Investment Appraisal

The aim of the course is the theoretical and practical training of students on the subject of Investment Appraisal. The course is structured in two parts: In the first part of the course, special emphasis is given to the understanding of the business investment decision-making process under conditions of certainty. More specifically, an introduction is made to the decision-making process and the time value of money. Then Present and Future Value, Annuity, Growing Annuity and Perpetuity are introduced, using pricing of shares and bonds as case studies. Accordingly, the main criteria for investment appraisal are presented, namely the Net Present Value (NPV) criterion, the Internal Rate of Return (IRR), the Payback Period, the Payback Discount, the Profitability Index and the Book Value Criterion. Accordingly, emphasis is placed on cash flow management interest and amortization, depreciation, residual value and inflation as major issues on investment decisions. Then, specific investment decisions are analyzed (such as lease or loan) Finally, a comparative presentation of the Financial and the Socio-Economic Investment Appraisal is given. The second part of the course deals in detail with the decision-making process under conditions of uncertainty. More specifically, the course delves into the concept of Financial Market Efficiency, distinguishing its basic forms, while analyzing the consequences of market effectiveness and their importance in their smooth and unseen operation, focusing on empirical ways of measuring market efficiency and on the use of Behavioral Finance. At the same time, the capital markets - primary and secondary - are analyzed together with the financial instruments used in them. Special emphasis is on analyzing alternative uncertain conditions using probabilities and other statistical measures such as arithmetic mean, standard deviation, variance and coefficient of variability. In addition, the Theories of Capital Asset Evaluation are analyzed, placing particular emphasis on the Capital Asset Valuation Model (CAPM), the CAPM Consumption Model (C-CAPM), as well as the Compensatory Valuation Model (APT), resulting also into a comparative analysis. Accordingly, the use of behavioral economics in investment appraisal and on market effectiveness is presented together with a comparison of Scenario Use vs traditional Investment Appraisal methods. Finally, impact investing is presented structured as follows: first, the basic concepts related to sustainability are presented and explained, as well as the historical background that led to its emergence as a global policy priority. Next, the financial resources provided at the government level to achieve it are presented and critically commented on, as well as the most popular new types of bonds created to finance development and sustainability. This is followed by a presentation of how sustainability is measured at the firm level, i.e., ESG criteria, and then the usefulness of ESG criteria for evaluating firms and investment decisions, followed by a discussion of ethical and impact investment practices. This is followed by a critical review of the Greek reality regarding the contribution of the private sector to the achievement of the sustainable development objective in the light of the adoption of ESG criteria, as well as of impact investments, and finally, the conclusions drawn are summarized. E-class is used. A mixed evaluation system is applied, comprising of a project/essay assignment accompanied by classroom presentation