QUESTIONS ON CASES

Forecasting Case

Mapping function in Excel: I contacted Microsoft, and this was their response: About Maps in Excel 2002 Microsoft Map is not available with Microsoft Excel 2002. You can open maps created with an earlier version of Excel, but you can't modify the maps or create new ones. To create maps that can be used in Excel 2002, you can use a mapping product such as Microsoft MapPoint®. For more information, see the Microsoft MapPoint Web site.

This is absolutely incorrect.  Remember what your homework said. If you don't find it on your toolbar, go to Tools -> Customize and find the map icon. In Microsoft Excel 2002 IT IS THERE. Go to Tools -> Customize -> Categories: Tools -> Custom. Add the Map function to your Toolbar by dragging it.

How do I use debt: I have a question regarding the forecasting of interest expenses in the minicase. In our lecture notes, we forecasted interest expense by multiplying the interest rate and the sum of long-term debt, current portion of long-term debt and the external funding required. However, in the case, we are also given the amount of debt that is maturing in the next two years. I am not sure how that amount factors into the forecasting. Also, how do we calculate new debt for Wendy's to calculate interest expense on new debt?

If you are given the amount of debt that is maturing say next year, e.g. 2003, would it be considered long term debt or short term debt in 2003? Your question is an ACCOUNTING question. In part, some of the new debt is what is being forecasted using the circular logic process. Did you attempt to replicate the excel problem in the lecture notes BEFORE starting on your case? If you did, you should realize that the external financing is what you were trying to solve for and that this external financing could be either debt or equity (we made it general).
 

GENERAL QUESTIONS

Homework Assignments: The syllabus says that HW is due Tuesdays unless otherwise stated.  I don't think you said the HW was
due this Thursday (tomorrow) but I want to make sure.  Which day is correct? Also, how do you want us to show how we get our answers from Excel?  Do we print our sheets out?  By calculator, do you want us to write the functions down?

I will announce in class when the homework is due. As far as showing how you get your answers in Excel, you will turn in the disk together with a hard copy of your homework. In this way, we can make sure that you did the homework by yourself as well as see if you used Excel correctly. In terms of the calculator, you don't need to turn in the calculator portion but on an exam, since we don't have spreadsheets, you will need to know how to use your calculator to solve problems.

Easiness of Course: Why can't this course be easy? It seems that we are not learning the basic concepts. Instead we are doing advanced corporate finance with spreadsheets to boot! Why can't you teach finance like the other financial management professors at Stern?

The credit goes to Dean Fred Choi (undergraduate business dean). Like myself, Fred is a Hawaiian who wanted to bring our rankings up for the undergraduate program. Students were complaining that they weren't having a different perspective on finance and so he approached me to create a new way of teaching finance to coincide with the millenium.  My method of teaching finance may not be for everyone. I modeled it after those professors who I considered excellent teachers e.g. Vijay Bawa, Fred Choi, Aswath Damodaran, and James Graaskamp to name a few. I also incorporated what I expected to see in a student who came to work for my firm on Wall Street. Not only did I expect them to know financial modeling using Excel but I also wanted them to apply the theory since you really can't eat a footnote.

That said, I am not one to simply "barf back" or regurgitate what you can read for yourself in the textbook or any other textbook. In fact, I'll admit that I use to "cut" those classes because I wasn't getting my money's worth. I was better off downing a brew at the local watering hole. Since Stern prides itself in accepting students with an SAT of 1350, it is obvious that you can read the textbook. Therefore, while I highlight the key concepts in lectures and you also do homework problems to reinforce those concepts, I want to spend the time in lectures to show students how these concepts can be and have been applied in the real world. Why? Because it makes you more marketable. Also, it's a helluva lot more work for me so I'm not being easy on myself. Why complain? Education is one of the few commodities I know of that students complain when they ARE getting their money's worth.  Enough pontificating.

Posting Grades: I was wondering if there was some way where you could post our grades (i.e. excel sheets) on your website so we can check up on it and as well see how we're doing relative to the rest of the class (this IS stern ;) and as well, if you could please give feedback on who you believe to be cheating or not because the way you focus and constantly reiterate that
cheating's bad, it makes even the most hard working students paranoid if they're suspect.

There are problems with posting grades to the website. It's an invasion of privacy. Also, it encourages "gaming" the system e.g. what do I need to get an A.  I would rather see people giving their best efforts. What I could do when I have the time is post the grade distribution for the homework, midterm etc. As far as giving feedback on who is cheating, I'm waiting to run the statistical program on the midterm answers. I already know who is cheating on the homework. If those individuals who cheat on their homework are also cheating on the exam then I will knock down their grade by one e.g. from a B to a C. If they continue to cheat on the project, I will knock their grade down another notch e.g. from a C to a D. If they continue to cheat on the final, they receive an F in the course.  You are given many opportunities to follow the right path. I don't have you flagged as cheating so please don't go around giving out answers or copying for someone else. Yes this IS stern and it is not only YOUR GPA that counts in the real world. A prominent investment bank (one of the top 3 on Wall Street) flushed 14 of our students (none of which were my students) who had a 3.8 or better in 1999. Why? Because they didn't know the basics of finance. They did not know how to do financial modeling. They did not know how to do valuation given a balance sheet and income statement. They didn't know how to obtain a discount rate using the CAPM, etc.

