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

VILNIUS UNIVERSITY

       VILNIAUS UNIVERSITETO

INTERNATIONAL BUSINESS SCHOOL

       TARPTAUTINIO VERSLO MOKYKLA


Project Finance Management

Course designed to MBA‘s of International Project Management program

Prepared by prof. dr. Arvydas Paškevičius

       Theaim of the Project Finance 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 Finance Management are subjects previously graduated by students: finance management, microeconomics, macroeconomics and accounting.

           Project Finance Management course develop theoretical and practical skills in financial management of capital investment that would facilitate abilities to plan, organize, analyze 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 Finance 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.

SYLLABUS

1.      Introduction to Project Finance 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 Textbook      Test Questions

Chapter 3 Textbook ( 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   Textbook   Q&P (page 152 – 153. Only 1-9 questions and problems)

Test Questions

Chapter 6   Textbook 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 Textbook 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   Textbook 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

Textbook

Case study

CASES

  1. Lockheed Tri Star and Capital Budgeting . Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 367-369psl.
  2. Merck & Company: Evaluating a Drug Licensing Opportunity. Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 371-376 psl.
  3. Tree Values. Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 377-379psl.
  4. The Super Project. Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 381-394psl.
  5. NetFlix.com, Inc. Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 395-403psl.
  6. A-Rod: Signing the Best Player in Baseball. Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 405-418 psl.
  7. Ocean Carriers Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 419-423 psl.
  8. Whirpool Europe. Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 425-430 psl.
  9. Health Development Coporation. Case Problems in Finance / edited by W.Carl Kester, Richard S. Ruback, Peter Tufano. 2005. 431-434 psl.

Schedule

Date

Time

Room

Topic

Notes

7-Jan

18:00-19:30

Introduction to Project Finance Management. Financial Statements and Cash Flow

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.

7-Jan

19:40-21:10

The Time Value of Money

8-Jan

16:20-17:50

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

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

8-Jan

18:00-19:30

The Time Value of Money

9-Jan

9:00-10:30

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

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

9-Jan

10:40-12:10

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

9-Jan

12:50-14:20

Net Present Value and Other Investment Criteria

9-Jan

14:30-16:00

Net Present Value and Other Investment Criteria

28-Jan

18:00-19:30

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

28-Jan

19:40-21:10

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

29-Jan

16:20-17:50

Making Capital Investment Decisions

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

29-Jan

18:00-19:30

Making Capital Investment Decisions. Case study prezentations

30-Jan

9:00-10:30

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

Homework: Preparation for examination. Self-test.

30-Jan

10:40-12:10

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

30-Jan

12:50-14:20

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

30-Jan

14:30-16:00

Case study prezentations

8-Feb

19-20:30

consultation

 9-Feb

 18:-20:00

EXAM


Self-test

How do I find the examination center?

LITERATURE

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

2. Case Problems 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. Eiteman D. and Stonehill A., and M.H. Moffett, Multinational Business Finance: 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 modeling 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%



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