Investment Appraisal

Investment Appraisal

This course is intended for managers who are having to justify capital expenditures and need to know something of the methodologies and theory behind justifying major pieces of expenditure. The course involves readers working on processes and procedures that result in successful investment appraisal through the use of group and individual activities, exercises, formal inputs etc.

In today’s market, capital purchases are subject to an ever-greater degree of scrutiny. Whether the investment is in new buildings, new machinery or new IT equipment, the position is much the same - there is usually a significant capital outlay upfront with potential benefits accruing over a long period of time.

Topics Covered
Over the 2 days we will cover:

How to decide whether to proceed with a capital purchase or project (by using techniques such as net present value, payback, and return on investment)
How to ensure you capture all the relevant costs and benefits, whether financial or otherwise, within your analysis

Session 1

The incremental after-tax cash flow concept
Discounted cash flow - the basic techniques

Session 2

Capital rationing
Inflation
The cost of equity capital for a company and for a specific project

Session 3

Sensitivity analysis
Project simulation
Questions to speaker

Session 4

Worked examples of specific problems
Lease or buy
Equipment replacement
Sequential projects
Practical work by delegates



6 CPD hours (for non-CIMA members)

THIS COURSE IS RUN BY CIMA MASTERCOURSES

What do I get out of it?
An improved and updated knowledge of how to appraise capital investments. This is a comprehensive review of discounted cash flow capital investment appraisal techniques. The theoretical content of the course is complemented by practical examples. The techniques are applied to specific problems through worked examples. Equal emphasis placed on the application of the techniques and the correct interpretation of results.

This course will take you through the basic investment appraisal techniques including discounted cash flows. You will learn how to develop these techniques and how to take account of real life complications in investment appraisal. Numerous examples and case studies are included in order for you to put the techniques into practice.

This course is designed as a prequel to our ’Investment Appraisal in practice’ course.

Learning outcomes include obtaining a greater understanding of:

How to decide whether to proceed with a capital purchase or project (by using techniques such as net present value, payback and return on investment)
How to perform investment appraisal calculations using a spreadsheet and also on paper to ensure the spreadsheet is correct
How to deal with real life complications such as changing interest rates, irregular cash flows, relevant cash flows, working capital cash flows, inflation and taxation

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