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CapBud-Outline-Spring 2021
CapBud-Outline-Spring 2021
CapBud-Outline-Spring 2021
UNIVERSITY OF DHAKA
EMBA Program
Course 601: Capital Investment Decisions
Spring 2021
Course Objective:
The major objective of this course is to develop the skills to make financial appraisal of business projects
in a competitive market environment.
Course Learning Outcomes:
After completing this course, students should be able to (a) apply the techniques of capital budgeting,
(b) estimate project cash flows (c) estimate the cost of capital for new project, (d) analyze and deal with
project risks and country risk, (e) prepare optimal capital budget and (f) value the real options relating to
the project.
Grading:
The grading of this course will be based on:
Case Analysis, Reports 20%
Class and Case Participation 10%
Two In-term Tests 30%
Final Exam 40%
Total 100%
Case Presentation and Term Papers:
Students are expected to form groups for the presentation of cases and preparation of term papers. A
group can have a maximum of three members. Each member is expected to participate in the group
equally. Grades will be based on group presentation and report, individual presentation and class
participation.
No definite format is prescribed for a case report, but in general a case report includes an introduction,
statement of the problem, analysis of the firm (with analysis of the economy and of the industry where
possible) alternative courses of actions, analysis of each alternative and recommendations. All arguments
should preferably be backed up by quantitative estimates. Students may not need to use every piece of
information provided in the case. For any information required for analysis, but not mentioned in the
case, students are free to make any realistic assumption. However, their assumptions cannot contradict
any information provided in the case. Students should provide justification in favor of their
recommendations. For case presentations, students are expected to use multimedia overhead projector.
Problems and conflicts within the group should preferably be resolved internally. If group members are
divided with respect to solution and recommendation, they may choose to provide separate reports. A
severe penalty will be imposed if any student copies others’ reports or presentation materials or parts
thereof.
SWITCH OFF YOUR MOBILE PHONES WHILE YOU ARE IN THE CLASS
Course Contents
Class Content Chapter
1 Capital Budgeting: Defining Capital Expenditures, Capital Budgeting Levy, Chap 2
Process; Time Value of Money. Brigham
Market Imperfections and Value: Strategic Matters Seitz, Chap 2
3-5 Cash Flow Estimation: Incremental Cash Flows –Working Capital, Brigham
Interest, Opportunity Costs, Sunk Costs, Salvage Value; Equipment
Replacement Decisions, Projects with Unequal Lives, Impact of
Corporate Tax; Cash Flow Estimation Process, Relevant Cash Flows,
Bias in Cash Flow Estimation, Managerial Options, Projects with
Unequal Lives, Abandonment Value, Adjusting for Inflation. Project
Interactions.
8-9 Cost of Capital – Cost of Equity, Cost of Debt, Cost of Preferred Stock, Brigham
Weighted Average Cost of Capital, Break Point, MCC Schedule
10 Replacement of Assets
14 Case Presentations:
15 Final Exam