Finance and Investment

Upon successful completion of this course the student should have the following learning outcomes:

Knowledge and understanding

• Be familiar with the Time Value of Money concept and the valuation of Cash Flow Streams
• Be familiar with the concept of Present Value
• Be familiar with investment analysis using the Net Present Value Method
• Be familiar with investment analysis using the Internal Rate of Return Method
• Be familiar with risk adjusted cost of capital

Skills

• Master the calculation of present value and future value from cash flow streams
• Be able to forecast the incremental free cash flow from a project
• Be able to use the NPV Decision Rule or the Internal Rate of Return Rule in capital budgeting taking into account income taxes
• Be able to calculate the effective annual interest rate and be able to apply it in various financing decisions

General Competence

• Be familiar with the Capital Asset Pricing Model (CAPM) and know how the model relates Risk to Expected Return
• Be familiar with the Weighted Average Cost of Capital (WACC)
• Be familiar with The Expected Return and the Volatility of a Portfolio
• Be familiar with the concept of diversification and how to compute a Portfolio`s Variance and Standard Deviation for a portfolio of two securities
• Have brief knowledge of how capital markets work and how various securities are priced