Appraisal Projects of Investment

Corporate Finance

Classes have a theoretical-practical nature, allowing students to actively participate in the debate and discussion of the proposed real cases. The issues of green investments/financing, their importance and opportunity, are stimulated. Therefore, the consolidation of knowledge is recommended with practices that are intended not only to understand the syllabus, but to develop individual capabilities, critical appreciation and prospective vision. We seek to explore the benefits and challenges of digital technologies for learning and teaching itself. Research is also instigated by taking advantage of the knowledge accumulated up to this UC and the wide range of economic and financial data available from companies as well as the macroeconomic environment at each moment.

The objective of this Curricular Unit is to enable the student to analyze investments in real assets; and provide students with theoretical and practical knowledge of the basic methodologies for analyzing the economic and financial viability of investment projects under conditions of certainty and uncertainty. Analysis of the problems of financing Investment in real assets. Analysis of the risk associated with an investment. The importance of the SDGs and goals of the Paris Agreement.

At the end of the semester, students should be able to:

1- Use the necessary technical and instrumental skills in the economic and financial analysis of investment projects in real assets.

2- Analyze and evaluate the risk level of an investment and use technical skills capable of proposing investment financing solutions.

3- Support decision-making regarding Real Investments in companies.

4- Help in making decisions based on sustainability issues.

In order for skills to be obtained consistently, classes will have a theoretical and practical nature, using realistic cases and spreadsheets suitable for projects appropriate to the macroeconomic environment of each moment.

I. INTRODUCTION
Preparation phases of an investment project
Necessary information
Types of Projects
II. BASIC CONCEPTS
The incremental character of the investment project
The notion of sunk costs
The notion of opportunity cost of invested capital
CAPM and cost of capital: Levered and unlevered beta. Typology of capital costs.
Duration of investment in project analysis.
The “residual value” of the investment project
Project cash flow meanings
III. PROJECT EVALUATION AND SELECTION CRITERIA
The Net Present Value (NPV)
The Internal Rate of Return (IRR)
The Profitability Index of a Project (IRP)
The Investment Payback Period (PRI)
Internal Integrated Return Rate (TIRI)
Capital rationing and project selection
Annuity criteria and the method of cycles

Fisher’s criterion.

IV. INTERACTION OF INVESTMENT AND FINANCING DECISIONS
The tax effect of indebtedness
VALA criterion
V. UNCERTAINTY REDUCTION TECHNIQUES AND RISK TREATMENT IN PROJECT ANALYSIS
Sensitivity Analysis
Scenario Analysis

Break-Even Analysis
Decision Trees
VI. THE CONSIDERATION OF STRATEGIC OPTIONS IN INVESTMENT EVALUATION
VII. SOCIAL ANALYSIS OF INVESTMENT PROJECTS

NAO

Main references
Cebola, A., (2017). Projetos de Investimento de Pequenas e Médias Empresas: Elaboração e Análise,
Lisboa,2ª edição, Ed. Sílabo.
Couto G., Lopes MM, Sousa F., Pimentel P, & Crispim J. (2014). Avaliação de investimentos, 2ª
edição/reimpressão, Áreas Editora.
Esperança, J. Paulo & Carlos D. (2014). Empreendedorismo e Planeamento Financeiro-Transformar
oportunidades em negócios. Criar micro, pequenas e médias empresas, 2ª edição/reimpressão, edições
Sílabo.

Hopkinson, M. (2017). The project risk maturity model: Measuring and improving risk management

capability. Routledge
Kurowski, L., & Sussman, D. (2011). Investment Project Design: a guide to financial and economic analysis
with constraints (Vol. 632). John Wiley & Sons.
Soares, I. Moreira, J.; Pinho, C. & Couto, J. (2015). Decisões de Investimento – Análise Financeira de Projectos,
Edição/reimpressão. Edições Sílabo (4ª edição, revista e corrigida

Additional references
-Bodie Z., Kane, A. and Marcus A. (2012). Essentials of Investments, McGraw Hill, 9th Edition
-Brealey, R. A.; Myers, S. C. and Alen, F. (2011). Principles of corporate Finance, McGraw Hill, 10º edition.
-Damodaran, A, (2012). Investment Valuation: Tools and Techniques for Determining the Value of any Asset,
University Edition.
-Esperança, J. P. e F. Matias, (2010). Finanças Empresariais, Texto Editores.
-Ferreira, M.; Mota, A. G.; Nunes, J. P. e Clementina, B. (2015). Finanças da Empresa – Teoria e Prática,5ª
edição, Edições Silabo.
-Koller, T.; Goedhart, M. and David, W. (2010). Valuation: Measuring and Managing the Value of Companies,
University Edition, 5th Edition, McKinsey & Company Inc.
-Lawrence Revsine; Daniel Collins; Bruce Johnson; Fred Mittelstaedt and Leonard Soffer (2018), Financial
Reporting and Analysis 7 Edition, McGraw-Hill.
-Neves, J. C. (2011). Avaliação e Gestão da Performance Estratégica da Empresa, 2ª Edição, Texto Editores.
-Neves, J. C. (2012). Análise e Relato Financeiro-uma visão integrada de gestão, 5ª Edição, Texto Editores.
– Robert, H. (2018). Analysis for Financial Management. 12 Edition, Macgraw-Hill
-Ross, S.; Westerfield R. and Jaffe, J. (2016). Essentials of Corporate Finance, McGraw-Hill Education, 9ª
edition.
-Silva, E. (2014). Decisões de Financiamento-aspetos práticos, Vida económica.
– Willem, S., Dirk, S., (2019). Principles Of Sustainable Finance, Edição: Oxford University Press