1) The document discusses various capital budgeting techniques under conditions of certainty and uncertainty, including payback period, risk-adjusted discount rate, and certainty equivalent.
2) It also covers sensitivity analysis, scenario analysis, and simulation analysis to account for risk and uncertainty in capital budgeting decisions.
3) Simulation analysis uses Monte Carlo simulation to generate multiple scenarios based on the probabilities of variables impacting cash flows and their interactions to determine the probability distribution of NPV outcomes.
Discusses various risks involved in capital budgeting - useful to the students of under graduate, post graduate and professional course students in finance and management
This presentation covers the basics of Dividend Discount Model (DDM). Firstly, fundamental formula for valuing a stock using DDM is discussed. After that, 3 cases i.e DDM for zero growth, constant growth, and variable growth stocks, are discussed.
Discusses various risks involved in capital budgeting - useful to the students of under graduate, post graduate and professional course students in finance and management
This presentation covers the basics of Dividend Discount Model (DDM). Firstly, fundamental formula for valuing a stock using DDM is discussed. After that, 3 cases i.e DDM for zero growth, constant growth, and variable growth stocks, are discussed.
RISK & RETURN UNDER SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT IS DESCRIBED, ALL THE DETAILED EXPLANATION OF TOPIC IS GIVEN UNDER THIS DOCUMENT.
CAN ALSO REFERRED FOR FINANCIAL MANAGEMENT, INSURANCE.
I have given this presentation at the Amsterdam Business School, University of Amsterdam. It is a practical introduction for Master students in Financial Markets about the importance of Risk Management and the tools thereof.
Time Preference for Money, Required Rate of Return, Time Value Adjustment, Future Value, Future Value of an Annuity, Sinking Fund, Present Value, Present Value of an Annuity, Capital Recovery and Loan Amortisation, Present Value of Perpetuity, Present Value of Growing Annuities, Value of an Annuity Due, Multi-Period Compounding, Continuous Compounding, Net Present Value, Present Value and Rate of Return , Internal Rate of Return , Internal Rate of Return
Capital Budgeting is about how one should evaluate the financing options based on the superior financial performance through mathematical techniques. These techniques have been discussed in the presentation in detail.
RISK & RETURN UNDER SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT IS DESCRIBED, ALL THE DETAILED EXPLANATION OF TOPIC IS GIVEN UNDER THIS DOCUMENT.
CAN ALSO REFERRED FOR FINANCIAL MANAGEMENT, INSURANCE.
I have given this presentation at the Amsterdam Business School, University of Amsterdam. It is a practical introduction for Master students in Financial Markets about the importance of Risk Management and the tools thereof.
Time Preference for Money, Required Rate of Return, Time Value Adjustment, Future Value, Future Value of an Annuity, Sinking Fund, Present Value, Present Value of an Annuity, Capital Recovery and Loan Amortisation, Present Value of Perpetuity, Present Value of Growing Annuities, Value of an Annuity Due, Multi-Period Compounding, Continuous Compounding, Net Present Value, Present Value and Rate of Return , Internal Rate of Return , Internal Rate of Return
Capital Budgeting is about how one should evaluate the financing options based on the superior financial performance through mathematical techniques. These techniques have been discussed in the presentation in detail.
Futurum training capital budgeting (intermediate)mputrawal
Futurum training capital budgeting (intermediate)
Date : see at the website “futurum corfinan” (2-day training)
Venue : Hotel at Jakarta Pusat
Notes :
Presentation slides will be distributed in softcopy
Minimum participants = 10 persons
After the training, participants are allowed to discuss about the training materials via email in the website
Contact email : futurumcorfinan@gmail.com
Visit Website and Training Testimonials : google “futurum corfinan”
Seminar on the National Strategy of the Implementation of the Code of Conduct...OECD Governance
Seminar on the National Strategy of the Implementation of the Code of Conduct - Tunis, March 2016
Part of the project - Deepening Tunisia's Integrity Foundations http://www.oecd.org/mena/governance/deepeningtunisiasintegrityfoundations.htm
Discuss the concept of risk in investment decisions.
Understand some commonly used techniques, i.e., payback, certainty equivalent and risk-adjusted discount rate, of risk analysis in capital budgeting.
Focus on the need and mechanics of sensitivity analysis and scenario analysis.
Highlight the utility and methodology simulation analysis.
Explain the decision tree approach in sequential investment decisions.
Focus on the relationship between utility theory and capital budgeting decisions.
The investment decisions of a firm are generally known as the capital budgeting, or capital expenditure decisions.
