About Course
The Investment Appraisal course provides students with a comprehensive understanding of the financial theories and analytical techniques used to evaluate investments in productive assets. This course introduces the decision-making frameworks firms use to enhance long-term viability, profitability, and risk management in a constantly evolving financial environment.
Learners gain proficiency in key investment appraisal tools, understand the foundations of capital structure decisions, and develop the ability to interpret financial risk and return relationships within the broader financial management context of a firm.
Investment Appraisal — Overview, Rationale & Learning Outcomes
Rationale
The course equips students with the theoretical and practical tools needed to assess investment decisions effectively. It focuses on how firms evaluate opportunities, structure their financing, and manage risk, particularly within the context of modern financial markets and global economic dynamics.
- Understand financial theories relevant to investment appraisal and long-term corporate decision-making.
- Learn how firms apply investment appraisal methods to maximise viability and profitability.
- Develop essential analytical and decision-making skills within a corporate financial context.
Learning Outcomes
- Demonstrate understanding of finance and how investment decisions fit into broader financial management.
- Explain how investment and financing decisions relate to capital structure, tax liabilities, and profitability.
- Critically assess why firms choose specific capital structures and the associated risks and benefits.
- Discuss the structure of capital markets and how firms obtain financing.
- Evaluate corporate funding challenges in light of financial crises and identify mitigation strategies.
Indicative Content
- Capital structure decisions
- Savings, investments, and the financial system
- Risk and return relationships
- Investment decisions
- Investment & project appraisal techniques: IRR, MIRR, ARR, Payback
- Cash flow analysis
- Investment & acquisitions
- Leasing rationale and evaluation
- Risk management and uncertainty
- Feasibility studies and ranking investment projects by profitability and risk profile
Skills Development
- Data collection and quantitative analysis
- Financial decision-making skills
- Group collaboration and presentation abilities
- Time management for analytical and project-based tasks
Assessment Methods
Students complete an individual assignment consisting of both qualitative and quantitative questions. These tasks require application of concepts learned in lectures and seminars, including investment appraisal techniques and financial analysis.
Learning Methods
- Lectures explaining theoretical and practical aspects of financial appraisal
- Video presentations to support conceptual understanding
- Seminar classes for applied discussion and problem-solving
- Case study analysis
- Engagement with academic articles and technical notes
- Formative exercises and individual analytical tasks
Indicative Learning Resources
- Zhou Huizhen (1999). The Investment Project Evaluation, Dongbei University of Finance and Economics Press.
- Zhou Huizhen (2000). Investment Project Evaluation Case Study, Northeast University of Finance and Economics Press.
- Investment Project Feasibility Study and Case Application Notes (2002).
- Jane De (2002). Investment Project Appraisal, Shanghai University of Finance and Economics Press.
Other Recommended Readings & Technical Notes
- Modified Internal Rate of Return — Technical Note
- Risk of Uncertainty — Technical Note 01
- Risk Management: Why It Matters — Technical Note
- Gearing and CAPM (10/2009 & 11/2009)
- SA Technical Paper: The European Debt Crisis
- S.C. Savvides (1994), Risk Analysis in Investment Appraisal
- SA Technical: How to Tackle Exams — A Marker’s Perspective
Students are encouraged to read widely from business and management sections of major newspapers and journals for real-world insights into investment issues.
Student Ratings & Reviews
