Investment Project Appraisal (BKG303)
Vietnamese title: Thẩm định dự án đầu tư
Credits: 3
Prerequisites: FIN202

Description:
This course introduces students to the principles and techniques of investment project appraisal in both private and public sectors. It covers the critical aspects of evaluating investment opportunities, including financial modeling, risk assessment, cost-benefit analysis, and the impact of financing and taxation on investment decisions. The course aims to equip students with the analytical tools necessary to assess the viability of investment projects and make informed financial decisions.

Learning Objectives
Upon successful completion of this course, students will be able to:
(i) Understand and apply the fundamental principles of investment appraisal.
(ii) Conduct financial analyses using discounted cash flow (DCF) techniques.
(iii) Evaluate the impact of risk and uncertainty on investment decisions.
(iv) Compare and contrast different investment appraisal methods.
(v)Prepare comprehensive investment appraisal reports.

Learning outcomes:
Explain the fundamental concepts and principles underlying the appraisal of investment projects, including the time value of money, cash flow estimation, and the cost of capital.
Apply discounted cash flow (DCF) techniques such as Net Present Value (NPV), Internal Rate of Return (IRR), and Adjusted Net Present Value (ANPV) to analyze and evaluate investment decisions.
Identify and evaluate the sources of risk and uncertainty in investment projects, employing methods such as sensitivity analysis, scenario analysis, and Monte Carlo simulation to assess their impact on project viability.
Compare and contrast various investment appraisal methods, including payback period, discounted payback period, and Accounting Rate of Return (ARR), and understand their limitations and applications.
Analyze the effects of financing and taxation on investment decisions, understanding the implications of different financing structures and tax regimes on the appraisal of investment projects.
Demonstrate the ability to apply investment appraisal techniques to real-world scenarios, using case studies and project work to evaluate actual investment projects and make informed recommendations.
Practice ability to work as part of an effective team to prepare report and presentation

Student tasks:
- Class attendance is strongly encouraged. Attend at least 80% of class hours in order to be accepted to the final examination
- Actively participate in class activities
- Fulfill tasks given by the instructor after class
- Use laptop in class only for learning purposes
- Read the textbook in advance
- Access the course website (http://flm.fpt.edu.vn) for up-to-date information and material of the course, for online support from teachers and other students and for practicing and assessment.

Tools:
- Internet
- Laptop
- Microsoft Excel or equivalent spreadsheet software

Materials:
description: Capital Budgeting Valuation: Financial Analysis for Today's Investment Projects
author: H. Kent Baker; Philip English
publisher: Wiley
published_date: 2011
isbn: 978-1-118-04456-8
note: Wiley - Vital Source
description: Fundamentals of Corporate Finance
author: Robert Parrino, Thomas Bates, Stuart L. Gillan, David S. Kidwell
publisher: Wiley
published_date: 2022
edition: 5th, International Adaptation
isbn: 978-1-119-79542-1
note: Wiley - Vital Source

Assessments:
category: Class Participation and Preparation
type: on-going
weight: 10.0
no_question: Each student should make at least 1 individual presentation during the course in front of the class. Topics will be varied based on the topics in the textbook. In addition, students are required to do exercises and other activities
category: Essay test
type: on-going
weight: 15.0
duration: In class (45-60 minutes)
question_type: CLO1, CLO2, CLO3, CLO4, CLO5
no_question: Multiple choice questions and/or Criticial thinking (exercises) questions.
For example:
▪ Part 1 (40%): 20 multiple choice questions in 20 minutes
▪ Part 2 (60%): 3 exercises in 30 minutes
knowledge_and_skill: OP 1- Only MCQ: 40-50 questions
OP 2- Only Critical thinking questions/ Exercises : 3-4 question.
OP 3- Mix: 15-20 mcqs + 2-3 critical thinking questions/exercises
grading_guide: All chapters
note: Paper/computer-based testing
category: Group Project and Presentation
type: on-going
weight: 20.0
duration: Presentation in class and report submission;
question_type: CLO1, CLO2, CLO3, CLO4, CLO5, CLO6, CLO7
no_question: Group problem solving: It can be composed of different parts like reports to apply investment appraisal techniques to real-world scenarios, using case studies and project work to evaluate actual investment projects and make informed recommendations.
knowledge_and_skill: Specified by instructor
grading_guide: Thinking creatively, making decisions, solving problems,Personal qualities: Individual responsibility, self-esteem, sociability, self-management, and integrity.
note: Stipulated by instructor
category: Individual Assignment
type: on-going
weight: 10.0
duration: In class (30-40 minutes)
question_type: CLO1, CLO2, CLO3, CLO4, CLO5, CLO6, CLO7
no_question: Synthesize analysis into coherent and comprehensive investment appraisal reports, clearly communicating the methodology, analysis, and recommendations for investment decisions to both technical and non-technical audiences.
knowledge_and_skill: Specified by instructor
grading_guide: Thinking creatively, making decisions, solving problems,Personal qualities: Individual responsibility, self-esteem, sociability, self-management, and integrity.
note: Stipulated by instructor
category: Mid-term test (MT)
type: on-going
weight: 15.0
duration: In class (45-60 minutes)
question_type: CLO1, CLO2, CLO3, CLO4, CLO5
no_question: Multiple choice questions and/or Criticial thinking (exercises) questions.
For example:
▪ Part 1 (40%): 20 multiple choice questions in 20 minutes
▪ Part 2 (60%): 3 exercises in 30 minutes
knowledge_and_skill: OP 1- Only MCQ: 40-50 questions
OP 2- Only Critical thinking questions/ Exercises : 3-4 question.
OP 3- Mix: 15-20 mcqs + 2-3 critical thinking questions/exercises
grading_guide: Chapters 2,4,5,7,8,10,11
note: Paper/computer-based testing
category: Final exam
type: Final exam
weight: 30.0
duration: 60 minutes
question_type: CLO1, CLO2, CLO3, CLO4, CLO5
no_question: Multiple choice questions
knowledge_and_skill: 50 MC questions
grading_guide: Selected number of MC questions on each of the following chapters, only including 2, 4, 5, 6, 7, 10, 11, 12, 13, 15, 18, 19. Other chapters, which are not mentions, are not tested.
note: Computer-based testing

