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Project Finance Management Course designed to MBA‘s of International Project Management program

 

VILNIUS UNIVERSITY

BUSINESS SCHOOL

Project Financial Management

Course designed to MBA‘s of International Project Management program

Prepared by prof. dr. Arvydas Paškevičius

       The aim of the Project Financial Management course – prepare highly skilled professionals who are able to define and implement business and public sector strategies in the form of projects, programs and portfolios in a dynamic, continuously changing international business environment, and in the context of policy priorities of Lithuania and the European Union..

        Prerequisites to study Project Financial Management are subjects previously graduated by students: finance management, microeconomics, macroeconomics and accounting.

         Project Financial Management course develop theoretical and practical skills in financial management of capital investment that would facilitate abilities to plan, organize, analyse and assess a company‘s development and expansion projects.

       The purpose of the course is not only to acquaint the students with the fundamental concepts of Project Financial Management but also to formulate practical skills while solving elementary financial problems and preparing and presenting the case study. Therefore, the course includes not only theoretical lectures but also practical work and home assignments. The course consists of 32 hours, 5 credits.



ONLINE STUDIES


„World Health Organization has declared the infections COVID-19 caused by SARS-CoV-2 coronavirus a pandemic, therefore the University has decided to preventively halt the study process. . Students and employees should study remotely via on-line measures - lectures and seminars will not be happening in the University's classes.”

Pro-Rector for Community Affairs
Dr. Birutė Švedaitė - Sakalauskė


Dear students.

We will work online through several programs.


First of all, the VMA you already know well. There you will find a self-test and exam that will be taken from home, online. And also a link to this page.


Second, my WEB page. Here you will find all the information about the course organization, lecture schedule and content, lecture slides, exercise assignments, test questions, lectures, assessment requirements and your exam results.


Third, the MS Teams program. This program will be used to read lectures online, organize online exercises and present your case study analyses online. 

Instructions for installing the MS Teams program can be found HOW TO ATTEND A VIDEO LECTURE (Instructions in English are given at the end).

After installing Teams, use the link to join Project Finance Management TEAM






SCHEDULE


#

W.D.

Date

Time

Room

Topic

Notes

1

Thu

2-Apr

18:00-19:30

on line

Introduction to Project Finance Management. 

Financial Statements and Cash Flow.The Time Value of Money

Homework: Chapter 2 Test Questions; Chapter 3 Questions and Problems # 11, 16, 29.Chapter 3 Test Questions # 1, 2, 3, 36, 37, 38, 39, 40, 41, 42, 75, 76, 77.

2

Thu

2-Apr

19:40-21:10

on line

The Time Value of Money. Discounted Cash Flow Valuation

3

Fri

3-Apr

16:20-17:50

on line

Net Present Value and Other InvestmentCriteria

Homework: Chapter 5 Questions and Problems # 1-9. Chapter 5 Test Questions. Chapter 6 Questions and Problems # 1-15. Chapter 6 Test Questions.

4

Fri

3-Apr

18:00-19:30

on line


5

Sat

4-Apr

9:00-10:30

on line

 Investment Criteria 

(part II)

Homework: Chapter 9 Questions and Problems # 1-16. Chapter 9 Test Questions. 


Homework: Chapter 10 Questions and Problems # 1-15. Chapter 10 Test Questions.


Homework: Chapter 11 Questions and Problems # 1-3, 5-15. Chapter 11 Test Questions.

6

Sat

4-Apr

10:40-12:10

on line

Making Capital Investment Decisions

7

Sat

4-Apr

12:50-14:20

on line


8

Sat

4-Apr

14:30-16:00

on line

Making Capital Investment Decisions (part II)   Project analysis and evaluation.

9

Thu

16-Apr

18:00-19:30

on line

Ch 2 TQ review. Ch 3 Q&P # 11, 16, 29. Ch 3 TQ # 1, 2, 3, 36, 37, 38, 39, 40, 41, 42, 75, 76, 77 review

10

Thu

16-Apr

19:40-21:10

on line

  Ch 5 Q&P # 1-9. Ch 6 Test Questions

 Ch6 Q&P # 1-15. Ch 6 Test Questions

11

Fri

17-Apr

16:20-17:50

on line

Ch 9 Q&P # 1-16. Ch 9 Test Questions

.

