Day 1
Time Value of Money and Investment Decision Rules
Present values, net present value, future values, discounting, compounding, cost of capital, annuities, perpetuities, loan amortisation, savings for retirement problems, compounding intervals, bond pricing, and nominal and real interest rates.
Applications of Time Value of Money
Group work with problems involving time value of money, such as understanding trade-offs between short-term and long-term oriented investment strategies, understanding investment decisions in an inflationary environment, savings for retirements, paying for college and education, choosing optimal retirement packages, home mortgage loan refinancing, amongst others.
Day 2
Capital Budgeting: Estimating Cash Flow
Incremental cash flow, sunk costs, sunk benefits, incidental effects, net cash flow, salvage value, taxation of salvage value, net working capital, capital budgeting involving asset acquisition, replacement of aging assets, valuing subsidies, lease versus buy decision, optimal timing of investment decisions, and determining the optimal life of capital assets.
Economy Shipping Case
Group work with a case involving replacement of an aging ship with a new ship. Participants will be arranged in groups and asked to analyse the case and present their findings.
Day 3
Financing Decisions and Cost of Capital
Risk, business and financial risk, diversification, unique risk, market risk, beta risk, capital asset pricing model, cost of equity, cost of debt, and weighted average cost of capital.
Super Project Case
Group work with a case involving the introduction of a new product. Critical issues involve estimating the cash flows from the new product, estimating the cost of capital, estimating the cost of excess capacity, cannibalisation of existing products as a result of the introduction of the new product. Once again, the participants will be arranged in groups and asked to analyse the case and present their findings.
