Capital budgeting is the process of deciding whether to undertake an investment project. In this module, you will study the three most popular capital budgeting techniques in practice: Net present value (NPV), Payback period, and Internal rate of return (IRR).
Project Analysis
In this module, you will learn how to estimate project cash flows using Excel. Overall, project cash flow analysis is similar to firm-level cash flow analysis. However, there also exist some unique features of a project cash flow analysis, which requires us to study the project cash flow principles.
Issues in Capital Budgeting
Sometimes you have to evaluate multiple projects at a time. In this module, you will learn how to choose the best project among multiple projects. We will also discuss various important issues in NPV and IRR techniques. Finally, we discuss the fundamental principle in choosing the discount rate.
Real Options in Business Projects
We continue to study analyzing business projects, but the difference in this module is that now we consider the value of "real options" embedded in the project. You will learn how to estimate the project's value by using the decision tree approach or the Black-Scholes option pricing model.