MSc in Sustainable Energy Systems

Course Information Package

Course Unit TitleINVESTMENT ANALYSIS AND FEASIBILITY
Course Unit CodeMES508
Course Unit Details
Number of ECTS credits allocated6
Learning Outcomes of the course unitBy the end of the course, the students should be able to:
  1. Differentiate between profit and cash and the impact on business and operational activities.
  2. Analyse financial reports, including published accounts.
  3. Outline the principles and management implications of alternative costing methodologies.
  4. Demonstrated competences in planning, budgetary control accountability and responsibility for financial performance.
  5. Apply the appraisal techniques for engineering and energy related investments.
  6. Propose alternative methods of financing and describe their effect on valuation.
  7. Judge the element of risk/uncertainty in the range of engineering and energy related decisions a company faces, and explain how to measure its effect.
Mode of DeliveryFace-to-face
PrerequisitesNONECo-requisitesNONE
Recommended optional program componentsNONE
Course Contents1. Introduction to Business Finance
Understanding Financial statements, profit vs. Cash, control of cash flow and its implications, interpretation of accounts, costing techniques to ascertain recover and control costs, marginal costing and contribution analysis, absorption and activity based costing

2. Evaluating Business and Engineering Assets
Present-worth Analysis, payback, rate of return analysis, project cash flow analysis, project cost elements, project cash flow activities, effect of inflation

3. Determination of asset risk and return
Mean-variance optimization and efficient frontiers, cost of capital and the capital asset pricing model (CAPM)

4. Project financing
Debt versus equity, cost of capital with different sources of financing, capital budgeting with different sources of financing

5. Handling Project Cash Flow Risk
Methods of describing Risk (Sensitivity Analysis, Scenario Analysis), Including Risk in Investment evaluation (Probabilistic approach), Investment strategies under Uncertainty (Real Options)
Recommended and/or required reading:
Textbooks
  • Fundamentals of engineering Economics (International Edition), by Park Chan, Prentice Hall, 2nd edition 2009.
  • Engineering Economy , by William Sullivan, Elin Wicks, and Patrick Koelling, 14th edition, 2009
  • Principles of Corporate Finance, 9th edition, by Brealey A. R., Myers C. S. I
References
  • Park Chan, Fundamentals of Engineering Economics, Prentice Hall, 2004
  • Financial Theory and Corporate Policy, by Copeland T. E., Weston J. F., Shastri K.4th edition
  • Park Chan, Contemporary Engineering Economics, Prentice Hall, 3rd Edition, 2002
  • Stephen A. Ross, Randolph W Westerfield, Bradford D Jordan, Fundamentals of Corporate Finance Alternate Edition + S&P card + Student CD, McGraw-Hill 7th Edition, 2006
  • James C. Van Horne, John M Wachowicz, Fundamentals of Financial Management, 12/E, Prentice Hall 12th Edition 2005
Planned learning activities and teaching methodsThe course is presented through theoretical lectures in class. The lectures present to the student the course content and allow for questions. The material is presented using visual aids (i.e. PowerPoint presentation slides). The learning process is enhanced with the requirement from the student with additional readings and working in small-group or individual exercises. A final project, which is required as part of the students assessment for the course, allows students the opportunity to carry out independent research, synthesize basic concepts presented in class, as well as improve their writing and presentation skills. Besides from the notes taken by students in class, all of the course material is made available through the class website which is available through the University’s E-learning platform (“Moodle”). The instructors are available to students during office hours or by appointment in order to provide necessary guidance.
Assessment methods and criteria
Individual or group exercises20%
Project20%
Readings10%
Final Exam50%
Language of instructionEnglish
Work placement(s)NO