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Investment Evaluation

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Financial Edge

The Investment Banker Certification

Overview

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Learn three methods to evaluate investments and make smarter financial decisions.

Syllabus

Introduction

Welcome
Course requirements and structure

1. Investment

Components of an investment
Investments and economic capital
Types of investments
Opportunity cost
Time value of money
Present, future, and terminal values
Challenge 1: Determine present, future, and terminal values
Solution 1: Determine present, future, and terminal values
Real talk: Investments and opportunity costs
Evaluation methods

2. Discounted Cash Flow (DCF)

What is DCF?
Solve for DCF
Challenge 2: Calculate DCF over 30 years
Solution 2: Calculate DCF over 30 years
Pros and cons of DCF
Real talk: Discounted cash flows

3. Net Present Value (NPV)

The net present value equation
NPV using tables
Challenge 3: Calculate NPV using table values
Solution 3: Calculate NPV using table values
A fully worked out example
NPV using a Microsoft Excel formula
Challenge 4: Calculate NPV using Microsoft Excel
Solution 4: Calculate NPV using Microsoft Excel
Pros and cons of NPV
Real talk: Net present value

4. Internal Rate of Return (IRR)

What is IRR?
IRR calculation the long way
The case of no IRR
The case of multiple IRRs
IRR using the Microsoft Excel formula
Challenge 5: Calculate NPV and IRR
Solution 5: Calculate NPV and IRR
Pros and cons of IRR
Payback period
Payback period in Microsoft Excel
Challenge 6: Choose a project based on NPV, IRR, and payback period
Solution 6: Choose a project based on NPV, IRR, and payback period
Real talk: IRR and payback period

Conclusion

Next steps

Taught by

Yash Patel

Reviews

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