Investment Projects

Financial Analysis
Financial Management

The course will have a theoretical and practical approach, beginning with the presentation of fundamental concepts and techniques, followed by their application through the analysis of practical cases.
Throughout the semester, the development of an Investment Project (IP) will also be developed, supported by a previously structured spreadsheet.
The ESG (Environmental, Social, and Governance) component will be integrated as a complement to traditional economic and financial assessment, allowing students to identify non-financial risks and opportunities in projects, utilize ESG metrics, and connect the Sustainable Development Goals (SDGs) with the feasibility and impact analysis of investments.

The objective of this course is to enable the student to prepare and analyze an investment project; provide
students with theoretical and practical knowledge of the base methodologies for analyzing the economic and
financial feasibility of investment projects under conditions of certainty and uncertainty. Analysis of the
Investment Financing Problem. Analysis of the risk associated with an investment project. The sustainability
of projects and social projects.

Additionally, it is intended that students develop critical sensitivity and the ability to perform an integrated evaluation of projects, considering environmental, social and governance (ESG) dimensions, as well as their contribution to the Sustainable Development Goals (SDGs), recognizing the relevance of these dimensions in the sustainability and long-term impact of investments.
The skills to be acquired:
At the end of the semester students should be able to:
– Use the necessary technical and instrumental skills in the economic and financial analysis of investments.
– Use technical skills capable of proposing investment financing solutions.
– Analyze and assess the risk level of investment.
– Support the decision-making of Real Investments in companies.

Integrate ESG factors into the evaluation of investment projects, identifying risks and opportunities associated with sustainability.

I. INTRODUCTION
Phases of Investment Project Development
Required Information
Types of Projects
II. BASIC CONCEPTS
The Incremental Nature of Investment Projects
The Concept of Sunk Costs
The Concept of Opportunity Cost of Invested Capital
CAPM and Cost of Capital: Levered and Unlevered Beta. Typology of Costs of Capital.
The Duration of Investment in Project Analysis.
The “Residual Value” of Investment Projects
Accuracies of Project Cash Flow
III. PROJECT EVALUATION AND SELECTION CRITERIA
Net Present Value (NPV)
Internal Rate of Return (IRR)
Project Return Index (PRI)
Payback Period (BRP)
Integrated Internal Rate of Return (IIR)
Capital Rationing and Project Selection
Annuity Criterion and the Cycle Method
Inversion of the IRR Criterion, Multiple IRRs, and the Absence of an IRR.
Fisher Criterion.
IV. INTERACTION OF INVESTMENT AND FINANCING DECISIONS
The Fiscal Effect of Debt
VALA Criterion
V. UNCERTAINTY REDUCTION TECHNIQUES AND RISK TREATMENT IN PROJECT ANALYSIS
Sensitivity Analysis
Scenario Analysis
Break-Even Review
Decision Trees
VI. INTRODUCTION TO ESG CRITERIA AS A COMPLEMENT TO TRADITIONAL ECONOMIC AND FINANCIAL ASSESSMENT
Identification of Non-Financial Risks and Opportunities in Investment Projects.
ESG Metrics and Indicators Applied to Investment Assessment.
Integrating the SDGs into Project Analysis: Consistency with Environmental, Social, and Good Governance Goals.
ESG Impact Assessment Models and Qualitative and Quantitative Sustainability Analysis.
Case Studies

NAO