation for the article did follow APA format/Chicago referencing style. All information was clear, consistently accurate and complete.Page 20 of 23 5.0 Appendix A 5.1 Learning Module 1 - Capital Budgeting in Corporate Finance  Understand the role and responsibility of and challenges faced by the corporate financial manager  Articulate the process, principles and tools used for capital budgeting  Apply various techniques on complex capital budgeting scenarios  Understand new trends/development in capital budgeting Reading: Chapter 2, 3, 4, 5, 6 and 10 of textbook Task 1: Ensure that you are familiar with the calculation of present values. This should be covered in your pre-requisite units. You will be expected to perform these calculations in the exam. Read chapter 2 of textbook if you need to refresh your memory. Task 2: Ensure that you are familiar with the process of valuing bonds and stocks. This should be covered in your pre-requisite units. You will be expected to perform these calculations in the exam. We will be covering the application of valuing bonds and stocks in module 3. Read chapter 3 and 4 of textbook if you need to refresh your memory. Task 3: Ensure that you are familiar with the various methods of valuing projects. This should be covered in your pre-requisite units. You will be expected to perform these calculations in the exam. In this module, we will be covering the application of capital budgeting in detail. Read chapter 5 and 6 of textbook if you need to refresh your memory. Task 4: Read chapter 10 of textbook and 'The Role of Real Options in Capital Budgeting.pdf'. Appreciate the use of options in the decision making process. 5.2 Learning Module 2 - Risk and Return and Cost of Capital  Understand risk and return as it applies in corporate finance  Identify shareholders of a company and understand their motivation and impact  Determine the cost of capital Reading: Chapters 7 & 8 of textbook Task 1: Revise the concept of measuring risk and return. This should be covered in your pre-requisite units. You will be expected to perform these calculations in the exam. Read chapter 7 of textbook if you need to refresh your memory. Task 2: Review various asset pricing models. You would have covered some of them in your pre-requisite units. Read chapter 8 of textbook if you need to refresh your memory.Page 21 of 23 Task 3: Investigate the significance of marginal investors and be able to identify who they are in a public listed company. As the textbook does not have sufficient information on the definition of marginal investors, you may want to read chapter 3 of the following: Damodaran, A. 2015, Applied Corporate Finance, 4th ed, New York, John Wiley & Sons Inc. 5.3 Learning Module 3 - Cost of Capital and Valuations  Understand the complexity of calculating cost of equity and debt  Able to articulate the various methods of calculating; their strengths and weaknesses  Able to apply knowledge to real life case studies Reading: Chapters 9 of textbook Task 1: Read chapter 9 of textbook. Understand the process of determining the company's cost of equity and debt. Understand how to calculate the company's WACC. Task 2: Select a company for your assignment and calculate the WACC using the steps described in this module. Identify which data used in your calculations contributed to the inaccuracy of your final solution. 5.4 Learning Module 4 - Debt Policy  Understand the various sources of debt available to companies.  Discuss the relationship between leverage and firm value.  Outline both Modigliani and Miller (M&M) Proposition I and M&M Proposition II and discuss the impact of corporate taxes.  Discuss how leverage increases the risk of a firm's equity. Reading: Chapters 17 textbook Task 1: Read chapter 17 of textbook. Be able to summarise Modigliani and Miller's propositions and use figures to illustrate your understanding Task 2: Reflect on the significance of being able construct a homemade leverage. 5.5 Learning Module 5 - Capital Structure  Understand the effect of including taxes and financial distress in capital structure determination  Able to articulate the various theories to explain the optimal capital structure Reading: Chapters 18 of textbookPage 22 of 23 Task 1: Read chapter 18 of textbook. Understand the issues that companies face when deciding on the optimum capital structure Task 2: Explain the indirect and direct costs of financial distress Task 2: Discuss the various theories that explain the companies' borrowing decision 5.6 Learning Module 6 - Dividend Policy  Understand the various forms of dividends  Differentiate between share repurchases versus a cash dividend payment  Outline the arguments supporting the case for dividend policy irrelevance and factors affecting the payout ratio Reading: Chapters 16 textbook Task 1: Read chapter 16 of textbook. Understand why and how companies pay out dividends Task 2: Explain the motivation between paying dividends and repurchasing shares Task 3: Understand the valuation of the company under various payout decisions 5.7 Learning Module 7 - Financial Analysis  Understand how to interpret the company's financials  Appreciate the financial manager's role in facilitating the growth and profitability of the business Reading: Chapters 28 of textbook Task 1: Read chapter 28 of textbook. Understand the use and importance of financial ratios in evaluating the health of a company Task 2: Able to articulate the Du Pont system and appreciate its application Task 3: Evaluate the financial health of the company chosen for your assignment 5.8 Learning Module 8 - Corporate Governance  Understand the mechanisms of corporate governance  Identify the role and directors and the functions of the board  Appreciate features of failures in corporate governance Reading: Chapters 33 of textbookPage 23 of 23 Task 1: Read chapter 33 of textbook. Understand the purpose and function of the board Task 2: Investigate the composition of the board for your chosen company and provide comments 5.9 Learning Module 9 – IPO  Understand the reason for, process of, benefits and disadvantages of firms going public  Able to articulate the mechanisms of and impact of a seasoned equity offering  Able to calculate the impact of a rights issue Reading: Chapters 15 of textbook Task 1: Read chapter 15 of textbook. Understand the motivations for companies to go public Task 2: Go to your stock exchange's website. Investigate the process and requirements for a company to make an initial public offering Task 3: Understand the impact of a seasoned equity offering and right issues and able to calculate the values 5.10 Learning Module 10 - Mergers and Acquisition  Understand the valid reason for a merger and able to estimate the gains, accounting and tax consequences from it  Understand the various tools for and against a takeover  Able to articulate a spin-off and carve-out Reading: Chapters 31 of textbook Task 1: Read chapter 31 of textbook. Articulate the reasons for a merger and identify scenarios where a merger does not make sense Task 2: Investigate the Bootstrap game in the textbook Task 3: Illustrate the impact of a merger with examples and calculations 5.11 Learning Module 11 - Corporate Restructuring  Understand the motivations for a leverage and management buyout  Appreciate the pros and cons of buyout/privatization Reading: Chapters 32 of textbook Task 1: Investigate the motivations for and characteristics of corporate restructuring