Economic Evaluation in a Regulated Environment
Course Description
Since companies have limited resources it is critical that they implement sound economic evaluation techniques to help them choose between projects competing for the same resources. It is extremely important that marketing plans be based around projects that maximize profitability to the company. This course develops skill sets necessary to work with financial analysts to evaluate alternative proposals. It focuses on how evaluations should be performed and what costs are appropriate to include in the evaluation process. The course is designed as a full-day class and would include either one or two instructors.
Learning Objectives
After this course students will be able to:
- Understand the difference between marginal and embedded cost
- Identify the relevant costs that should be included in a economic evaluation
- Perform basic revenue requirement and Net Present Value calculations
- Communicate effectively with finance and provide leadership with respect to project evaluation
1. Basic Regulatory Economics
a. Marginal Cost of Service
b. Embedded Cost of Service
2. Determination of Revenue Requirements
a. Description
b. Example Calculations
c. Student Exercises
3. Time Value of Money
a. Description
b. Example Calculations
c. Student Exercises
4. Present Value Revenue Requirements
a. Description
b. Example Calculations
c. Student Exercises
5. Determination of Cash Flow
a. Description
b. Example Calculations
c. Student Exercises
6. Discounted Cash Flow Calculations
a. Description
b. Example Calculations
c. Student Exercises
7. Other Methodologies
a. Simple Payback
b. Discounted Payback
c. Internal Rate of Return
8. Fundamentals of Decision Making
