TeSP - Contabilidade e Gestão, Publication in the Diário da República - Aviso n.º 2033/2018 - 14/02/2018

4 ECTS; 2º Ano, 1º Semestre, 30,0 T + 30,0 PL

Lecturer

Prerequisites
There are no prerequisites but foundations of Financial Calculus, Corporate Finance and English would be helpful.

Objectives
Study of the most important concepts on Investment Analysis. Special attention will be given to investment decision rules and to uncertainty and risk in the capital budgeting process. One wants to introduce the students to the main concepts, models and tools on investment analysis.

Program
I INTRODUCTION TO CORPORATE FINANCE

1. The 3 major decisions in Corporate Finance.
2. First principles of Corporate Finance.

II THE TOOLS OF CORPORATE FINANCE

1. Present value (Revision)

2. Fundamentals of Valuation.

III THE BASICS OF RISK AND COST OF CAPITAL ESTIMATION

1. What is risk?
2. The C.A.P.M. model (Capital Asset Pricing Model).
3. Cost of Equity.
4. Cost of Debt.
5.Cost of capital.
6.Choosing a hurdle rate.


IV INVESTMENT PROJECTS

1. Project definition.
2. Project categorization.
3. Hurdle rates for Projects and Investments.
4. Estimation earnings and cash-flows on projects.

V INVESTMENT DECISION RULES

1. Categorizing investment decision rules.
1.1. Cash-flow-based decision rules.
1.2. Discounted cash-flow measures.
2. Comparing investment decision rules.
2.1. Net Present value and Internal rate of return: a closer look

VI UNCERTAINTY AND RISK IN CAPITAL BUDGETING.

1. Sensitivity analysis.
2. Breakeven analysis.

Evaluation Methodology
- 1 Written Test (100%)

Bibliography
- Barros, C. (2007). Avaliação Financeira de Projetos de Investimento. Lisboa: Escolar Editora
- Damodaran, A. (2001). Corporate Finance: Theory and Practice. U.S.A.: John Wiley & Sons

Method of interaction
Conventional theoretical-practical sessions supported by powerpoint presentations covering the key concepts and theories in the field and how they can be applied to real business situations.

Software used in class
Excel