Corp Finance #12 Capital Budgeting & Investment Risk Tools

Name: Corp Finance #12 Capital Budgeting & Investment Risk Tools
Rating: 4.6 (121 reviews)

Learn how to use risk management tools when making capital budgeting and investment decisions

Highest Rated

Created byRobert (Bob) Steele

Last updated 9/2024

English

English [Auto],Korean [Auto],

What you'll learn

List and define risk management tools that relate to capital budgeting and investment decisions
Explain the concept of population mean and expected value
Discuss the term population variance and how it can apply to capital budgeting decisions
Describe standard deviation and how it can apply to capital budgeting decisions
Explain the concept of coefficient of variation and how it can be used to measure risk in the capital budgeting decision making process
Define simulation models and how they can be useful in capital budgeting decisions
Discuss how capital budgeting decisions should take into consideration the overall investment portfolio

Course content

3 sections • 27 lectures • 5h 22m total length

1310 Capital Budget Risk Overview7:27
Assess capital budgeting risk using time value of money tools like net present value and internal rate of return, comparing projects by expected value and risk.
1315 Measure of Risk12:19
Explore how capital budgeting balances expected value and risk by using mean, population variance, standard deviation, and coefficient of variation; practice problems clarify ebita as a stock risk measure.
1320 Risk & Discount Rates6:21
Adjust discount rates to reflect project risk when evaluating capital budgeting decisions. Apply risk-based cost of capital and hurdle rates, and compare net present value and internal rate of return.
1325 Simulation Models5:12
Explore how Monte Carlo simulation models forecast capital budgeting outcomes using NPV and IRR, handling uncertain future cash flows with random inputs and what-if analyses.
1330 Investment Impact on Portfolio7:30
Explore how long-term capital projects affect portfolios, emphasizing diversification, correlation, and risk reduction to optimize return for a given risk level.

OneNote Resource
1300 Standard Deviation, Variance, & Coefficient of Variation22:06
Explore standard deviation, variance, and coefficient of variation through data sets, mean calculations, and population versus sample concepts, using one note and Excel for visual analysis.
1312 Standard Deviation, Variance, & Coefficient of Variation15:38
Learn to compute standard deviation, variance, and coefficient of variation to project future outcomes, using an advertising campaign with expected value and inventory implications.
1313 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 213:01
Learn to compute expected value, population variance, standard deviation, and coefficient of variation from a probabilistic sales scenario, using percent weights to inform budgeting, inventory, and production decisions.
1314 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 311:56
Apply expected value, standard deviation, and coefficient of variation to a corporate finance budgeting scenario. Calculate mean, variance, and coefficient of variation for forecasting inventory needs.
1316 Coefficient of Variation Three Investment Alternatives13:54
Compare three investment alternatives using the coefficient of variation to evaluate expected value and risk, projecting returns across not good, good, and very good scenarios.
1318 Coefficient of Variation & Investment Risk7:29
Apply the coefficient of variation to compare investment risk using expected return and standard deviation. Rank options by risk and assess whether higher returns justify higher risk in investment decisions.
1322 Coefficient of variation Two Project Alternatives11:06
Compare two project alternatives using the coefficient of variation, linking variance, standard deviation, and expected value from cash flow probabilities.
1326 Expected Value & Net Present Value Even Yearly Cash Flows12:47
Explore capital budgeting using expected value and net present value with even five-year cash inflows, and evaluate project viability at a 14% cost of capital.
1328 Expected Value & Coefficient of Variation Investment Options11:31
Compare two investment options using expected value and coefficient of variation to balance return and risk. Learn to compute variance and standard deviation for portfolio-level risk assessment.
1329 Expected Value in Capital Budgeting Decision Uneven Payments8:32
Analyze capital budgeting decisions with expected value under uneven payments, applying net present value and internal rate of return to compare scenarios.
1331 Expected Value for Multiple Years & NPV17:40
Apply capital budgeting with expected value across multiple years and net present value calculations. Model cash flows under low, average, and high scenarios, discount to present value, and assess variation.

1300 Standard Deviation, Variance, & Coefficient of Variation25:33
Learn to calculate and interpret standard deviation, variance, and coefficient of variation with Excel, including population data, mean, practice problems, and cross-dataset comparisons.
1312 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 114:47
Apply expected value, standard deviation, and coefficient of variation to future projections using an Excel practice problem, linking probability scenarios to sales outcomes.
1313 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 213:51
Apply Excel to calculate expected value, standard deviation, and coefficient of variation for capital budgeting scenarios using forecasted outcomes and probabilities in corporate finance.
1314 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 312:47
Compute the expected value, standard deviation, and coefficient of variation for three outcomes—bad, good, very good—using Excel with probabilities 30%, 50%, and 20%.
1316 Coefficient of Variation Three Investment Alternatives16:12
Explore three investment alternatives using the coefficient of variation in Excel, calculating expected value, variance, and standard deviation to assess risk and compare returns.
1318 Coefficient of Variation & Investment Risk6:04
Compute the coefficient of variation as standard deviation divided by the expected return to compare five investment options on risk and return using Excel.
1322 Expected Value & Net Present Value Even Yearly cash Flows11:19
Use Excel to analyze capital budgeting with expected value and net present value for an investment with even yearly inflows over five years, and estimate IRR to compare projects.
1328 Expected Value & Coefficient of Variation Investment Options13:04
Compare investment options using expected value and the coefficient of variation in an Excel-based practice problem, weighing returns, risk, and portfolio fit.
1329 Expected Value in Capital Budgeting Decision Uneven Payments7:33
Use excel to calculate the expected value and net present value for capital budgeting with uneven payments, using scenarios, probabilities, inflows, and upfront outflows, and the internal rate of return.
1331 Expected Value for Multiple Years & NPV16:47
Apply capital budgeting techniques in Excel to compute expected value and net present value from year-by-year cash flows, including upfront outflows and later inflows.

Requirements

Basic understanding of corporate finance concepts

Description

This course will cover the use of risk assessment tools as they relate to capital budgeting and investment decisions and how to use them.

We will include many example problems, both in the format of presentations and Excel worksheet problems. The Excel worksheet presentations will include a downloadable Excel workbook with at least two tabs, one with the answer, the second with a preformatted worksheet that can be completed in a step-by-step process along with the instructional videos.

When making long term investment and capital budgeting decisions we need to consider the time value of money. The decision-making process will estimate future cash flows and then apply our time value of money concepts to those future cash flows.

This course will take a step back in the process, providing tools to best estimate the future cash flows. To make the best decision we will need to estimate what the future cash flows will be and the likelihood of those cash flows, giving us numbers we can apply present value concepts to while also taking into consideration risk.

To help measure risk, the course will use statistical tools including the population mean, population variance, standard deviation, and coefficient of variation.

We will provide a quick overview of these statistical concepts in general and then consider how we can apply them to measuring risk for investment and capital budgeting decisions.

Who this course is for:

Business students
Business professionals

Corp Finance #12 Capital Budgeting & Investment Risk Tools

What you'll learn

Explore related topics

Course content

Introduction5 lectures • 39min

Practice Probs. - Capital Budgeting Risk Assessment12 lectures • 2hr 26min

Excel Probs. - Capital Budgeting Risk Assessment10 lectures • 2hr 18min

Requirements

Description

Who this course is for: