Unit convenor and teaching staff |
Unit convenor and teaching staff
Unit Convenor
Timothy Kyng
Contact via timothy.kyng@mq.edu.au
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Credit points |
Credit points
4
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Prerequisites |
Prerequisites
4cp in ACCG or ACST or BUS or ECON or MKTG units at 600 level
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Corequisites |
Corequisites
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Co-badged status |
Co-badged status
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Unit description |
Unit description
This unit covers established methods for the valuation and appraisal of investment projects and related financial decisions. It also covers the new 'real options approach' to investment appraisal, including the application of exotic options pricing formulae to real options using Microsoft Excel to build financial models, and introducing students to Visual Basic/Excel macros for financial modelling.
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Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates
On successful completion of this unit, you will be able to:
Name | Weighting | Due |
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4. Final Examination | 50% | Examination period |
3. Case Study | 10% | Week 12 |
1. Assignment | 20% | Week 7 |
2. Assignment | 20% | Week 11 |
Due: Examination period
Weighting: 50%
Submission
THE EXAM WILL BE CONDUCTED EITHER DURING THE NORMAL EXAMINATION PERIOD OR JUST BEFORE IT. YOU MUST ATTEND AND DO THE EXAM IN THE NORMAL WAY
Extension
IF YOU DON'T ATTEND THE FINAL EXAM YOU WILL FAIL THE UNIT. IF YOU CAN'T ATTEND THE EXAM DUE TO ILLNESS OR MISADVENTURE YOU CAN APPLY FOR SPECIAL CONSIDERATION, BUT YOU MUST PROVIDE SUPPORTING EVIDENCE TO EXPLAIN WHY YOU DIDN'T ATTEND.
Penalties
IF YOU DON'T ATTEND THE FINAL EXAM AND YOU ARE GRANTED SPECIAL CONSIDERATION, YOU MAY HAVE TO SIT A SUPPLEMENTARY EXAM. OTHERWISE YOU WOULD FAIL THE UNIT.
Due: Week 12
Weighting: 10%
Submission
SUBMIT YOUR WORD AND EXCEL FILES ELECTRONICALLY (METHOD TO BE ADVISED)
Extension
No extensions will be granted. Late tasks will be accepted up to 72* hours after the submission deadline. There will be a deduction of 20%* of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission – 40% penalty). This penalty does not apply for cases in which an application for special consideration is made and approved.
Due: Week 7
Weighting: 20%
Submission
SUBMIT YOUR WORD AND EXCEL FILES ELECTRONICALLY (METHOD TO BE ADVISED)
Extension
No extensions will be granted. Late tasks will be accepted up to 72* hours after the submission deadline. There will be a deduction of 20%* of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission – 40% penalty). This penalty does not apply for cases in which an application for special consideration is made and approved.
Due: Week 11
Weighting: 20%
Submission
SUBMIT YOUR WORD AND EXCEL FILES ELECTRONICALLY (METHOD TO BE ADVISED)
Extension
No extensions will be granted. Late tasks will be accepted up to 72* hours after the submission deadline. There will be a deduction of 20%* of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission – 40% penalty). This penalty does not apply for cases in which an application for special consideration is made and approved.
Classes
For campus students:
For distance students:
Required and Recommended Texts and/or Materials Prescribed
Textbooks:
There is no specific required text for this unit. However the following books are useful references:
The recommended texts are not available from the Macquarie University Co-op Bookshop.
The recommended texts are not available in the Macquarie Library.
Technology Used and Required
Unit Web Page
Course material is available on the learning management system (iLearn)
The web page for this unit can be found at: [URL to be advised]
Teaching and Learning Activities
Changes since last offering
Date |
Topic |
Week 1
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(1) Basic Financial mathematics: Interest rates, present value, future value, annuities, perpetuities, bonds; (2) Introduction to excel |
Week 2
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(1) Introduction to capital budgeting. (2) Further topics in financial mathematics: Present value and future value under varying interest rates, loans and leases, loan repayment schedules |
Week 3
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(1) Project cashflows and methods for their estimation. (2) Examples of asset expansion, retirement and replacement projects |
Week 4
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(1) Elementary methods of forecasting. (2) Matrix algebra and implementation in excel |
Week 5
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(1) Analysis of leasing decisions, lease vs buy, (2) leveraged leases and their analysis using alternative measures of return. |
Week 6
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(1) Project evaluation methods: npv, irr, pp, arr. Application to asset replacement, retirement and expansion projects. (2) Methods for choosing the discount rate for npv analysis. |
Mid term break
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14 April – 25 April |
Week 7
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(1) Project evaluation methods: npv, irr, pp, arr. Application to asset replacement, retirement and expansion projects. (2) Methods for choosing the discount rate for npv analysis. |
Week 8
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(1) Methods for estimating model parameters (2) Sensitivity and breakeven analysis: implementation in excel |
Week 9
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(1) Introduction to options and valuation via the black scholes model, (2) monte carlo simulation modelling for stock prices and option valuation |
Week 10
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Binomial option pricing methods and implementation in excel |
Week 11
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The flaws in the traditional methods of investment appraisal and introduction to the real options approach to valuation of projects with flexibility |
Week 12
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More on real options analysis: parameter estimation, embedded exotic options, application of exotic option valuation theory to real options examples |
Week 13
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Revision / case studies |
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