Cost of Capital and Capital Investment Decisions

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Overview

1.5 Credits
ONLINE

This CPE course discusses methods of investment appraisal. It begins with the Weighted Average Cost of Capital (WACC) formula, then discusses the Capital Asset Pricing Model (CAPM). It outlines the procedure for calculating the WACC, and indicates conditions when it can be used as a discount rate. It examines sensitivity analysis, and instructs how to calculate expected values (EV). The course then discusses real options and their values, and concludes with a study of the concept of Adjusted Present Value (APV).

Objectives

  • Identify methods to evaluate investment projects.

Major Topics

  • Cost of capital and risk.
  • Recognizing risk using the certainty equivalent method (when given a risk free rate and certainty equivalent values).
  • Adjusted present value.

Designed For

CGMA exam candidates Management accountants wanting to develop skills in governance and risk management
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