Last modified: 31 Jul 2020 15:45
The course focuses on the procedures that firms use to make investment decisions. An important example is the decision about whether or not to proceed with a proposed project, and we will consider this example in some detail.
Decisions about projects and other investments are some of the most important decisions facing firms in the energy industry.
The course is divided into four sections that focus on various aspects of economics and finance.
One section studies how decision makers in firms assess trade-offs over time.
An investment typically involves costs in order to obtain benefits in the future. But the future benefits, as well as any future costs, may occur at different times and in different amounts.
To take a very simple example, suppose that, by paying an amount I now, a firm can receive a cash flow of either 5 million pounds in five years or 10 million pounds in 8 years. How should a firm choose between two such investments?
A second section of the course studies the decision rules that firms use to compare investments. These decision rules involve comparing the patterns of present and future cash flows associated with various investments.
We will consider several types of commonly used decision rules. Our main focus will be on rules that involve net present value calculations, but we will also consider other decision criteria including the internal rate of return and the payback period.
The third section consists of a number of workshops that will help you to construct Excel spreadsheets to implement the analysis of investment projects. These workshops provide a valuable complement to the more conceptual material in the course.
The fourth section of the course involves the question of risk and how the risk associated with an investment is factored into a firm’s decision about whether or not to make the investment.
How should risk be measured? How much should a firm be willing to pay to limit the risk associated with a project? How should the level of risk be incorporated into the decision rules that a firm uses to evaluate investments?
These are some of the questions discussed in this section
| Study Type | Postgraduate | Level | 5 |
|---|---|---|---|
| Term | First Term | Credit Points | 15 credits (7.5 ECTS credits) |
| Campus | Aberdeen | Sustained Study | No |
| Co-ordinators |
|
||
The aim of this course is to equip students with good analytical skills in order to understand the implications of corporate financing decisions and to enable students to understand the theoretical underpinnings of corporate finance theory.
At the end of the course students should have developed an understanding of the conceptual underpinnings of project and investment analysis, including a knowledge of important financial concepts such as present value, the opportunity cost of capital, arbitrage and the law of one price, and the relation between the risk and return of an investment.
In addition, students should be able to apply these ideas to consider the assessment of a particular project.
To do so this course will help students to develop their:
| Assessment Type | Summative | Weighting | 50 | |
|---|---|---|---|---|
| Assessment Weeks | Feedback Weeks | |||
| Feedback |
Students are given the option to choose between an essay and an exam, they will not do both. Feedback will be provided individually through a standardised template |
Word Count | 3000 | |
| Knowledge Level | Thinking Skill | Outcome |
|---|---|---|
|
|
||
| Assessment Type | Summative | Weighting | 50 | |
|---|---|---|---|---|
| Assessment Weeks | Feedback Weeks | |||
| Feedback |
Students are given the option to choose between an essay and an exam, they will not do both. General feedback through online platform. |
|||
| Knowledge Level | Thinking Skill | Outcome |
|---|---|---|
|
|
||
| Assessment Type | Formative | Weighting | ||
|---|---|---|---|---|
| Assessment Weeks | Feedback Weeks | |||
| Feedback |
general feedback through model answers |
|||
| Knowledge Level | Thinking Skill | Outcome |
|---|---|---|
|
|
||
| Knowledge Level | Thinking Skill | Outcome |
|---|---|---|
| Procedural | Analyse | understand and analyse theoretical concepts of accounting |
| Reflection | Create | create investment evaluation models using corporate finance theory and excel modelling |
| Procedural | Understand | By participating in the course, students should be able to demonstrate knowledge and understanding of basic financial concepts such as: present value, the opportunity cost of capital, investment d |
| Reflection | Evaluate | Evaluate the theoretical underpinnings used in financial decision-making |
We have detected that you are have compatibility mode enabled or are using an old version of Internet Explorer. You either need to switch off compatibility mode for this site or upgrade your browser.
