Capital Budgeting

Code:

1GE308

Acronym:

PI

Keywords
Classification	Keyword
OFICIAL	Management Studies

Instance: 2022/2023 - 2S

Active?	Yes
Responsible unit:	Management
Course/CS Responsible:	Bachelor in Business Administration

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
LGES	254	Bologna Syllabus since 2012	3	-	6	42	162

Teaching language

Portuguese and english

Objectives

The course intends to introduce students to the capital budgeting process and techniques, developing the adequate skills both for valuation and for decision-making. The course addresses not only the main (traditional) valuation techniques, but also the most recent methods for project valuation (real options theory).

Learning outcomes and competences

In the end of the course, the student should be able to perform project appraisals, understand the different capital budgeting phases, and dominate the main techniques for assessing/selecting investment projects. At the end, the students are expected to understand the importance of uncertainty and flexibility in the investment decision.

Working method

Presencial

Pre-requirements (prior knowledge) and co-requirements (common knowledge)

n/a

Program

1. Introduction

2. The Capital Budgeting

3. The Main Criteria for Project Valuation

4. Methods to Approach Risk in Project Valuation

5. The Cost of Capital

6. New Methods for Project Valuation: the Real Options Theory

Mandatory literature

Alan C. Shapiro; Capital Budgeting and Investment Analysis, Prentice Hall, 2004
Ross S.; R. Westereld; J. Jaffe; and B. Jordan ; Modern Financial Management, McGraw Hill , 2008, 9th Ed
Brealey, R.; S. Myers; and F. Allen ; ;Principles of Corporate Finance, McGraw Hill , 2008, 9th Ed

Teaching methods and learning activities

The teaching method includes moments where the main theoretical and conceptual aspects will be presented, (and the main valuation techniques will be discussed), and also moments where concepts and theories will be applied by solving real-world problems and case studies.

Evaluation Type

Distributed evaluation without final exam

Assessment Components

Designation	Weight (%)
Teste	100,00
Total:	100,00

Amount of time allocated to each course unit

Designation	Time (hours)
Estudo autónomo	120,00
Frequência das aulas	42,00
Total:	162,00

Eligibility for exams

The student is approved if:

a) he/she obtains a minimum weighted average grade of 9.5 (out of 20) in the assessment components;

b) he/she obtains  a minimum grade of 9.5 (out of 20) in the final exam.

Calculation formula of final grade

Continuous assessment: 2 partial tests, one taking place in the middle of the semester and the other one taking place in the date of the exam. To be approved the student needs to obtain an average grade of, at least, 9.5/20. A minimum grade of 7.0 is required in each of the partial tests.

or

Final exam: Written exam (100%); to be approved the student needs to obtain a grade of, at least, 9.5/20.

Examinations or Special Assignments

n/a

Internship work/project

n/a

Special assessment (TE, DA, ...)

n/a

Classification improvement

The students can improve the grade by doing an global exam.

Observations

n/a