Introduction:
In this module, you will learn about capital budgeting techniques and how to evaluate investment opportunities. By understanding the concepts of time value of money, risk assessment, and return on investment, you will be equipped to make informed investment decisions for your business.
Learning Objectives:
By the end of this module, you will be able to:
- Understand the principles of capital budgeting.
- Apply discounted cash flow (DCF) techniques to evaluate investment projects.
- Assess the risk and return of investment opportunities.
Lessons:
Lesson 1: Introduction to Capital Budgeting
In this lesson, you will learn about the concept of capital budgeting and its significance in the decision-making process. You will gain an understanding of why capital budgeting is crucial for businesses in allocating their financial resources effectively.
Lesson 2: Defining Capital Budgeting and its Significance
In this lesson, you will delve deeper into the definition and significance of capital budgeting. You will explore the different types of investment decisions businesses face and the factors they consider when evaluating potential projects.
Lesson 3: Discussing Different Investment Decision-Making Methods
In this lesson, you will explore various investment decision-making methods used in capital budgeting. You will learn about techniques such as payback period, accounting rate of return, and profitability index.
Lesson 4: Discounted Cash Flow (DCF) Analysis
This lesson will introduce you to the concept of discounted cash flow (DCF) analysis. You will understand the importance of considering the time value of money in evaluating investment projects and how DCF analysis helps in making more accurate investment decisions.
Lesson 5: Examine the Time Value of Money Concept
In this lesson, you will gain a thorough understanding of the time value of money concept. You will learn about present value, future value, and the relationship between time and money. This knowledge will lay the foundation for applying DCF techniques.
Lesson 6: Apply NPV (Net Present Value) and IRR (Internal Rate of Return) Methods
In this lesson, you will learn how to apply two essential DCF techniques: Net Present Value (NPV) and Internal Rate of Return (IRR). You will understand how to calculate and interpret these metrics to evaluate investment projects effectively.
