48805 - Economics and Valuation (6 Credits)

Learning outcomes

Basic knowledge of investment analysis and related methods. Basic knowledge of real estate analysis and related methods.

Course contents

FIRST PART OF THE COURSE

a.       The concept of investment and different kinds of investments

b.      Capitalization and discounting back: elements of financial mathematics.

c.       Determining the value of an investment: the Net Present Value.

d.      Investment valuation: steps of the decision procedure.

e.       Basic concepts to evaluate an investment: the expected return rate, the economic life of a project, the relevant cash flows.

f.        Problems in assessing cash flows.

g.       Other methods to gain investment valuation: internal return rate, average pay-back time, the average accounting profit.

h.       Investment valuation within the firm schedule.

SECOND PART OF THE COURSE

The meaning of Real Estate valuation Introduction to the basic principles - Procedures of real estate appraisal – Ordinary use - Italian real estate market - The Valuation Report (appraisal report, appraisal expertise) – The appraisal problem - Property (being valued) identifications. Economic definitions – Application – Market prices and valuations – Statistical sources – Market analysis- Property measurements - Segmentation of the Real Estate Market – Examples – Advantages and disadvantages of the appraisal method. Economic definitions – Construction and reconstruction costs – The technical costs – The process of depreciation - The appraisal of the land value - Statistical sources – Market analysis – Construction plan – Urbanisation costs – Examples – Advantages and disadvantages of the appraisal methodIncome Approach. Economic definitions – Application – Net income – The capitalization rate – Subjective method, comparative approach, opportunity cost  – Examples – Advantages and disadvantages of the appraisal method

Readings/Bibliography

Required
Richard A. Brealey, Stewart C. Myers, Sandro Sandri, Capital budgeting 2/ed, settembre 2003, cap. 1, 2, 3, 5, 6, 7  OR Richard A. Brealey, Stewart C. Myers, Sandro Sandri, Capital budgeting 3/ed, 2007, cap. 2, 3, 5, 6, 7 

 M. Orefice, Estimo civile, Vol. secondo, Utet, Torino, 1995Martin Hoesli, Bernard Thion, Immobilier et gestion de patrimoine – Théorie et pratiques financières – Ed Economica 1994 – Rue Héricart 49 – Paris

Claudio Cacciamani, Il rischio immmobiliare, 2003 EGEA SpA.

Teaching methods

Class lectures and exercises

Assessment methods

Written exam. Dates determined according to the School's teaching calendar and available through Uniwex.

Teaching tools

Lectures and class exercises

Office hours

See the website of Maurizio Sobrero

See the website of Stefano Stanzani