The firm’s investment decisions would generally include expansion, acquisition, modernisation and replacement of the long-term assets. Sale of a division or business (divestment) is also as an investment decision.
Decisions like the change in the methods of sales distribution, or an advertisement campaign or a research and development programme have long-term implications for the firm’s expenditures and benefits, and therefore, they should also be evaluated as investment decisions.
Normal Labour/ Stages of Labour/ Mechanism of LabourWasim Ak
Normal labor is also termed spontaneous labor, defined as the natural physiological process through which the fetus, placenta, and membranes are expelled from the uterus through the birth canal at term (37 to 42 weeks
A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Safalta Digital marketing institute in Noida, provide complete applications that encompass a huge range of virtual advertising and marketing additives, which includes search engine optimization, virtual communication advertising, pay-per-click on marketing, content material advertising, internet analytics, and greater. These university courses are designed for students who possess a comprehensive understanding of virtual marketing strategies and attributes.Safalta Digital Marketing Institute in Noida is a first choice for young individuals or students who are looking to start their careers in the field of digital advertising. The institute gives specialized courses designed and certification.
for beginners, providing thorough training in areas such as SEO, digital communication marketing, and PPC training in Noida. After finishing the program, students receive the certifications recognised by top different universitie, setting a strong foundation for a successful career in digital marketing.
A review of the growth of the Israel Genealogy Research Association Database Collection for the last 12 months. Our collection is now passed the 3 million mark and still growing. See which archives have contributed the most. See the different types of records we have, and which years have had records added. You can also see what we have for the future.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
3. Risk can be defined as the chance that the actual outcome will differ from the
expected outcome. Uncertainty relates to the situation where a range of differing
outcome is possible, but it is not possible to assign probabilities to this range of
outcomes.
Conventional Techniques for Risk Analysis:
(a) Payback
(b) Risk-adjusted Discount Rate
(c) Certainty Equivalent
4. Meaning:
It is the number of years required to recover the original cash outlay invested in a
project.
Methods to compute PBP:
A ) The first method can be applied when the CFAT is uniform. In such a situation
the initial cost of the investment is divided by the constant annual cash flow: For
example, if an investment of Rs.100000 in a machine is expected to generate cash
inflow of Rs.20,000 p.a. for 10 years.
Its PBP will be calculated using following formula:
PBP=Initial Investment/ constant annual cash inflow = 1,00,000 /20,000=5 yrs
5. b) The second method is used when a project’s CFAT are not equal. In such a
situation PBP is calculated by the process of cumulating CFAT till the time when
cumulative cash flow becomes equal to the original investment outlays.
For example, A firm requires an initial cash outflow of Rs. 20,000 and the annual
cash inflows for 5 years are Rs. 6000, Rs. 8000, Rs. 5000, Rs. 4000 and Rs. 4000
respectively.
Calculate PBP.
Here, When we cumulate the cash flows for the first three years, Rs. 19,000 is
recovered. In the fourth year Rs.4000 cash flow is generated by the project but we
need to recover only Rs.1000 so the time required recovering Rs. 1000 will be
(Rs.1000/Rs.4000)× 12months = 3 months. Thus, the PBP is 3 years and 3 months
(3.25 years).
Decision Rule:
The PBP can be used as a decision criterion to select investment proposal. If the
PBP is less than the maximum acceptable payback period, accept the project.
If the PBP is greater than the maximum acceptable payback period, reject the
project.
6. To allow for risk, the businessmen required a premium over and above an alternative
which is risk free. It is proposed that risk premium be incorporated into the capital
budgeting analysis through the discount rate. i.e. If the time preference for the money
is to be recognized by discounting estimated future cash flows, at some risk free rate,
to there present value, then, to allow for the riskiness of the future cash flow a risk
premium rate may be added to risk free discount rate. Such a composite discount
would account for both time preference and risk preference.
RADR= Risk free rate + Risk Premium OR
k = Rf + Rp
The RADR accounts for risk by varying discount rate depending on the degree of
risk of investment projects. The following figure portrays the relationship between
amount of risk and the required k.
The following equation can be used:-
NPV = ΣNCFt / ( 1+k )t - CO
Where k is a risk-adjusted rate.
7. The risk adjusted approach can be used for both NPV & IRR.
If NPV method is used for evaluation, the NPV would be calculated using risk
adjusted rate.
If NPV is positive, the proposal would qualify for acceptance, if
it is negative, the proposal would be rejected.
In case of IRR, the IRR would be compared with the risk adjusted required
rate of return.
If the ‘r’ exceeds risk adjusted rate, the proposal would be
accepted, otherwise not.
