FINC 430: Financial Management

FINC 430 at the University of Maryland Global Campus is a three-credit study of financial management. UMGC lists FINC 340 as the prerequisite and allows credit for only one of BMGT 440 or FINC 430.

The objective is to apply financial principles to assess and solve financial problems and make financial and corporate policy at the executive level. Topics include the financial health of the organization, company valuation, cost of capital, risk analysis, investment decisions, and financial systems and capital markets.

Students find it hard because the viewpoint is that of senior management: it is not enough to calculate; you must decide and defend the decision.

What FINC 430 Covers

Key Concepts with Worked Examples

Weighted Average Cost of Capital

WACC blends the cost of equity and after-tax cost of debt by their share of funding.

Using WACC in a Decision

Discount a project's expected cash flows at WACC (or a risk-adjusted rate) and accept if NPV is positive. Explain why a riskier project should use a higher rate than the firm average.

Valuing the Firm

Firm value equals the present value of expected free cash flows. Show the forecast, the rate and the terminal assumption, then test sensitivity.

Typical Assignments and How to Approach Them

UMGC's public page lists no assessments. These are common kinds of work for an executive-level finance course; follow your syllabus.

A Decision Checklist for Executive Cases

Executive-level cases reward a disciplined approach. Work through this list in order.

Keeping to this sequence also keeps your write-up in the order that a board or senior manager would want to read it.

A Second Example: A Project Against WACC

A project costs $8 million and returns $2.4 million a year for five years. At the firm's WACC of 9 percent the annuity factor is about 3.8897, so inflows are worth about $9.33 million and NPV is about +$1.33 million.

If the project is riskier than the firm's average, a rate of 12 percent is more appropriate. The factor falls to about 3.6048, inflows are worth $8.65 million and NPV is about +$0.65 million. Still positive, but the margin is thinner, and your recommendation should say so.

Where the Marks Usually Come From

At executive level, graders look for a decision that follows from the analysis. A strong answer states the recommendation, shows the calculation behind it and explains how the result would change under stress.

Make every input traceable: where the risk-free rate, beta, tax rate and growth assumption came from, and the date. A reader should be able to rebuild your answer from the assumptions page alone.

Where Students Get Stuck

• Using the wrong rate. Match the discount rate to the cash flow and its risk.
• Book versus market weights. WACC should use target or market values where possible.
• Tax shield. Remember to use after-tax cost of debt.
• No decision. End with a recommendation.

Study Tips for FINC 430

• Build a WACC template and test it with different capital structures.
• Review FINC 340 on risk and return before the cost of capital unit.
• Write the recommendation first and check each section supports it.
• Keep all assumptions in a labeled list.

How We Help with FINC 430

Send the case, data and rubric. A finance writer can prepare a custom worked answer, or review your draft for accuracy and clarity. See our finance assignment help guide.

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