Leonard N. Stern School of Business

Available dates

Jun 8—9, 2020
2 days
New York, New York, United States
USD 3600
USD 1800 per day

Disclaimer

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About the course

Almost every decision in the corporate world is financial in nature. There are numerous financial implications when purchasing another firm (e.g., a competitor or supplier), launching an expensive advertising campaign, deciding to purchase, rent or buy a new production facility—the list goes on.

This course will cover the basics of discounted cash flow analysis and rigorous cash flow forecasts derived from P&L projections. Participants will understand rules for making investment decisions, including the net present value (NPV) rule and internal rate of return (IRR) rule, as well as the treatment of real options. Participants will also learn how to compute the right discount rate, or cost of capital, to account for the time value of money as well as risk. This course will utilize numerical examples to give participants hands-on practice with each of the methods taught.

Program Takeaways

  • Value – Learn how to make value-maximizing investment decisions
  • Rules – Appreciate the uses and misuses of popular decision rules (NPV, IRR)
  • Forecasting – Analyze and make cash flow forecasts from projected income statements

Agenda

Day 1

Session 1: Discounted Cash-Flow Analysis and Rules to Make Investment Decisions

  • Present Values, Perpetuities, Annuities
  • Net Present Value Rule, Internal Rate of Return (IRR) Rule
  • Shortcomings of the IRR Rule
  • Payback Rule
  • Capital Budgeting

Session 2: Real Options

  • Option to Wait and the Value of New Information
  • Option to Expand
  • Option to Scale Investments Up or Down

Day 1 Conclusion and Evaluations

Day 2

Session 3: Cash Flows

  • Five Steps of Project Valuation
  • What are Cash Flows?
  • Making Cash-Flow Forecasts: Investments, Recoveries, Depreciation, Sunk Costs, Opportunity Costs, Operating Cash Flows, Capital Gains and Losses, Working Capital

Session 4: Cost of Capital

  • Capital Asset Pricing Model
  • “Pure Play Approach” to Assess Project Risk
  • Market Price of Risk
  • Weighted Average Cost of Capital

Program Conclusion and Evaluations

Who should attend

Although there are no formal education or background requirements, this course is designed for executives who meet the criteria below. While we strongly encourage global participation, please note that all courses are taught in English. Proficiency in written and spoken English is required.

  • Years of Experience – Designed for professionals with 5+ years of work experience
  • Job Functions – Ideal for professionals who need to make financial decisions, or who frequently communicate with financial decision makers
  • Prerequisites – Intended for individuals who want to improve their financial literacy

Trust the experts

Holger Mueller

Biography Holger M. Mueller is the Nomura Professor of Finance at New York University Leonard N. Stern School of Business. He is also a research associate at NBER, a research fellow at CEPR, and a research associate at ECGi. Professor Mueller has been with NYU Stern since 2001. He teaches Corpo...

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