For example, if an investment project has following cash flows, its NPV using RADR will be as
follows:
Risk free rate is 6% and Risk adjusted rate is 10%.
Year CFAT
(RS.)
PV @10 PV( Rs.)
1
2
3
50000
40000
45000
LESS:
0.909
0.826
0.751
ΣPV
Investment
45450
33040
33795
---------
112285
150000
-------
8. The certainty equivalent coefficient (α) can be determined as a relationship between the
certain cash flows and the uncertain cash flows.
For example, if a company expected a risky cash flow of Rs. 90,000 and a risk free cash
flow of Rs. 65,000 then
(α1 ) will be calculated as follows:-
(α)t =NCFt* /NCFt = risk free cash flows / risky cashflows=65,000 /90,000
The certainty equivalent coefficient (α ) t assumes a value between 0 and 1 and varies
inversely with risk. The higher the risk, the lower the (α)t and the lower the risk, the
higher the (α)t .
The certainty equivalent approach can be expressed in the form of equation as
follows:
NPV=Σαt NCFt / (1+kf)t
where, NCFt = Net cash flow,
α t= the certainty equivalent coefficient,
kf = Risk free rate
9. (a) Sensitivity Analysis
(b) Scenario Analysis
(c)Simulation Analysis
1) The sensitivity analysis helps in identifying how sensitive are the various
estimated variables of the project. It shows how sensitive is a project’s NPV or IRR
for a given change in particular variables.
Steps:
The following three steps are involved in the use of sensitivity analysis.
1. Identify the variables which can influence the project’s NPV or IRR.
2. Define the underlying relationship between the variables.
3. Analyze the impact of the change in each of the variables on the project’s
NPV or IRR.
10. The Project’s NPV or IRR can be computed under following three assumptions
in sensitivity analysis.
1. Pessimistic (i.e. the worst),
2. Expected (i.e. the most likely)
3. Optimistic (i.e. the best)
For example, A company has two mutually exclusive projects for
process improvement. The management has developed following
estimates of the annual cash flows for each project having a life of
fifteen years and 12% discount rate.
11. PROJECT A
Net investments 90000
CFAT Estimates PVAIF12%,
15yrs
PV NPV
pessimistic 10000 6.811 68110 (21890)
Most likely 15000 6.811 102165 12165
optimistic 21000 6.811 143031 53031
SENSTIVITY ANALYSIS:-
PROJECT A
Net investments 90000
CFAT Estimates PVAIF12%,
15yrs
PV NPV
pessimistic 13500 6.811 91948.5 1948.5
Most likely 15000 6.811 102165 12165
optimistic 18000 6.811 122598 32598
12. The NPV calculations of both the projects suggest that the projects are equally
desirable on the basis of the most likely estimates of cash flows.
However, the Project– A is riskier than Project – B because its NPV can be negative
to the extent of Rs. 21,890 but there is no possibility of incurring any losses with
project B as all the NPVs are positive.
As the two projects are mutually exclusive, the actual selection of the projects
depends on decision maker’s attitude towards the risk. If he is ready to take risk, he
will select Project A, because it has the potential of yielding NPV much higher than
(Rs. 53031) Project B. But if he is risk averse, he will select project B.
13. The another way to examine the risk of investment is to analyze the impact of
alternative combination of variables , called the scenarios , on the project NPV.
EXAMPLE:- In the expected scenario, it may be possible to increase the sales
volume of 1 lac units to 1,25000 units . If the company reduces the selling price
from Rs. 15 to Rs. 13.50, resorts to aggressive advertisement campaign, their by
increasing unit variable cost to Rs.7.1( 5% increase) & fixed cost is rs.44,000.
Calculate the NPV.
OPTIMISTIC :-1,25,000
PESSIMISTIC:-75,000
NEUTRAL:- 1,00,000
15. Sensitivity analysis and Scenario analysis are quite useful to understand the
uncertainty of the investment projects. But both the methods do not consider the
interactions between variables and also, they do not reflect on the probability of
the change in variables.
Monte simulation considers the interaction among variables & probabilities of
change in variables & its impact on NPV of cash inflows . In this a computer generates
a very large no. of scenarios according to the probability distribution of variables.
Steps:-
1)Identification of the variables , which influences the cash inflows.
Initial investment ,Market size ,Fixed cost & variable cost , market growth rate
2) Specify the formula which relates the variables.
3)Assign the probabilities to each variables
4)Develop a computer program, that randomly selects 1 value from the probability
with each variable & uses these values, to calculate projects NPV.