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      WELCOME_OBA3105_INTRODUCTION TO FINANCE_BBAIB_ODL

      This is Introduction to Finance OBA 3105, a core subject in Bachelor of Business Administration in International Business (BBAIB)_ODL

      DESCRIPTION OF THE COURSE

      This module is designed to provide students with a strong foundation in finance that allows them to understand and apply the concepts in the world of finance as well as to focus their attention to certain issues they can further explore. which applicable for both in personal and managerial finance. At the end of the course, students can recognize relationship between finance and other business disciplines, as well as to be able to use synergy of those disciplines in decision making.

      AIM OF THE COURSE

      The overall aim of the module is to give students an exposure to the basic business finance theory both quantitative and qualitative with some simple applications.

      • Specific topics covered will include time value of money, the role of the financial markets in company financing, the nature and role of financial instruments, sources of financial information, evaluation of proposed capital expenditure, and cost of capital and the returns to providers of finance.
      • This is an introduction to the fundamental concepts of business finance. The students will be exposed to the time value of money concept, the assets evaluation, the capital budgeting, the capital structure, and the cost of capital, and working capital management.

      COURSE LEARNING OUTCOME

      At the end of the course the students will be able to:

      • Discuss the principles of finance and the roles of financial market that underline the finance discipline.(C2, PLO1)
      • Demonstrate the concept of time value of money and various decision making techniques in financial planning. (C3,PLO8)
      • Calculate the value of bonds and stock in a market place (C3,PLO8)

      SUPPORT AND CONTACT DETAILS

      • Name: Mimi Suriaty Binti Haji Abdul Rani
      • Email : msuriaty@nilai.edu.my
      • Consultation Hours: Wednesday (08:00 am – 10:00 am) and Thursday (08:00 am – 10:00 am


      Lecturer Image
◄Chapter 8 - Common Stock Valuation_Part 1Chapter 9 - Working Capital Management►

Chapter 8 - Common Stock Valuation_Part 2

  • Chapter 8 - Common Stock Valuation_Part 2

    WEEK 13 (Lecture) and (Tutorial)

    Chapter 8 cover introduce one widely used model: The CAPM model. The CAPM model is used to compute a company's costs of capital that can be used in net present value calculations. It has been used in court cases for estimating a company's stock value as with the case of the breakup of AT&T in 1984 that resulted in seven companies. Also, the CAPM model is used in computing stock valuation. This lesson will show how the financial manager uses this financial tool to value stock and to determine which stocks are the better options for investors, based on their rates of returns and how they compare to the overall stock market return.

    Here are the main topics to be covered in Chapter 8 (Week 13):

    • Common Stock Valuation
    • Some Features of Common and
    • Preferred Stocks
    • The Stock Markets


    LEARNING OUTCOMES

    By the end of this lesson, student should be able to:

    • Explain how corporate directors are elected.
    • Discuss how stock markets work.
    • Identify how stock prices are quoted.

    REQUIRED READINGS

    Chapter 9: Stock Valuation

    Brigham E. and Houston J. Fundamentals of Financial Management. 14th ed., South-Western College Pub., 2016.

    Chapter 8: Equity Instruments

    Titman, Keown, A. J. and Martin, J.D. (2018). Financial Management, (13th ed). Principles and Applications, Pearson Education.


    • SELF CHECK 8.2 : Online Discussion Forum
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      Once completed view the video. Let's discuss!

      Tutorial (8) _Stock Valuations.

      ▪ Details: 10 questions

      ▪ Duration of submission: 1 week

       Question 1 :

      Consider a stock that just paid a dividend (D0) of $5.00 per share with dividends growing at a constant 4% per year. If my required return is 13%, what is the stock worth to me?

      Question 2 :

      Consider a firm that just paid a dividend of $2.60. They plan to increase dividends by 5% in year one, 10% in year two, 20% in year three, 20% in year four, and then 3% per year thereafter. You feel that a 16% required return is appropriate. What is this stock worth to you?

      Question 3 :

      Suppose dividends for a company are projected to grow at 5 percent forever. If the discount rate is 15 percent and the current dividend is $10, what is the value of the stock?

      Question 4 :

      Given the following data, what should the price of the stock be?

      • Required return: 10%
      • Present dividend: $1
      • Dividend growth rate: 5%

      Question 5 :

      An investor requires a return of 12 percent. A stock sells for $18, it pays a dividend of $1, and the dividends compound annually at 6 percent. What should the price of the stock be?

      Question 6 :

      Atlas Motors is expected to grow at a constant rate of 6% a year into the indefinite future. It recently paid a dividend of $2.25 a share. The rate of return on stocks like Atlas is about 11%. What should a share of Atlas Motors sell for today?

      Question 7 :

      If Zinc Co. is expected to pay cash dividends of $8 per share and the firm has a 10% required rate of return, what is the intrinsic value of the stock?

      Question 8 :

      The most recent annual (2006) dividend payment of Warren Industries, a rapidly growing boat manufacturer, was $1.50 per share. The firm’s financial manager expects that these dividends will increase at a 10% annual rate, g1, over the next three years. At the end of three years (the end of 2009), the firm’s mature is expected to result in a slowing of the dividend growth rate to 5% per year, g2, for the foreseeable future. The firm’s required return is 15%.

      Question 9 :

      The dividend of Denham Company, an established textile manufacturer, is expected to remain constant at $3 per share indefinitely. What is the value of Denham’s stock if the required return demanded by investors is 15%?

      Question 10 :

      Big Brothers Inc. has the following information for every investor:

      • The estimated dividends for the next period – $50,000
      • The required rate of return – 10%

      Calculate the price of the stock.


◄Chapter 8 - Common Stock Valuation_Part 1Chapter 9 - Working Capital Management►