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Formal SIMS course description
Course Outline

CCN: 42712 
3 unit(s) 

Economic Methods for Decision Making 

Yale Braunstein
E-mail: yale@sims.berkeley.edu
Office: 203B South Hall

W 2:00 - 5:00
202 South Hall 

General information for Fall 2002 Schedule & Topics 
Aug. 28 Introduction .
Sept. 4 Financial statements BH, Ch. 1-3
Sept. 11 Forecasting, uncertainty, introduction to risk BH, Ch. 4-5;
Insight Ch. 1-3, 5
Sept. 18 Financial markets, interest, risk BH, Ch. 5-6
Sept. 25 Risk, return, CAPM, Time value of money BH, Ch. 6-7
Oct. 2 Valuation - Bonds  BH, Ch. 8
Oct. 9 Valuation - Stocks; problems 8-19, 9-26; Review; Hand out mid-term exam BH, Ch. 9
Oct. 16 Mid-term exam due; Capital budgeting I - WACC BH, Ch. 10-12
Oct. 23 Review mid-term exam; Capital budgeting II - project evaluation; problems 10-20, 11-18
Variable project life
Oct. 30 Guest speaker: Diane Ghorbani
Project budgeting lessons (presentation ppt)
Business case format (Excel)
Additional project evaluation topics
Tax shields (Excel example)
Nov. 6
Project evaluation (continued)
Problem 12-11
Real options, decision trees
Capital structure
BH, Ch. 13-14
Insight, Ch. 6
Nov. 13
Capital structure (continued); problems 13-13, 14-16;  Working capital
BH, Ch. 15-16
Nov. 20
Working capital (continued); problems 15-10, 16-14;  Optimization
BH, Ch. 17
Insight, Ch. 7-8
Nov. 28
Extended office hours;
Hand out final exam (link to Adobe PDF version; contact Yale for other formats)

Dec. 4
Extended Office Hours

Dec. 6
(Friday, 4 pm) Final exam due

Specific information on content

This course covers a variety of economic methods and tools useful to decision makers in information industries.  The general framework is built around a financial management textbook with additional topics and emphasis on forecasting, decision trees, simulation, and optimization.  Given this approach, the course is probably not appropriate for students who have already taken an MBA-level finance course.

Topics in a finance course that are not in this course: derivatives, hybrids (preferred stock, convertibles), mergers, LBOs, bankruptcy.

(All of the above is subject to change.)

Case studies, problem sets, etc.