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Mastering Capital Budgeting: Decision Analysis, Option Pricing, and Investment Decisions

This training program at RTI, Chennai, equips trainees with essential skills in auditing capital budgeting proposals. Participants will learn to critically evaluate management decisions, exploring decision analysis, option pricing, and strategic investment choices. Key topics include the Multiple Attribute Decision Model (MADM), benefits of considering both financial and non-financial factors, and methods for calculating Net Present Value (NPV), Internal Rate of Return (IRR), and discounted cash flow. Enhance your understanding of risk analysis to effectively manage project uncertainties and improve decision-making processes.

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Mastering Capital Budgeting: Decision Analysis, Option Pricing, and Investment Decisions

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  1. Learning Objective • Given the concepts of Decision Analysis, Option Pricing and Investment Decisions, the trainee will be able to audit the capital budgeting proposals of projects and critically examine the decisions of management as evaluated by the instructor RTI,Chennai

  2. Three stages of capital budgeting • Decision Analysis • Exploring the options • Investment decision RTI,Chennai

  3. Decision Analysis • Multiple Attribute Decision Model (MADM) RTI,Chennai

  4. Advantages • Consideration of financial and non-financial criteria • Judgements and assumptions and its impact • Important factors are weighed more • Collective decision RTI,Chennai

  5. Option Pricing • Three common sources of options • Timing option • Abandonment options • Growth options RTI,Chennai

  6. Investment decision • Importance of Time value of money • Inflation • Uncertainty • Opportunity costs • Calculation of discounted cash flow RTI,Chennai

  7. Economic criteria • Net Present Value (NPV) • Internal Rate of Return (IRR) • Discounted Pay Back (DPB) RTI,Chennai

  8. Risk Analysis • Different levels of risks between projects • Risks specific to foreign projects • Comparing the actuals with estimates during execution of the projects RTI,Chennai

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