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Economic Evaluation of Projects

Code 16488
Year 2
Semester S2
ECTS Credits 6
Workload TP(60H)
Scientific area Economics
Entry requirements No entry requirements.
Mode of delivery Theoretical-Practical.
Work placements Not applicable
Learning outcomes - To develop project design and evaluation skills;
- To enable students to develop a coherent economic discourse;
- Prepare students for economic and financial decision-making; identify investment opportunities and implement them;
- Provide tools, instruments and techniques for the economic and financial evaluation of real assets;
Syllabus 1 - Project feasibility studies
1.1 - The concept of an investment project
1.2 - Project phases
1.3 - Project feasibility studies
1.4 - Project selection
2. The CASH FLOW concept
2..1 Estimating cash flows according to the type of investment
2.2 Opportunity cost of capital
2.3 Investment and financing decisions
2.4 Equity and debt capital
2.5 Weighted average cost of capital (WACC)
3 Investment decision assessment methodologies
3.1 Net Present Value (NPV)
3.2 Internal Rate of Return (IRR)
3.3 Project Profitability Index (PRI)
3.4 Payback
3.5 NPV VS IRR
4. Valuation techniques based on cash flows and techniques for analysing risk and uncertainty.
4.1 Adjustment of the discount rate
4.2 CAPM (Capital Asset Pricing Model).
4.3 Analysing economic and financial indicators
5. Sensitivity Analysis for Project Valuation
5.1. Univariate sensitivity analysis
5.2 Multivariate sensitivity analysis
Main Bibliography Megre, L. (2018), Análise de Projetos de Investimento: Uma perspetiva económica, 2ª Edição, Lisboa, Edições Silabo.
Cebola, A. (2017), Projetos de Investimento de Pequenas e Médias Empresas: Elaboração e Análise. 2ª Edição, Lisboa, Edições Sílabo.
Boardman, A., (2014), Cost-benefit analysis: concepts and practice, 4th ed., Pearson Education Limited.
Bodies, Z., Kane, A., and Marcusm A., (2019) Essential of Investments, 11th Edition, McGrawHillDavidson, R. and J.G. MacKinnon (2003), Econometric Theory and Methods, Oxford University Press.
Teaching Methodologies and Assessment Criteria Students must attend classes every week in order to understand and learn the theoretical and pratical aspects used to better structure and evaluate an investment project vs. a business plan; on the other hand, to be familiarised with the type of economic evaluation by solving specific exercises for evaluating investments, interpreting the results and evaluating the used indicators.
The students' classification corresponds to the weighting of three (3) teaching and learning components, such as the completion of a set of 3 worksheets during the semester with a weighting of 25% in the final grade and the completion of two Frequencies, the first of which will have a weighting of 35% in the final grade to be agreed with the students; and the second frequency to be held on a date proposed at the end of the academic semester by the Course Director, will have a weighting of 40% in the final grade.
Language Portuguese. Tutorial support is available in English.
Last updated on: 2025-06-14

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