UNIVERSITY OF NATIONAL AND WORLD ECONOMY
COURSE TITLE: FIRM’S INVETSMENTS
SEMESTER: (WINTER or SUMMER)
TEACHER’S NAME: Prof. D.Sc. Ivan Stoilov Georgiev,
Assist. Prof. Dr. Dimitar Marchev Blagoev
OFFICE: 4036 and 4034
E-MAIL: [email protected], [email protected]
1. ANNOTATION
Object of attention in the course of "Firm Investments" is the modern concepts;
approaches and methods for justify the investment decisions of the firms. In the course are
clarified the basic concepts of investment management at company level; methodological
approach and schedule for the development of an investment strategy of the companies.
Covered are general issues of capital budgeting and the content of work on the development
of large investment projects.
The methodology for evaluation and selection of investment projects is considered.
Attention is paid to the portfolio management of investments. The last two topics are
considered organizational-managerial issues of project implementation and control of the
investment process.
The practical focus of the course is devoted to methodological issues for developing
investment strategies, development, evaluation and selection of investment projects. It relies
heavily on independent work of students and their active participation in discussions and
work on developing a real model of investment project.
2. LANGUAGE OF TEACHING
ENGLISH
3. COURSE CONTENT (TOPICS)
1. Investments and investors. The term investments. Classification of investments.
Investors. Principles of rational investor behavior. Specifics of the firm’s investments and
principles of their management.
2. Investments in real assets. Investment process in narrow and broad sense. Single
investment process. Investment process in the company as a whole. The process of
investing in securities.
3. The concept of Net Present Value under conditions of developing markets. Net Present
Value as a basis for investment decision making. Implementation of modern concepts of
investment analysis in developing markets.
4. Investment strategy of the firm. Approach and schedule of development, evaluation and
selection of investment strategy. Investment strategy formulation.
5. Capital budgeting in the firms. Scouting for ideas, preliminary assessment and screening
of investment ideas. Individual (single) investment projects – definition, classification,
life cycle of projects, scheme of the process of organizing and making investment project.
Preparation of individual investment projects.
6. Formulation of basic parameters (characteristics) of an investment project: choice of
technology, determination of production program, production (plant) capacity, location
and site selection, project alternatives, period of comparison of mutually exclusive
alternatives.
UNIVERSITY OF NATIONAL AND WORLD ECONOMY
7. Calculation of investments, costs and net income (cash flows) for a project. Total
investment costs – basic components, methods for calculating the cost of machinery, and
equipment, civil engineering works etc.
8. Financing of investment projects. Source of financing. Cost of capital provided by
various sources. Calculating the cost of servicing the source of capital. Weighted Average
Cost of Capital for new, rebuild and extended firms.
9. Calculation of cash flows of the project. Principles, possible schemes. The problem of
choice of an appropriate discount rate. Discounting and compounding of cash flows.
10. Economic appraisal of investment projects. Basic methods: Net Present Value (NPV),
Internal Rate of Return (IRR), Pay Back Period (PBP), Profitability Index (PI), etc.
11. Investment project appraisal from ecological, strategic and social point of view.
12. Risk definition and risk analysis. Analysis and assessment of investment risk. Methods
for identifying, analyzing and measuring risk: sensitivity analysis, method of standard
deviation (probability analysis), simulation, method of break-even point etc. Risk
analysis in particular projects.
13. Ranking of mutually exclusive investment projects. Methodological and methodical
problems of ranking on a multidimensional basis.
14. Appraisal and choice of portfolio of investment projects. Preparation, evaluation and
selection of investment projects portfolio.
15. Implementation of investment projects. Organization of the design. Practical problems of
financing, organization and implementation of investment projects.
16. Control of investment projects. Post audit review of the capital budgeting process.
17. The real option approach to investment decision making – a new concept for making
investment decisions.
4. METHODS OF TEACHING
The course includes lectures, developing a real model of investment project, and
discussion on part of the lectures.
The resources necessary for training are board, computer and multimedia projector.
Students are divided into small groups (up to 4 people) to develop a model of investment
project to build a new company, under the technical guidance of the teacher. Evaluation of the project
is using Excel or software COMFAR III Expert.
5. LEARNING OUTCOMES
As a result of the course "Firm Investments" are expected the following benefits to the
students. Knowledge about:
 investment as a major factor for a successful business and achieve the strategic
objectives of business organizations;
 modern concepts of investment management;
 planning and organization of investment activities in business organizations;
 development and evaluation of investment projects;
 content and performance of the organization and control of the investment
process in companies.
Ability:
 to apply concepts of investment management in the development of company
investment strategies;
 to evaluation and selection of investment projects using professional software.
UNIVERSITY OF NATIONAL AND WORLD ECONOMY
6. ASSESTMENT METHODS
The final grade is in six-level scale, the minimum score for successful completion of
the course is "Satisfactory 3". Correlated with ECTS credits the comparability of scores is as
follows:
Excellent (6)
Very good (5) Good (4)
Satisfactory Poor (2)
(3)
А (more than 80 %)
В (71-80%)
С (61-70 %)
D (51-60 %)
According to the curriculum are awarded six credits.
Е (0 - 50%)
No credits
The final grade is formed by two intermediate tests during the semester - 30% and the
final exam (individual work: defence of developed investment project) - 70%.
Comprehensive final evaluation is obtained as a sum of the scores on separate
forming and their weights.
7. REFERENCES (MANDATORY AND RECOMMENDED)
MANDATORY
1. Georgiev, Iv., N. Shetrev, D. Blagoev, K. Blagoev, Economics of Enterprise,
UNWE Publishing Complex, Sofia, 2012;
2. A Guide to the Management Body of Knowledge (PMBOK Guide) – 4th ed.,
Project Management Institute, 2008;
3. Behrens, W., P.M. Havranek, Manual for the Preparation of Industrial Feasibility
Studies. United Nations Industrial Development Organization, Vienna, 1995;
4. Jones, Ch., Investments, principles and Concepts, Eleventh Edition, John Wiley &
Sons Inc., 2010;
5. Bodie, Z., A. Kane, A. Marcus, Investments, Seventh Edition, McGraw-Hill, 2008;
6. Chapman, Ch., St. Ward, Project Risk Management – Processes, Techniques and
Insights, John Wiley & Sons Inc., 1997;
RECOMMENDED
7. Tarantino, A., D. Carnanskas, Risk Management in Finance – Six Sigma and Other
Next-Generation Techniques, John Wiley & Sons Inc., 2009;
8. Hertz, P., H. Thomas, Risk Analysis and Its Application, N.Y., John Wiley, 1993;
9. Huikku, J., Post-Completion Auditing of Capital Investments and Organization
Learning (dissertation), Helsinki School of Economics, HSE Print, 2009,
http://www.epub.lib.aalto.fi/pdf.diss/a347.pdf;
10. Pritchard, C., Risk Management – Concepts and Guidance, ESI International,
Arlington, Virginia, 2001.