12

Fri

17-Apr

18:00-19:30

on line

Ch 10 Q&P # 1-15. Ch 10 Test Questions 

13

Sat

18-Apr

9:00-10:30

on line

Case study prezentations

Homework: Preparation for examination. Self-test.

14

Sat

18-Apr

10:40-12:10

on line

Case study prezentations

15

Sat

18-Apr

12:50-14:20

on line

Case study prezentations

16

Sat

18-Apr

14:30-16:00

on line

Ch11 Q&P # 1-3, 5-15. Ch 11 Test Questions.

.21-Apr

.18:00

on line

Consultation

.22-Apr

.18:00

on line

EXAM


SYLLABUS


1. Introduction to Project Financial Management (Stefano Gatti, Project Finance in Theory and Practice,)

1.1. Understanding of the Project Finance

1.2. Methods of the Project financing

1.3. Project financing sources

1.4. Contract structure of a Project Finance Deal

        Lecture Notes

        

2. Financial Statements and Cash Flow (Chapter 2 and section 1 of Chapter 3 “Fundamentals of Corporate Finance, Ross, S. A”)

2.1. The Balance sheet

2.2. The Income Statement

2.3. Cash flow

2. 4. Cash Flow and Financial Statements

        Lecture Notes        

       Chapter 2       Test Questions

      Chapter 3  ( section 1)   Q&P (page 88-92. Only 11, 16, 29 questions and problems)

      Test Questions (only 1, 2, 3, 36, 37, 38, 39, 40, 41, 42, 75, 76, 77 questions)


3. The Time Value of Money(Chapter 5 and 6 “Fundamentals of Corporate Finance, Ross, S. A)”

3.1. Future Value and Compounding

3.2. Present Value and Discounting

3.3. More on Present and Future Values.

3.4. Present and Future Values of Multiple Cash Flows

3.5. Valuing Level Cash Flows: Annuities and Perpetuities

3.6. Comparing Rates: The Effect of Compounding

3.7. Loan Types and Loan Amortization

       Lecture Notes

      Chapter 5      Q&P (page 152 – 153. Only 1-9 questions and problems)

     Test Questions

     Chapter 6      Q&P (page 191 – 192. Only 1-15 questions and problems)

     Test Questions


4.   Net Present Value and Other Investment Criteria (Chapter 9 “Fundamentals of Corporate Finance, Ross, S. A”)

4.1. Net present value

4.2. The Payback Rule

4.3. The Payback Rule

4.4. The Average Accounting Return (AAR)

4.5. The Internal Rate of Return (IRR)

4.6. The Profitability Index

       Lecture Notes

      Chapter 9       Q&P (page 305 – 307. Only 1-16 questions and problems)

     Test Questions


5. Making Capital Investment Decisions (Chapter 10 ”Fundamentals of Corporate Finance, Ross, S. A”)

5.1. Project Cash Flows: A First Look

5.2. Incremental Cash Flows

5.3. Pro Forma Financial Statements and Project Cash Flows

5.4. More on Project Cash Flow

5.5. Alternative Definitions of Operating Cash Flow

5.6. Some Special Cases of Cash Flow Analysis

      Lecture Notes

      Chapter 10       Q&P (page 344 – 345. Only 1-15 questions and problems)

      Test Questions


6. Project Analysis And Evaluation (Chapter 11 “Fundamentals of Corporate Finance, Ross, S.A”)

6.1. Evaluating NPV Estimates

6.2. Scenario and Other What-If Analyses

6.3. Break-Even Analysis

6.4. Operating Cash Flow, Sales Volume, and Break-Even

6.5. Operating Leverage

6.6. Capital Rationings

Lecture Notes       Q&P (page 374 – 376. Only 1-3 and 5-15 questions and problems)

      Test Questions


CASE ANALYSIS  AND  PRESENTATION


Student’s registration of case studies  


Send requests and presentations: arvydas@paskevicius.com

The example of presentation: Health Development Corporationy   Presentation     Excel

Slide presentations limited to a duration of 10-15 minutes. (desirable in the University Business School form of presentations). Presentations file name must be shortened name of the case. Calculation tables, as additional material illustrating the decision is contained in the Excel form. The presentation you have to send no later than 24 hours before the presentation. The first slide specify: the theme and the author (s) surname (s).