Grading: Since no other class has had to use Excel for homeworks and cases and we are the "experimental" class, are our grades for the semester going to depend so heavily on Excel?  And if they will, will they be more lenient than the actual grades that the T.A. has given us?  Personally, I have never used Excel before (for any of my classes), so it is very new to me and there is a lot of information being taught on it in a short period of time.

Before answering your question, I am curious what your response would be if your boss said you only had one month to learn Excel? (Most analyst training programs give new hires a crash course in Excel that lasts between 2 weeks to a month. If you don't believe me, try calling up a few of your friends in the business)  Students typically respond "But that's different, I'm getting paid and it's a part of my job!"  So how is this scenario any different than the one you're now in? The only way to learn is to apply it "on the run".  The best way to learn something is when you are in a situation where you have to perform... especially when your bonus money is riding on the outcome.

The bottomline is that your grade is based on your performance.  Excel is merely a tool.  It makes life easier than using a calculator and in some cases it is the only way to do the problem as in the Tire City case.  Grading is relative e.g. how well you do relative to the rest of the class. About 99% of the class is in the same situation that you are in and so its the relative grade that matters not whether you received a 10 on your homework.  If you were ranked 1st in the class then you get a A. In fact, our grading policy in the Finance department is that 20-25% of the students get an A (A or A-), 40% get B's, 40% get C or below.
 

Cheating on Exams: Something should be done regarding cheating on this exam (Midterm exam given in Spring 2000).  I
mean, I have been working my butt off in your class, atending all lectures and that is just unfair for those who cheated to get the same grade I did.  I am sure I did not get an A, but at least I did everything by myself.   But, I understand how hard it must be to prevent all this cheating, especially in a such a huge class.  I just do not understand how you will be able to pin point
who did or not cheat. In my Stats class last semester, in the same room, we had the same problem. Same thing works for my homework. Rather than cheating, I just did not handed in my homework for chapter 10.  Eventually, I did it later when you posted, so I could know how to do it.  I just think that something must be done. All this just lowers the standards of the Stern school.

Since I was in a frat, I do know most of the tricks used and have seen those used on the Midterm.  Since this is the first time that I am teaching in the core, I wanted to see first hand how bad it is before taking action.  Fear not. I already know who is cheating on the homework since my graders have been instructed to send me email based on the graded homework. Secondly, there are some statistical techniques that one can use to see if the people who cheated on their homework also cheated on their exams.  Their answers on each question should "cluster" together.  One technique is based on the Pythagorean theorem (about distance) that you learned down in the grades that a² + b² = c². At best, I will reduce their grade by one  e.g. if they had an A, they now get a B, etc. If they continue to cheat, I will give them an F.

Final Exam:  I know that you are very busy, but I need to make some arrangements for moving home after school.  I was wondering if you had a vague idea as to the date of the final exam.  Also, is it cumulative or not?

I have absolutely no clue when or where the final is. The graduate school lets professors know at the start of the semester while the undergraduate school gives you 2 weeks warning before the end of the semester. As such I really don't know when the date is. The exam will be cumulative to reinforce what you have learned in finance. My philosophy is that if you throw enough shit on the wall eventually some of it will stick. Please pardon my french.

Taking Other Classes with You

My name is ___________ I am a student in your Undergraduate Financial Managment class (Spring 2000). Normally I would stop in during office hours, but i never really get a chance because I hold a job. My question is relatively painless. I would like to know what undergraduate classes you are teaching next semester (fall). If you arent teaching any classes next semester, what about
spring of '01? Are you teaching anything over the summer? The reason I ask is because I have come to the realization that I will learn the most about finance from you, as opposed to other teachers. Co-workers of mine have had you in the past, and they tell me the same thing. I also notice how much more I know about FM related topics than students in other classes. I am not
saying this to boost my grade. Instead I think that if I am paying all this money for a buisiness education, I might as well learn as much as i can. I was also wondering about the Mortgage Backed Securities your website said you were teaching. Is that an undergraduate class? Will you be teaching it again?. See you in class.

Are you for real?? It is always nice to get a compliment even though you know from your co-workers that this won't change your grade. Given that each class session is $200, if you're not learning anything, you could have had a nice dinner at a 3 star restaurant with your main squeeze and enjoyed it more than going to a class that reminds you of getting a root canal.  I'm not teaching this summer given a promise I made to my wife to spend quality time with her and the kids. I'll be on sabbatical in the Fall of 2000 and then will be teaching Real Estate Finance in the spring as well as Investment Philosophies in Real Estate (plus Financial Management). The real estate finance course is an undergraduate course while the Investment Philosophies course, a graduate course, will be open to undergraduates. As far as the mortgage backed securities course, it will probably be offered in the summer of 2001. Although it is a graduate course, undergraduates can enroll in it and have frequently outperformed graduates (at least those who have taken other classes with me and survived).