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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.

 

SUBJECT(MODULE) DESCRIPTION 


VMA

 

 

ORGANIZATION OF STUDIES

Dear students
The Rector provides the opportunity to conduct studies remotely.
When organizing studies remotely, we will take advantage of several programs.
First, this page, which contains all the information (lectures, syllabi, exercise tasks, case study tasks, and exam questions).
Second, the VMA e-learning, where you will find pilot tests, an exam that will be held remotely from home and a link to this page.
Third,we will organize lectures, seminars, consultations and exams using the MS teams program. For instructions on how to install MS Teams can be found HOW TO ATTEND A VIDEO LECTURE (Instructions in English are given at the end).

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

 

 

SCHEDULE


#

W.D.

Date

Time

Room

Topic

Notes

1

Thu

3-Dec

18:00-19:30

114

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 # 6, 9, 14.Chapter 3 Test Questions # 1, 2, 3, 36, 37, 38, 39, 40, 41, 42, 75, 76, 77.

2

Thu

3-Dec

19:40-21:10

114

The Time Value of Money. Discounted Cash Flow Valuation

3

Fri

4-Dec

16:20-17:50

114

Net Present Value and Other Investment Criteria

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

4-Dec

18:00-19:30

114

Making Capital Investment Decisions

5

Sat

5-Dec

9:00-10:30

114

Making Capital Investment Decisions

Homework:  Chapter 9  Questions and Problems # 1-16. Chapter 9 Test Questions.                          Chapter 10  Questions and Problems # 1-15. Chapter 10 Test Questions.                               Chapter 11  Questions and Problems # 1-3,  5-15. Chapter 11 Test Questions.

6

Sat

5-Dec

10:40-12:10

114

Project analysis and evaluation.

7

Sat

5-Dec

12:50-14:20

114

Ch 2 TQ review. Ch 3  Q&P # 6, 9, 14. Ch 3 TQ # 1, 2, 3, 36, 37, 38, 39, 40, 41, 42, 75, 76, 77 review 

8

Sat

5-Dec

14:30-16:00

114

Ch 5 Q&P # 1-9. Ch 6 Test Questions           Ch6 Q&P # 1-15. Ch 6 Test Questions

9

Thu

17-Dec

18:00-19:30

114

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

10

Thu

17-Dec

19:40-21:10

114

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

11

Fri

18-Dec

16:20-17:50

114

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

Homework:  Preparing for the presentation of the case study

12

Fri

18-Dec

18:00-19:30

114

Case study prezentations

13

Sat

19-Dec

9:00-10:30

114

Case study prezentations

Homework: Preparation for examination. Self-test.

14

Sat

19-Dec

10:40-12:10

114

Case study prezentations

15

Sat

19-Dec

12:50-14:20

114

Case study prezentations

16

Sat

19-Dec

14:30-16:00

114

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

21-Dec

 .

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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