Case studies do not have a straight answer. Different people shall bring a unified solution, so the analysis of the case must present YOUR decision and justify it argumentative. The analysis of the test should be kept in mind that the latest information about the problem and the company can be find on the internet.


Assessment of case analysis and presentation:

1. Presentations submission timeliness, slide quality, oratorical art, audience involvement in the case study 0-3.

2. The complexity of the analysed problem 0-3

3. Case studies breadth, i.e. quite a lot of work done 0-4

4. Depth of the case analysis, i.e. use sophisticated analytical techniques 0-4

5. It was collected an additional, interesting and valuable material on the Internet. For example how the company is now doing, what the consequences, modern innovations. 0-2

6. A summary of the findings, what is memorable, the most valuable of the case presented, where you can apply the acquired knowledge 0-2

7. Working as opponent of the peer presentations or active participation in the cases analysis 0-1.  Good questions or comments prized pluses, 3-4 pluses equal to 1 point.


CASES

1.    Lockheed Tri Star and Capital Budgeting. Pages 367-369.

2.    Merck & Company: Evaluating a Drug Licensing Opportunity. Pages 371-376.

3.    Tree Values. Pages 377-379.

4.    The Super Project. Pages 381-394.

5.    NetFlix.com, Inc. Pages 395-403.

6.    A-Rod: Signing the Best Player in Baseball. Pages 405-418.

7.    Ocean Carriers. Pages 419-423.

8.    Whirpool Europe. Pages 425-430.

9.    Health Development Corporation. Pages 431-434.

10. The Investment Detective   (Investment criteria and discounted cash flow) Page 257

11. Worldwide Paper Company  (Analysis of an expansion investment)   Page 259

12. Target Corporation  (Multifaceted capital investment decisions)   Page 263

13. Aurora Textile Company  (Analysis of an automation investment)   Page 283

14. Compass Records  (Analysis of working capital investment)   Page 295

15.  Victoria Chemicals plc (A): The Merseyside Project  (Relevant cash flows)   Page 309

16. Victoria Chemicals plc (B): Merseyside and Rotterdam Projects  (Mutually exclusive investment opportunities)   Page 317

17.  Euroland Foods S.A.  (Strategic resource allocation)  Page 325

18. Star River Electronics Ltd.(Capital project analysis and forecasting)   Page 337 



LITERATURE


1. Fundamentals of Corporate Finance, Ross, S. A. 2010. Textbook

2. CaseProblems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano.2005

3. A Guide to the Project Management Body of Knowledge (PMBOK Guide) 4th Editon 2008

4. Stefano Gatti, Project Finance in Theory and Practice, Academic Press, 2008

5. EitemanD. and Stonehill A., and M.H. Moffett, Multinational BusinessFinance: International Edition, 12/E, ISBN-10: 0136096689; 2010 .

6. Principles of Corporate Finance, Brealey, Myers, 2010.

7. Financial Management, Ray M. Brooks. 2010.

8. Mastering Financial modelling in Microsoft Excel. 2006


EVALUATION


Assessment requirements:

Analysis and solutions of tasks and problems at seminars, case study task and examination.


Final assessment criteria:

The grade assigned for problem solution at seminars is multiplied by 0.15.

The grade assigned for case study task solution is multiplied by 0.35.

Examination shall be taken by electronic means at the Examination center. Students are required to solve tasks presented in the test. The grade of the examination is multiplied by 0.5 and shall be added to the final result.


Composition of the final accumulative grade

The final accumulative grade shall be composed of:

Problem solutions at seminars – 15 %

Case study task solution – 35%

Examination – 50%


                                        

RESULTS    






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