Schedule:
session: Course Introduction
learning_outcomes: I
materials: BKG303
session: Chap 1: Capital Budeting: An Overview
1.1 Capital Budgeting Process
1.2 Financial Objective of the Firm
1.3 Capital Investment Choice
learning_outcomes: T
U
materials: BKG303
session: Chap 1: Capital Budeting: An Overview (cont')
1.1 Capital Budgeting Process
1.2 Financial Objective of the Firm
1.3 Capital Investment Choice
learning_outcomes: T
U
session: PART I - Foundation and Key Concepts
Chap 2 Corporate Strategy and Investment Decisions
2.1 THE IMPORTANCE OF STRATEGY FOR INVESTMENT DECISIONS
2.2 KEY CONCEPTS AND IDEAS IN STRATEGY
learning_outcomes: T
U
session: Chap 2 Corporate Strategy and Investment Decisions
2.3 CORPORATE STRATEGY, INVESTMENT, AND PERFORMANCE: SOME EVIDENCE
learning_outcomes: T
U
session: (Optional) Chap 3 Corporate Governance and Investment Decisions
3.1 THE CAUSES OF INVESTMENT DISTORTIONS
3.2 IMPACT OF CORPORATE GOVERNANCE ON INVESTMENT DISTORTIONS
learning_outcomes: T
U
session: PART II - Capital Investment Choice
Chap 4 Measuring Investment Value: Free Cash Flow, Net Present Value, and Economic Value Added
4.1 NPV AND IRR
4.2 CASH FLOWS
learning_outcomes: T
U
session: Chap 4 Measuring Investment Value: Free Cash Flow, Net Present Value, and Economic Value Added
4.3 TAX SAVINGS, DISCOUNT RATES, AND THE FUNDING MIX OF CAPITAL
4.4 DYNAMIC NPV
4.5 ECONOMIC VALUE ADDED
learning_outcomes: T
U
session: Practice
Group/Individual Assignment Release
learning_outcomes: T
U
session: Chap 5 Alternative Methods of Evaluating Capital Investments
5.1 AN AGENCY PROBLEM BETWEEN MANAGERS AND SHAREHOLDERS
5.2 THE PAYBACK PERIOD AND ITS VARIATIONS
5.3 IRR: SCALE AND TIMING EFFECTS
learning_outcomes: T
U
session: Chap 5 Alternative Methods of Evaluating Capital Investments
5.4 NPV AND IRR: MUTUALLY EXCLUSIVE PROJECTS
5.5 REINVESTMENT RATES AND MULTIPLE IRRs
5.6 PROFITABILITY INDEX
learning_outcomes: T
U
session: Chap 6 Capital Rationing for Capital Budgeting
6.1 DEFINITION OF CAPITAL RATIONING FOR CAPITAL BUDGETING
6.2 HOW DOES CAPITAL RATIONING WORK TO IMPROVE CAPITAL BUDGETING?
6.3 CONDITIONS FOR SUCCESSFUL CAPITAL RATIONING
6.4 NEGATIVE SIDE EFFECTS OF COMPETITIVE CAPITAL RATIONING
learning_outcomes: T
U
session: Chap 7 Analyzing Foreign Investment
7.1 FINANCIAL VALUATION PROCESS
7.2 FINANCIAL MODELING BASICS
learning_outcomes: I
T
session: Chap 7 Analyzing Foreign Investment
7.3 FINANCIAL MODELING COMPLICATIONS
learning_outcomes: I
T
session: (Optional) Chap 8: Postcompletion Auditing of Capital Investments
learning_outcomes: I
T
session: Group/Individual Assignment Release
learning_outcomes: U
session: Practice
learning_outcomes: U
session: Practice
learning_outcomes: U
session: PART III - Project Cash Flows and Inflation
Chap 10 Estimating Project Cash Flows
10.2 RELEVANT CASH FLOWS
10.3 FORECAST OF NET CASH FLOWS
learning_outcomes: T
U
session: Chap 10 Estimating Project Cash Flows
10.2 RELEVANT CASH FLOWS
10.3 FORECAST OF NET CASH FLOWSƯ
learning_outcomes: T
U
session: Practice
learning_outcomes: U
session: Chap 11 Capital Budgeting and Inflation
11.1 REASONS TO JUSTIFY A REAL OR CONSTANT PRICES APPROACH
11.2 IMPACTS OF INFLATION ON THE FINANCIALS: AN EXAMPLE
learning_outcomes: I
T
