Mastery in investment appraisal techniques
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Brief Introduction
PB period, ARR, NPV, IRR, annuity & perpetuity, non-annual receipts, PI & non-financial factors in capital budgetingDescription
You will learn everything you need to know in investment appraisal fundamentals. As an investor, your perspectives on investment alternatives will radically change after completing this course. You will be able to choose the best projects for your precious funds. As a student, you will get to know all the basic investment appraisal techniques which could appear in your exams. I can assure you that this course will give you the maximum return for your investment on this programme by making you the master in investment appraisal techniques.
At the completion of this course, you will be a master in following investment appraisal techniques.
Traditional Payback Period
Accounting Rate of Return / Average Rate of Return (ARR)
Net Present Value (NPV)
Internal Rate of Return (IRR)
Discounted Payback Period
In addition to these techniques, you will learn how to incorporate the following aspects in investment appraisals.
Annuity and Perpetuity
Non-annual cashflows
Capital rationing and Profitability Index (PI)
Non-financial factors
Designed to make you an expert
You will get concept explanation animation videos, theory explanation handouts, question sets, answer keys and answer explanation videos for each topic. There are more than 70 practice questions with answer explanation. All the theory explanation handouts, question sets and answer keys have been given in a downloadable format to make sure you get maximum out of it.
If you want to be a master in investment appraisal techniques, you should follow the following steps.
Step 01: Watch the concept explanation video
Step 02: Read the theory explanation handout
Step 03: Try the relevant question set
Step 04: If you feel comfortable with the questions, check your answers with the recommended answers. If not, go back and watch the video again.
Step 05: Watch the answer explanation video to consolidate your knowledge (answer explanation videos have been given for the selected challenging questions only)
Bonus step: Watch the videos explaining the application of Excel formulae to calculate NPV and IRR.
What you will get in each section
Section 01: Introduction to the course
The structure of the course is explained with few ground rules to follow.
Section 02: Introduction to investment appraisal
Importance of investment appraisal
Classification of investment appraisal techniques
Section 03: Payback period
Importance of the traditional payback period
How to calculate the payback period
How to calculate the payback period when you have many investments in different years
Pros and cons of payback period method
Section 04: Average Rate of Return / Accounting Rate of Return (ARR)
Key equations to calculate the ARR
How to calculate ARRPros and cons of the ARR technique
Section 05: Time value of money
Why money has a time value
The logic behind calculating the present value from the future value
The meaning of cost of capital / discount rate
How to tackle the deferred and advanced cashflows
Section 06: Net Present Value (NPV)
How to calculate NPV using the formula
How to calculate NPV using the present value table
Pros and cons of NPV method
Section 07: Annuity and Perpetuity
The concept of annuity
How to use annuity techniques in NPV calculation
Annuity techniques for the advanced and deferred cashflows
Annuity techniques for the constant cashflows in the middle of a project
How to use perpetuity in NPV calculation
Perpetuity techniques for advanced and deferred cashflows
Section 08: NPV with non-annual cashflows
How to convert the annual cost of capital to a non-annual period
How to incorporate monthly, quarterly and bi-annum cashflows in NPV calculations
How to apply annuity techniques for non-annual cashflows
Section 09: A comprehensive NPV calculation
An NPV calculation with non-annual cashflows, annuity techniques and irrelevant cost
Section 10: Internal Rate of Return (IRR)
Simplified explanation on the concept of IRR
How to calculate IRR
Pros and cons of the IRR technique
Section 11: Discounted Payback Period
How to calculate discounted payback period
Section 12: Capital Rationing and Profitability Index (PI)
The concept of capital rationing and the underlying assumptions
Calculating the PI and ranking the projects according to the PI
How to allocated the limited funds among different projects
Section 13: Calculating NPV and IRR using the Excel formulae
How to calculate NPV using the inbuilt Excel formula
How to calculate IRR using the inbuilt Excel formula
Section 14: Non-financial factors in investment appraisal
The non-financial factors which could affect our investment decisions
The importance of considering the non-financial factors when making investment decisions
Requirements
- Requirements
- No prior knowledge required. All the concepts will be explained from the elementary level.
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