Overview
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Learn three methods to evaluate investments and make smarter financial decisions.
Syllabus
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Introduction
- Welcome
- Course requirements and structure
- 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
- 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
- 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
- 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
- Next steps
