FINC20010 Capital Budgeting

This course explains the financial appraisal of large scale, long-term investment projects. Project evaluation criteria, such as NPV and IRR, are explained and applied to many different industrial projects, property investments and international investments. Topics include: an overview of capital budgeting process, identification of relevant cash flows for project analysis, use of quantitative and qualitative methods for forecasting project cash flows, various project evaluation techniques and their relative advantages and disadvantages, application of project evaluation techniques for ranking projects with size disparities, cash-flow timing pattern disparities and unequal lives, asset expansion and asset replacement investment decisions, project retirement, property investment analysis and multinational capital budgeting. Application of linear programming to handle resource constraints is demonstrated intuitively with examples and tableaux using Excel rather than in terms of algebra. Risk analysis is extensively covered by the use of risk adjusted discount rate, certainty equivalent, sensitivity analysis and simulation. All the calculations are extensively supported by Excel spreadsheet workbooks on the Web.