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Module

ECO2013 : Economic Evaluation and Investment

  • Offered for Year: 2019/20
  • Module Leader(s): Dr Jytte Seested Nielsen
  • Demonstrator: Dr Smriti Sharma
  • Lecturer: Dr Barbara Eberth
  • Owning School: Newcastle University Business School
  • Teaching Location: Newcastle City Campus
Semesters
Semester 1 Credit Value: 10
Semester 2 Credit Value: 10
ECTS Credits: 10.0

Aims

To provide students with the theoretical and methodological skills necessary to conduct policy and project appraisals, covering both private sector investment appraisal and public sector social cost-benefit analysis.

The module is concerned with the economic and financial appraisal of projects that are used in both private sectors and public sectors to examine whether investments are worthwhile or not. The module examines the methods used to appraise projects and considers the circumstances and difficulties that arise in applying these. In the case of the economic appraisal, or Cost-Benefit Analysis as it is known, this module covers the underlying theory of social decision-making for evaluating the welfare economic consequences of econonomic policies and projects. Cost Benefit Analysis is applied to evaluate initiatives within health, environmental, transport and natural resource policy. Often project benefits include non-market goods, and this module addresses the issues that arise when trying to estimate the total economic benefits and costs of society as a whole from a given project.

Outline Of Syllabus

The module starts with the basic notions underlying economic appraisal of projects. Thereby students get a common background before more advanced material is introduced and discussed. Throughout the module examples and cases are used to illustrate the material. The module included the following topics:

1. Dividends
2. Discounting, valuation of dividend streams, net present values
3. Welfare theoretic background of a Cost-Benefit analysis
4. Economic Evaluation of strategies for projects
5. Time horizon and choice of social discount factor
6. Estimating costs
7. Valuing benefits; revealed preference methods (hedonic method and Travel Cost Method)
8. Valuing benefits; stated preference methods (Contingent Valuation)
9. Under certainty dividends and valuation. Sensitivity analyses in economic evaluation
10. Possibilities or real options in projects
11. Economic evaluation of real option and strategies for real options
12. Modelling projects and critical reflection on methods

Teaching Methods

Teaching Activities
Category Activity Number Length Student Hours Comment
Guided Independent StudyAssessment preparation and completion164:0064:00N/A
Scheduled Learning And Teaching ActivitiesLecture152:0030:00N/A
Guided Independent StudyDirected research and reading150:0050:00N/A
Scheduled Learning And Teaching ActivitiesSmall group teaching61:006:00N/A
Guided Independent StudyIndependent study150:0050:00N/A
Total200:00
Teaching Rationale And Relationship

The lecture slots are intended to aid students to learn concepts, methods and applications. Seminars are intended to give hands-on experience of the material of the module.

The individual supervision time allows students to discuss individual research topics one-to-one with their supervisor.

Assessment Methods

The format of resits will be determined by the Board of Examiners

Exams
Description Length Semester When Set Percentage Comment
Written Examination1201A60N/A
Other Assessment
Description Semester When Set Percentage Comment
Prof skill assessmnt2M40Group presentations - groups of 3 to 4 students. Each student must present to up to 10 minutes
Formative Assessments
Description Semester When Set Comment
Prob solv exercises1MSeminar questions provided
Assessment Rationale And Relationship

The final mark will take into account each of the elements. The written exam will provide evidence of understanding of concepts and methods. The oral presentations will provide evidence of being able to critically use the material on applications.

Reading Lists

Timetable