NPV and IRR Techniques for CA / CFA / CPA Exams
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This course is about Tools and Techniques available for evaluating Business Investment Opportunities.
Yes! Every business takes decisions with regard to Investments in Projects. It may be starting a New Business, Expansion of Existing Business, Modernisation, Backward and Forward Integration, etc.
But, how those decisions are taken by the Business entities? What Financial factors are evaluated before taking those decisions?
This course explains all about.
There are various Capital Budgeting tools available which will evaluate Investment Opportunities and would tell us whether to take up or not to take up the projects and that process is called Capital Budgeting.
Capital budgeting is the process most companies use to authorize capital spending on long‐term projects and on other projects requiring significant investments of capital.
Capital budgeting is also concerned with the setting of criteria about which projects should receive investment funding to increase the value of the firm, and whether to finance that investment with equity or debt capital. Investments should be made on the basis of value-added to the future of the corporation.
Businesses should pursue all projects and opportunities that enhance shareholder value. However, because the amount of capital available at any given time for new projects is limited, management needs to use capital budgeting techniques to determine which projects will yield the most return over an applicable period of time.
Investment evaluation tools ranges from simple Pay Back Period, Accounting Rate of Return to cash discounting tools like NPV, IRR, MIRR, Profitability Index, etc.
The course has been structured in simple way, where in each and every techniques are explained followed by solving of case studies.
Topic covered in the course:
NPV can be described as the “difference amount" between the sums of discounted: cash inflows and cash outflows. It compares the present value of money today to the present value of money in the future, taking inflation and returns into account.
The (IRR) is defined as the discount rate that gives a NPV of zero. It is a commonly used measure of investment efficiency.
Need for Capital Budgeting:
Mandatory Disclosure regarding course contents:
The contents of this course will also be available in
a) Financial Management - A Complete Study
b) Accounting, Finance and Banking - A Comprehensive Study
courses, which are comprehensive in nature. If you have already purchased any of the above two courses, then you need purchase this course.
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|Section 1: Introduction to Capital Budgeting|
What is Capital BudgetingPreview
Capital Budgeting Process
Project Cash Flows
Types of Capital Investment Decisions
Principles for Measuring Project Cash Flows
Capital Budgeting Techniques
Case Study 1 on Measuring Cash Flows
Case Study 2 on Measuring Cash Flows
|Section 2: Pay back Period|
Introduction to Pay Back PeriodPreview
Pay back period example
Discounted Pay Back Period Method
Case Study on Pay Back Period Method
|Section 3: Accounting Rate of Return|
Accounting Rate of Return
|Section 4: NPV|
2 NPV Technique
3 Advantages and Disadvantages of NPV
Case Study on NPV
Case Study on NPV Ranking
3 Case Study on NPV (Cash Flows Derivation)
Case study on NPV of Different Projects
5 Case Study on NPV and Capital Rationing
|Section 5: IRR|
IRR Case Study with Interpolation
2 IRR Introduction
3 Advantages and Disadvantages of IRR
4 Modified IRR
Case study on 1 IRR
Case Study 2 IRR
Case Study 3 IRR ARR NPV and Ranking
Case Study on 4 IRR DPB PI and Ranking
Case Study on 5 PB IRR ARR NPV and Ranking
Case Study on 6 IRR Mutually Exclusive Projects and Reinvestment
Problem 7 NPV and IRR Suitability
|Section 6: Profitability Index|
1 Profitability IndexPreview
Case Study on Profitability Index
NPV Case Study
Equivalent Annual Cost CS
NPV Incremental Disc Rate CS
NPV Case Study on Tax Savings
NPV Case Study on Tax Savings 2
NPV CS (opportunity Cost)
Cash Flow Perspective
Aggregate Cash Flow Method
Incremental Cash Flow Method
NPV over Different Life
Project and Equity IRR
Replacement Analysis Case Study
Replacement Analysis Case Study2
Replacement Analysis Case Study3
Bonus Lecture - Discount Coupon Links for other Courses
I am a practicing Chartered Accountant with tonnes of passion for teaching.
I teach Financial Management & Strategic Financial Management for Chartered Accountancy, Cost and Management Accountancy and Company Secretary students in Ernakulam, India. I also hold Post Graduate Diploma in Business Administration in Finance from Symbiosis, Pune and Bachelors in Commerce, from Loyola College, Chennai.
I worked in State Bank of India as Assistant Vice President - Credit for a period of four years after which i started my Chartered Accountancy Practice. During the stint in State Bank of India, I worked on credit proposals of Mid Corporate Units and gained good experience in Financial Analysis, Risk Assessment, Viability Study, Evaluating business models, Project Finance, Working Capital Management, etc.
I conduct work shops for Entrepreneurs, Chartered Accountancy / Cost and Management Accountancy Students on the topics like Project Finance, Credit Risk Assessment, Entrepreneurship Development, Finance for Non Finance Executives, etc.
I love teaching and i want fundamentals of accounting and finance to reach students and so i am here.