ØKA1019 Investments and Financial Management

Startsemestre

Course content

Models and techniques for budgeting relevant cash flows.
Time value of money, interest rates and discounted cash flows.
Models and techniques for valuing investments- and financing projects: Net Present Value, Internal rate of return, The payback rule.
Assessing risk using sensitivity analysis and star charts.
Cost of capital, capital asset pricing model, risk adjusted return.
Financing sources.
Relation between debt ratio and risk for the owners.

Learning Outcome

Upon completion of the course, the student shall be able to:

Knowledge

identify situations and decision problems where investment analysis is relevant to use.
describe the concept of time value of money and use the terms nominal-, real-, and risk adjusted interest rate correctly.
describe and compare key methods used to make investment decisions.
describe key methods for assessing risk associated with investment decisions; sensitivity analysis; scenario analysis; decision trees.
explain how the capital asset pricing models works and interpret empirical results from real life applications.
explain the relation between debt ratio and risk for the firm.

Skills

budget decision relevant cash flows for both investment- and financing decisions.
assess the value of various investments based on net present value (NPV), internal rate of return, and the payback rule.
assess various financing opportunities based using net present value and effective interest rate.
develop decision support for investment- and financing decisions using appropriate valuation and risk assessment techniques.
apply the capital asset pricing model (CAPM) to estimate risk adjusted cost of capital whenever the market risk is relevant.
assess the value of investment- and financing decisions with a focus on (1) time value of money, (2) coping with risk, and (3) calculations of relevant cash flows.

General competence

explain and discuss the value of flexibility with peers and decision makers when it comes to firms’ investment decisions.

Teaching and working methods

The following teaching methods are used:

Required coursework

2-4 mandatory assignments must be passed to be allow to take the exam.
These will be combinations of practical and theoretical exercises covering key topics in the course.

Assessments

Form of assessment	Grading scale	Grouping	Duration of assessment	Support materials	Proportion	Comment
Written examination with invigilation	ECTS - A-F	Individual	4 Hour(s)	Approved calculator	100	About permitted aids: calculator in line with the requirements given by the study program.

Professional overlap

Name	Credits	Date	Comment
3BED200 Investering og finansiering	7,5
KBED200 Investering og finansiering	7,5
SBED200 Investering og finansiering	7,5

No reading list available for this course

Faculty

Inland School of Business and Social Sciences

Department

Department of Business Administration