# Corp Finance #12 Capital Budgeting & Investment Risk Tools

Learn how to use risk management tools when making capital budgeting and investment decisions

**Language**: english

**Note**: 4.7/5 (36 notes) 22,122 students

**Instructor(s)**: Robert (Bob) Steele

**Last update**: 2022-02-17

## What you’ll learn

- List and define risk management tools that relate to capital budgeting and investment decisions
- Explain the concept of population mean and expected value
- Discuss the term population variance and how it can apply to capital budgeting decisions
- Describe standard deviation and how it can apply to capital budgeting decisions
- Explain the concept of coefficient of variation and how it can be used to measure risk in the capital budgeting decision making process
- Define simulation models and how they can be useful in capital budgeting decisions
- Discuss how capital budgeting decisions should take into consideration the overall investment portfolio

## Requirements

- Basic understanding of corporate finance concepts

## Description

This course will cover the use of risk assessment tools as they relate to capital budgeting and investment decisions and how to use them.

We will include many example problems, both in the format of presentations and Excel worksheet problems. The Excel worksheet presentations will include a downloadable Excel workbook with at least two tabs, one with the answer, the second with a preformatted worksheet that can be completed in a step-by-step process along with the instructional videos.

When making long term investment and capital budgeting decisions we need to consider the time value of money. The decision-making process will estimate future cash flows and then apply our time value of money concepts to those future cash flows.

This course will take a step back in the process, providing tools to best estimate the future cash flows. To make the best decision we will need to estimate what the future cash flows will be and the likelihood of those cash flows, giving us numbers we can apply present value concepts to while also taking into consideration risk.

To help measure risk, the course will use statistical tools including the population mean, population variance, standard deviation, and coefficient of variation.

We will provide a quick overview of these statistical concepts in general and then consider how we can apply them to measuring risk for investment and capital budgeting decisions.

## Who this course is for

- Business students
- Business professionals

## Course content

- Introduction
- 1310 Capital Budget Risk Overview
- 1315 Measure of Risk
- 1320 Risk & Discount Rates
- 1325 Simulation Models
- 1330 Investment Impact on Portfolio

- Practice Probs. – Capital Budgeting Risk Assessment
- OneNote Resource
- 1300 Standard Deviation, Variance, & Coefficient of Variation
- 1312 Standard Deviation, Variance, & Coefficient of Variation
- 1313 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 2
- 1314 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 3
- 1316 Coefficient of Variation Three Investment Alternatives
- 1318 Coefficient of Variation & Investment Risk
- 1322 Coefficient of variation Two Project Alternatives
- 1326 Expected Value & Net Present Value Even Yearly Cash Flows
- 1328 Expected Value & Coefficient of Variation Investment Options
- 1329 Expected Value in Capital Budgeting Decision Uneven Payments
- 1331 Expected Value for Multiple Years & NPV

- Excel Probs. – Capital Budgeting Risk Assessment
- 1300 Standard Deviation, Variance, & Coefficient of Variation
- 1312 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 1
- 1313 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 2
- 1314 Expected Value, Standard Deviation, & Coefficient of Variation Prob. 3
- 1316 Coefficient of Variation Three Investment Alternatives
- 1318 Coefficient of Variation & Investment Risk
- 1322 Expected Value & Net Present Value Even Yearly cash Flows
- 1328 Expected Value & Coefficient of Variation Investment Options
- 1329 Expected Value in Capital Budgeting Decision Uneven Payments
- 1331 Expected Value for Multiple Years & NPV

**Time remaining or 956 enrolls left**

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