session: Chap 11 Capital Budgeting and Inflation
11.1 REASONS TO JUSTIFY A REAL OR CONSTANT PRICES APPROACH
11.2 IMPACTS OF INFLATION ON THE FINANCIALS: AN EXAMPLE
learning_outcomes: I
T
session: Practice
learning_outcomes: U
session: Midterm Test
learning_outcomes: U
session: Midterm Test
learning_outcomes: U
session: Assignment Instruction
learning_outcomes: U
session: PART IV - Risk and Investment Choice
Chap 12 Basic Risk Adjustment Techniques in Capital Budgeting
12.1 DECISION-MAKING TECHNIQUES FOR RISKY CAPITAL BUDGETING PROJECTS
12.2 THE JUDGMENT APPROACH
12.3 ADJUSTING THE PAYBACK PERIOD
learning_outcomes: I
T
session: Chap 12 Basic Risk Adjustment Techniques in Capital Budgeting
12.4 THE CERTAINTY EQUIVALENT METHOD
12.5 THE RISK-ADJUSTED DISCOUNT RATE METHOD
12.6 COMPARING THE CE AND RADR METHODS
learning_outcomes: I
T
session: Practice
learning_outcomes: U
session: Chap 13 Capital Budgeting with political/country risk
13.1 METHODS AND TECHNIQUES OF POLITICAL/COUNTRY RISK ANALYSIS
13.2 INCORPORATING POLITICAL RISK IN THE CAPITAL BUDGETING DECISION
learning_outcomes: I
T
session: Chap 14 Risk management in project finance
14.1 PROJECT FINANCE AS A NEXUS OF CONTRACTS
14.2 RISK MANAGEMENT IN PROJECT FINANCE
14.3 CAPITAL BUDGETING IN PROJECT FINANCE
learning_outcomes: I
T
session: Practice
learning_outcomes: U
session: Chap 15 Risk simulation concepts and methods
15.1 INITIAL STATIC MODEL
15.2 INITIAL SIMULATION AND ANALYSIS
15.3 SIMULATION WITH CORRELATED INPUTS
learning_outcomes: I
T
session: Chap 15 Risk simulation concepts and methods
15.4 COMPACT PRO FORMA MODELS
learning_outcomes: T
U
session: Practice
learning_outcomes: U
session: PART VI - Estimating the Project Cost of Capital
Chap 18 Cost of capital: An introduction
18.1 COST OF CAPITAL
learning_outcomes: I
T
session: Chap 18 Cost of capital: An introduction
18.2 COMPREHENSIVE EXAMPLE OF ESTIMATING THE WACC
learning_outcomes: T
U
session: Practice
learning_outcomes: U
session: Chap 19 Using the Capital Asset Pricing Model and Arbitrage Pricing Theory in Capital Budgeting
19.1 THE CAPITAL ASSET PRICING MODEL
learning_outcomes: I
T
session: Chap 19 Using the Capital Asset Pricing Model and Arbitrage Pricing Theory in Capital Budgeting
19.2 THE ARBITRAGE PRICING THEORY
learning_outcomes: I
T
session: Practice
learning_outcomes: U
session: Practice
learning_outcomes: U
session: Practice
learning_outcomes: U
session: Assignment Submission
learning_outcomes: U
session: (Optional)
Part V Real Options
Part VII Special Topics
learning_outcomes: I
T
session: (Optional)
Part V Real Options
Part VII Special Topics
learning_outcomes: I
T
session: (Optional)
Part V Real Options
Part VII Special Topics
learning_outcomes: I
T
session: Group Presentation
learning_outcomes: U
session: Group Presentation
learning_outcomes: U
session: Group Presentation
learning_outcomes: U
session: Group Presentation
learning_outcomes: U
session: Group Presentation
learning_outcomes: U
session: Group Presentation
learning_outcomes: U
session: Course Review
learning_outcomes: U
session: Course Review
learning_outcomes: U
session: Course Review
learning_outcomes: U
session: Essay Test
learning_outcomes: U
session: Essay Test
learning_outcomes: U
session: Essay Test - Review
learning_outcomes: U