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

What you will 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

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.

English

Language

Content

Introduction

1310 Capital Budget Risk Overview

1315 Measure of Risk

1320 Risk & Discount Rates

1325 Simulation Models

1330 Investment Impact on Portfolio

Practice Probs. – Capital Budgeting Risk Assessment

1300 Standard Deviation, Variance, & Coefficient of Variation

1312 Standard Deviation, Variance, & Coefficient of Variation


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1313 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 2

1314 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 3

1316 Coefficient of Variation Three Investment Alternatives

1318 Coefficient of Variation & Investment Risk

1322 Coefficient of variation Two Project Alternatives

1326 Expected Value & Net Present Value Even Yearly Cash Flows

1328 Expected Value & Coefficient of Variation Investment Options

1329 Expected Value in Capital Budgeting Decision Uneven Payments

1331 Expected Value for Multiple Years & NPV

Excel Probs. – Capital Budgeting Risk Assessment

1300 Standard Deviation, Variance, & Coefficient of Variation

1312 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 1

1313 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 2

1314 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 3

1316 Coefficient of Variation Three Investment Alternatives

1318 Coefficient of Variation & Investment Risk

1322 Expected Value & Net Present Value Even Yearly cash Flows

1328 Expected Value & Coefficient of Variation Investment Options

1329 Expected Value in Capital Budgeting Decision Uneven Payments

1331 Expected Value for Multiple Years & NPV