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Summary of Investment Project Analysis
English , Spanish , Portuguese Brasil
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Reference: FN-630-E
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Number of pages: 2
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Publication Date: Jul 10, 2017
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Source: IESE (España)
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Type of Document: Technical Note
Description
Summary sheet (two sides) of the steps to follow for analyzing and deciding on investment projects (capital budgeting). Examples of investment projects: new product launch, investment in a new factory, etc. Steps
1. What am I investing in?: analysis of the business and of its future P&L and balance sheet.
2. How much can I expect to make? Calculation of cash flows (free cash flow and cash flow for the shareholder). Expected rate of return (IRR).
3. How much can I lose? Risks.
4. Other decision criteria, other than the rate of return and the risk.
Learning Objective
This is a summary to be handed out in class, once the module on investment decisions has been completed. It serves as a guide for the participants to apply the methodology learned.