Appraisal of Investment Projects

Code:

M.EM063

Acronym:

API

Keywords
Classification	Keyword
OFICIAL	Management

Instance: 2021/2022 - 2S

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

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
M.EM	42	Syllabus	1	-	4,5	39	121,5

Teaching language

English

Objectives

The objective of this curricular unit is to give students the knowledge of basic methodologies for the analysis of the financial and economic feasibility of real investment projects.

Learning outcomes and competences

By the end of the course unit, students should be able to base capital budgeting decisions within a  companies and to design a business plan.

Working method

Presencial

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

Basic knowledge of  Financial Accounting .

Program

I - Introduction. 1 - Project evaluation overview. 2 - The Business Plan. II. The dossier regarding the preparation and evaluation of a project 3 Feasibility studies. 4 - The basic documents of the economic-financial study. III Economic and financial evaluation of the project. 5 - Determinants and analysis of cash flows. Basic principles. Project viewpoint vs. entrepreneur viewpoint. The estimation of cash flows under inflation. 6 - Decision Criteria. 7 The capital cost of the projects. Cost of capital and refresh rate. Interaction of investment and financing decisions. How to estimate the cost of the various sources of financing. III- Investment decisions in view of the risk. 8 - Risk and uncertainty assessment. Empirical methods. Decision theory. Simulation methods - sensitivity analysis, alternative scenarios, analysis of neutral, Monte Carlo simulation. Decision trees. The CAPM in the risk assessment of projects.

Mandatory literature

Lopes Maria Dulce Soares; Análise Projetos de Investimento, U Porto Edições, 2018. ISBN: 978-989-746-174-3

Complementary Bibliography

Alan C. Shapiro; Capital budgeting and investment analysis. ISBN: 0-13-066090-6
Brealey, R. A., Myers, S.C., e Allen. F; Principles of Corporate Finance, McGraw-Hill. New York, 2020

Teaching methods and learning activities

The theoretical basis of the course unit is presented in expository classes supported by the analysis of case studies and problem solving, together with the experience in producing a business plan.

Evaluation Type

Distributed evaluation with final exam

Assessment Components

Designation	Weight (%)
Exame	40,00
Trabalho prático ou de projeto	60,00
Total:	100,00

Amount of time allocated to each course unit

Designation	Time (hours)
Elaboração de projeto	40,00
Estudo autónomo	42,00
Frequência das aulas	39,00
Apresentação/discussão de um trabalho científico	0,50
Total:	121,50

Eligibility for exams

According to General Evaluation Rules of FEUP

Calculation formula of final grade

   

FG =  0.40 x FEG+ 0.60 x GGA 

FG = Final Grade

FEG= Final Exam Grade (theoretical component)
GAG = Group Assignment Grade (pratical component)

OBS:Exam  Theory has  a minimum mark of 1 (out of 8) 

Examinations or Special Assignments

Group Assignment- Business Plan - Groups of 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 and  Discussion of another ´s  group work. 

obs_
1-The dates will be defined in the first class(es) and published in the "Contents" of the discipline.
2- After the publication of the Business Plan grade (group work), each group will carry out a cross-evaluation between pairs (with differentiation of individual grades up to plus or minus 2 values ​​and sum of null variations) and the teacher may also apply a differentiation of plus or minus 1 value to the resulting individual final grade

Special assessment (TE, DA, ...)

Final exam (100%) on specific dates for these students.

The exam will have a theoretical component with a weighting of 40% and  minimum grade of 1.0  and a practical component with a weighting of 60%.)

Classification improvement

Final Exam (100%), loosing the grade of group assigment.

Obs:the exam will have a theoretical component with a weighting of 40% and a practical component with a weighting of 60%.

Observations

Examination with the possibility of consulting ONE  of the books mentioned in the bibliography ( only on the pratical component).