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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.

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 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 ANALYSIS AND PRESENTATION

Student’sregistration of case studies  

Send requests and presentations: arvydas@paskevicius.com

The example of presentation: Butler Lumber Company   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 analyzed 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 Coporation. Pages 431-434.


SCHEDULE


Date

Time

Room

Topic

Notes

5-Jan

18:00-19:30

212

Introduction to Project Financial 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.

5-Jan

19:40-21:10

212

The Time Value of Money

6-Jan

16:20-17:50

212

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.

6-Jan

18:00-19:30

212

The Time Value of Money

7-Jan

9:00-10:30

212

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

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

7-Jan

10:40-12:10

212

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

7-Jan

12:50-14:20

212

Net Present Value and Other Investment Criteria

7-Jan

14:30-16:00

212

Net Present Value and Other Investment Criteria

19-Jan

18:00-19:30

212

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

19-Jan

19:40-21:10

212

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

20-Jan

16:20-17:50

212

Making Capital Investment Decisions

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

20-Jan

18:00-19:30

212

Making Capital Investment Decisions. Case study presentations

21-Jan

9:00-10:30

212

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

Homework: Preparation for examination. Self-test.

21-Jan

10:40-12:10

212

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

21-Jan

12:50-14:20

212

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

21-Jan

14:30-16:00

212

Case study presentations

consultation

EC

EXAM



Self-test

How do I find the examination center?

LITERATURE

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

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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