Project Appraisal

Code:

EIG0035

Acronym:

API

Keywords
Classification	Keyword
OFICIAL	Economics and Finance

Instance: 2015/2016 - 2S

Active?	Yes
Responsible unit:	Department of Industrial Engineering and Management
Course/CS Responsible:	Master in Engineering and Industrial Management

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
MIEIG	89	Syllabus since 2006/2007	4	-	7	56	189

Teaching language

Suitable for English-speaking students

Objectives

This course unit aims to provide students with knowledge of basic methodologies for the analysis of the financial and economic feasibility of investment projects.

Learning outcomes and competences

After the completion of the course unit, students should be capable of making and justifying  real investments decisions   and designing  and analyzing a business plan .

Working method

Presencial

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

Basic concepts of Accounting,  Fnancial  mathematics and Financial Management

Program

I – Introduction 1- An overview on project evaluation; description of project evaluation; concept of real investment; the importance of evaluation; basic evaluation methodology; project typology; life cycle and project stages . 2- Business plan: description; Basic components of a business plan; Structure. II- Project elaboration and evaluation 2- Feasibility studies; project background: analysis; resource and technical feasibility analysis; market analysis; economic and financial analysis; legal procedures; organizational and human analysis; political, social and environmental analysis. 3- The documents of an economic and financial study; investment plans; operational plan; financing plan. 4- Business plan: description; Basic components of a business plan; Structure. III- Economic and financial evaluation of a project 5- Cash flow (CF) analysis; concept of projects’ cash flow; basic principles of measuring and estimating cash flow; cash flow investment analysis; project side vs. entrepreneur side; cash flow estimation in a situation of inflation. 6- Decision criteria: decision criteria no update: recovery, return rate, net present value (NPV). Decision criteria update: internal rate of return (IRR), profitability index, annuity criteria, and macroeconomic indicators. 7- Project cost of capital; cost of capital; weighted average cost of capital for company: why and how to use it; the interaction of investment and financing decisions; estimate the cost of financing sources 8- Selection of mutually exclusive projects; directly comparable projects; incomplete alternatives III- Risk and investment decisions 9- Risk and uncertainty evaluation; basic concepts of risk, risk and uncertainty components; empirical methods in risk management; decision theory; simulation methods- sensitivity analysis, alternative scenarios, breakeven point analysis; Monte Carlo simulation; decision trees; capital asset pricing model (CAPM) – risk management; reference to real options.

Mandatory literature

Maria Dulce Soares Lopes; Elaboração e Análise de Projetos de Investimento, FEUP Edições, 2011

Complementary Bibliography

Alan C, Shapiro; Capital Budgeting and Investment Analysis, Pearson Prentice Hall, 2005. ISBN: 0-13-066090-6
Brealey, Richard A.; Princípios de finanças empresariais, N. ISBN: 972-9241-14-7

Teaching methods and learning activities

The theoretical part of this course is supported by theoretical type lectures. Theoretical lectures are complemented with case analysis and practical classes, to which experience in the analysis of investments from the team work will be made part.

keywords

Social sciences > Economics > Management studies > Financial management
Social sciences > Economics > Management studies > Financial management

Evaluation Type

Distributed evaluation with final exam

Assessment Components

Designation	Weight (%)
Defesa pública de dissertação, de relatório de projeto ou estágio, ou de tese	10,00
Exame	60,00
Trabalho escrito	30,00
Total:	100,00

Amount of time allocated to each course unit

Designation	Time (hours)
Elaboração de projeto	53,00
Estudo autónomo	80,00
Frequência das aulas	56,00
Total:	189,00

Eligibility for exams

General assessment rules are applied

Calculation formula of final grade

Assessement comprises: 1- A final exam and the elaboration and discussion of a team work, optional, with the following grading: Assignment 40%; Final exam 60%, with a minimum mark of 7 (out of 20); or, 2- Final exam (100%) if team work is not realized. FC = 0.6 x FEC + 0.4 x GAC, in which: FC = Final Classification FEC = Final exam classification GAC = Group assignment classification OBS - If FC >18 there will bw an oral exam compulsory (or FC=18); - If GAC > (FEC+4), GACwill be lowered to FEC+4 Obs - if Fc>18 there wil be an oral exam (or FC=18) - if GAC > (FEC+4), GAC wil be lowered to FEC+4

Examinations or Special Assignments

Group Assignment- Business Plan - Groups of 6/8 students to be defined at the beginning of the semester - 2 reports have to be written (one at the middle of the semester and another at the end) - Oral presentation: each group has to give an oral presentation and analyse other - Discussion (to be scheduled with each group) Comments: 1- If students do not do the assignment or if they do not deliver it until the deadline, they have to attend to the final exam (100% of the final grade). 2- Only students who regularly attend to classes can do the assignment. Students who cannot attend to classes

Special assessment (TE, DA, ...)

Final exam (100%)on specific dates for these students. (If FC >18 there will bw an oral exam compulsory (or FC=18)

Classification improvement

Final Exam (100%) (If FC >18 there will bw an oral exam compulsory (or FC=18)