Financial Analysis for
Project Evaluation
DESCRIPTION
This course is developed
to provide managers working in both public and private sector companies with a
basic guide for the financial evaluation of projects. It is aimed at people who
need to learn more about both what evaluation can do and how to do an
evaluation, rather than those who already have a solid base of experience in
the field. This course discusses quantitative and qualitative evaluation methods,
suggesting ways in which they can be used as complements in an evaluation
strategy. As a result of completing this course, it is expected that project managers
will increase their understanding of the evaluation process. This course will
start with the discussion on the importance of conducting feasibility study and
steps for the same. The course will then look at the financial implication of
projects and will teach the various techniques to evaluate the financial
feasibility and viability of projects. It will also
AIMS
The aims of this course are
to:
·
Enable participants to conduct a
feasibility study
·
Understand the attributes of a
good investment or allocation of capital.
- The principles and
objectives behind longer-term decision-making.
- The application of
the key non-discounting and discounting capital budgeting techniques.
- The advantages of the
discounting techniques over the non-discounting techniques.
- The practical issues
surrounding the application of the net present value (NPV) and internal
rate of return (IRR) techniques.
- The importance of
post-completion audits of projects.
SUBJECT TOPICS
The training course will cover the following topics:
Module 1: Introduction: Need for Project Evaluation
- assess the economic viability of the proposed project
- Does the idea make sense
- What is a feasibility study
- market issues
- technical and
organizational requirements
- financial overview
Module 2: Present Value and Opportunity
Cost of Capital
w
Present
Value
w
Net
Present Value
w
NPV
Rule
w
ROR
Rule
w
Opportunity Cost of Capital
Module 3: Business Valuation and the Domination of
NPV
w
How
Common Stocks are Traded
w
How
To Value Common Stock
w
Capitalization
Rates
w
Stock
Prices and EPS
w
Discounted
Cash Flows and the Value of a Business
w
NPV
and its Competitors
w
The
Payback Period
w
The
Book Rate of Return
w
Internal
Rate of Return
w
Capital
Rationing
Module 4: Investment Decisions
w
What
To Discount
w
Project
Interaction
è
Equivalent
Annual Cost
è
Replacement
è
Project
Interaction
è
Timing
Module 5: Capital Budgeting under
w
Company
and Project Costs of Capital
w
Measuring
the Cost of Equity
w
Capital
Structure and COC
w
Discount
Rates for Intl. Projects
w
Estimating
Discount Rates
w
Risk
and DCF
w
Sensitivity
Analysis
w
Break
Even Analysis
w
Monte Carlo Simulation
w
Decision
Trees
Module 6: Management Incentives and Economic Value
Added
w
The
capital investment process
w
Decision
Makers and Information
w
Incentives
w
Residual
Income and EVA
w
Accounting
Performance Measures
w
Economic
Profit
Module 7: Real Options
w
Calls,
Puts and Shares
w
Financial
Alchemy with Options
w
What
Determines Option Value
w
Option
Valuation
w
The
Value of Follow-On Investment Opportunities
w
The
Timing Option
w
The
Abandonment Option
w
Flexible
Production
w
Vary
Output or Production
Module 9: Mergers and Acquisitions
w
Sensible
Motives for Mergers
w
Some
Dubious Reasons for Mergers
w
Estimating
Merger Gains and Costs
w
The
Mechanics of a Merger
w
Takeover
Battles and Tactics
w
Mergers
and the Economy
w
Leveraged
Buyouts, Spin-offs and Restructurings
w
Fusion
and Fission in Corporate Finance
w
Conglomerates
w
Control
and Governance