In the current context of uncertainty and lack of funding, it is essential to provide students with knowledge of the criteria for investment decisions, firm value and risk analysis.
OBJECTIVES AND EXPECTED LEARNNG OUTCOMES
The objectives of this curricular unit are:
1. Distinguish the different types of real investments
2. Know and calculate the cash-flows of the investment project
3. Know the different types of costs
4. Calculate and analyze the investment decision criteria
5. Know the specificities of each investment decision criterion
6. Know the different sources of financing and impact in the investment decision
7. Analyze and identify investment risk
8. Develop the financial part of a business plan.
SKILLS TO BE DEVELOPED
It is important to provide managers and entrepreneurs with the skills to overcome the current context of uncertainty around investment and financing decisions. Therefore, it is intended students to develop the following skills:
1. Learning the criteria for investment decision;
2. Analyze the conditions that must be met when making this investment decision, including those relating to profitability, risk, financing conditions and the strategic framework;
3. Understand and be able to apply to the specifics of each project, a methodology of analysis, involving the different steps in the calculation of the cash-flows of an investment project and the application / use of analytical methods / most appropriate indicators;
4. Learning to use the mechanisms that enable the adoption of strategies to mitigate the risk that characterizes the investment decision, while the decision to root clearly foreseeable;
5. Evaluate the consequences of inflation in the investment decision, and
6. Prepare the financial part of a business plan.
Programme
1. DEFINITION OF PROJECT INVESTMENT
1.1 Motivation
1.2 Types of projects
1.3 Classification of investments
1.4 Decisions of acceptance / rejection investment
2. CASH-FLOWS CONCEPT AND MEASURES 2.1 Cash-flow of exploration 2.2 Cash-flow of investment 2.3 Cash-Flow Global 2.4 The investment perspective and the entrepreneur's perspective 2.5 Cash-Flow Global and Free Cash-Flow 2.6 Incremental Cash-Flow 2.7 Constant Prices vs. Current prices
3. COST OF CAPITAL
3.1 Weighted Average Cost (WACC)
3.2 Capital Asset Pricing Model
3.3 Financing Options
3.4 Financing Decisions
4. EVALUATION CRITERIA OF INVESTMENT DECISION
4.1 Concept of present value
4.2 NET PRESENT VALUE (NPV)
4.2.1 Influence of the DISCOUNT rate in NPV
4.2.2 Special cases of NPV
4.2.3 Critical analysis of NPV
4.3 PROFITABILITY INDEX (Ri)
4.4 PAYBACK PERIOD (PRI)
4.5 INTERNAL RATE OF RETURN (IRR)
4.6 MODIFIED INTERNAL RATE OF RETURN (MIRR)
4.7 Analysis NPV versus IRR
4.8 DIFFERENTIAL METHOD
4.9 EQUIVALENT ANNUAL BENEFIT (BEA)
4:10 EQUIVALENT ANNUAL COST (CEA)
5. EFFECT OF FINANCING DECISIONS
5.1 The Adjusted Value
5.2 The evaluation from the perspective of the own capitals
5.3. Practical cases
6. RISK
6.1 Definition of risk, profitability and opportunity cost
6.2 Relationship between risk and profitability
6.3 Risk Analysis
6.3.1 Sensitivity Analysis
6.3.2 Critical Points
6.3.3 Scenario analysis
6.3.4 Probabilistic analysis
7. BUSINESS PLAN
7.1 Main steps
7.2 Factors of success of a business
7.3 Case Studies
Demonstration of the syllabus coherence with the curricular unit's learning objectives
The first objective "Distinguishing the different types of real investments" is addressed in chapter 1 of the program, where different types of investments are identified and a set of classifications of investment projects are presented.
The second objective " Know and calculate the cash-flows of the investment project" is explored in the second chapter through application exercises.
The third objective "Know the different types of costs" is discussed in Chapter 3. In Chapter 4 the main investment decision criteria are developed to meet objectives 4 and 5. The 6th objective "Know the different sources of financing and impact in the investment decision" is discussed in Chapter 5 and "Analyze and identify investment risk" (7th objective) is explored in Chapter 6.
Finally, the 8th objective "Develop the financial part of a business plan" is developed in Chapter 7, which uses the financial part of a business plan.
Main literature
Eduardo Sá Silva e Mário Queirós;Análise de Investimentos em Ativos Reais - Volume 1, Grupo Editorial Vida Económica, 2013
João P. Vieito;Finanças Empresariais, Escolar Editora, 2010
Esperança, José Paulo e Matias, Fernanda;Finanças Empresariais, Texto Editores, 2009
Eduardo Sá Silva e Mário Queirós;Gestão Financeira - Análise de Investimentos - 2ª edição, Grupo Editorial Vida Económica, 2011
Learning Methods
The classes have a component of theoretical exposition, they are used audiovisual media, and a practical component where through analysis or problem solving are explored all concepts explained in class. Computer media, such as Microsoft PowerPoint software is used to present programmatic content, and Microsoft Excel is used for the financial part of an investment project.
Assessment Components
Avaliação distribuída com exame final
Assessment Components
Description
Type
Time (hours)
Conclusion Date
Attendance (estimated)
Lessons
45
Trabalho laboratorial ou de campo
15
Teste/Exame
3
Study
97
Total:
160
Continuous Assessment
1. Written tests with a weight of 60% (30% per test) in the final grade.
2. Another type of assessment, in the classroom: elaboration of an investment project, with a weighting of 40% in the final grade. The preparation of the business plan will comprise two evaluation components and will be carried out in groups.
Under the terms of the Bachelor's Regulation:
a) The effective attendance of students in class will be recorded and, if the number of absences per student exceeds 30% of the total number of contact sessions for each course unit, will be automatically transferred to the final evaluation of the normal season;
b) In the written tests and in the defined evaluation elements it is necessary to obtain a minimum grade of 7.5 points;
c) If the student misses or achieves a grade lower than 7.5 points in the tests or evaluation elements referred to in the previous number, he / she will be automatically transferred to the final evaluation of the normal season;
d) If the student misses or achieves a grade lower than 7.5 points in the second written test (held on the same date as the final written test of the normal season), he / she may require registration for evaluation at the time of appeal;
e) All written academic work provided for in the assessment (reports, case studies, etc.) must be submitted to the Turnitin database, available on the ISAG E-Learning platform, with a similarity rate up to 30% acceptable.
Final Exam
Written exam: 100%.
Demonstration of the coherence between the teaching methodologies and the learning outcomes
In order to achieve the objectives described above, the classes include the presentation of theoretical contents where the Microsoft PowerPoint program is used. In the application of the contents taught, students are offered practical cases and exercises and in "PDF" format. In the concrete case of the 8th objective, the Microsoft Excel program is used.