Steps in Capital Budgeting

8/18/00

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Table of Contents

Steps in Capital Budgeting

Basic Framework for Decisions

An Example of Mutually Exclusive Projects

Normal Cash Flow projects

Rationale for the NPV Method

Two Simple Projects

Calculator Solution for Project L

Modified IRR (MIRR)

Chapter 12 - Cash Flow Estimation

Net Investment Outlay at t = 0 (000s)

Net Terminal Cash Flow at t = 4 (000s)

What if you terminate a project before the asset is fully depreciated?

Project S with Replication:

Chapter 13 - Risk Analysis & Real Options

Risk Analysis & Types of Risk

How is each type of risk used?

What is sensitivity analysis?

What is scenario analysis?

What is a simulation analysis?

Summary View of Risk Analysis

Project Risk, Beta & Cost of capital

More on Real Options

Author: Siv Krishnan

Email: sivarama@cameron.edu

Home Page: www.cameron.edu/~sivarama

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