Duration: 3 hours per week - 13 weeks [ECTS: 6]

Course outline

1. Time value of money
2. Fisher model for investment and consumption decisions
3. Investment criteria under certainty: a) Traditional criteria Payback period, Average Rate of Return; b) Discounted cash flow methods: net present value, internal rate of return benefit cost ratio
4. Special investment decisions: Annual Equivalent Cost, Annual equivalent net cash flows, leasing vs. traditional loans
5. Cash flows, treating depreciation, taxes and inflation
6. Socioeconomic methods of investment appraisal
7. Maximization of social surplus
8. Capital market imperfections, Shadow versus market prices
9. Measuring social costs and social benefits of a project
10. Investment criteria under uncertainty: traditional methods, maximization of expected utility and the capital asset pricing model on investment decisions. Sensitivity analysis