CB Module Handbook

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Capital Budgeting and Financial Planning Module Handbook (MBA/RBA)

Capital Budgeting and Financial Planning

Module Handbook

Instructor:Jibran SheikhFaculty of Business Adinistration

!epartent of Manageent Sciences

Department of Management Science! C""# "lamabad $ of %


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Contents

Capital Budgeting and Financial Planning..................................................................................................1

Module Handbook.......................................................................................................................................1

Contents...................................................................................................................................................2Contacting the Module Instructor:...........................................................................................................3

Rationale Including i!s:.......................................................................................................................3

"tudents should ha#e s$ccess%ull$ co!pleted the course on Corporate Finance& and Financial

Manage!ent and Polic$ be%ore taking the this course. ..........................................................................3

'eaching and (earning "trategies:...........................................................................................................3

(earning outco!es:..................................................................................................................................3

ssess!ent "che!e.................................................................................................................................)

Reading Materials....................................................................................................................................)

Course Re*uire!ents and +,pectations:.................................................................................................)

Pro-ectCase "tudies................................................................................................................................./

cade!ic 0ishonest$:............................................................................................................................./Course utline:........................................................................................................................................

Department of Management Science! C""# "lamabad & of %


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Course Introduction and "#er#ie$

Capital budgeting is the study of investment decisions undertaken by the corporations. It revolvesaround understanding how corporations allocate funds among alternative investment opportunities. Thecourse is concerned with the valuation of corporate assets (projects/investments). It is based on thetheory and methods developed in prereuisite units! particularly Corporate "inance and "inancial#anagement $ %olicy. There is considerable emphasis on valuation techniues including advancedtechniues such as &%' and real options! project risk analysis and financial planning.

This is a credit hour course! comprising hours of teaching per week.

Contacting the Module Instructor:ou can contact your module instructor in the following ways*

+mail* jibransheikh,comsats.edu.pk#eeting* -y appointment only or during the office hours (arranged prior to coming)

%ationale Including Ais:

Capital budgeting is the study of investment decisions undertaken by the corporations. It revolvesaround understanding how corporations allocate funds among alternative investment opportunities. Theultimate objective of any capital budgeting decision is to maimie the market value of the firm0scommon stocks! and thereby! the wealth of its shareholders. #ain aim of this course is to cover basictools used in capital budgeting decisions. &t the end of the course! the students should be able tounderstand and apply the following methods of capital budgeting*

1%'! I22! %ayback %eriod

Cash "low estimation for %roject &ppraisal

2isk &nalysis of Capital -udgeting %rojects

2eal 3ptions

Prere&uisites*4tudents should have syccessfully completed the course on Corporate "inance! and "inancial

#anagement and %olicy before taking the this course.

'eaching and (earning Strategies:

5ectures will introduce the ideas and the course materials.

Class discussions will provide in6depth analysis of the concpets and clarify any ambiguities.

%articipation from the students is encouraged.

&ssignemnts and activities will keep the students engaged in the learning process and

enhance self learning. %roject/Case 4tudy will provide the students with an etended framework to apply the

concepts learned in the class to real world situations thus transforming the concepts and ideas intoskills.

%resentations will burnish students0 presentation! communication and public speaking skills

and give them self confidence.

+ams and 7uies will stimulate the learning and provide an objective assessment of the

knowledge gained after taking the course. +ams will also help to identify high achivers thusenabling to reward their hardwork.

(earning outcoes:

8pon successful completion of the course! the students will be able to*

Department of Management Science! C""# "lamabad ' of %
mailto:[email protected]:[email protected]


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+stimate any project9s Cash inflows $ outflows

&ssess riskiness of these Cash "lows using different risk analysis techniues

:etermine appropriate discount rate (cost of capital)

&pply an Investment &ppraisal #ethod/Techniue (1%'! I22! #I22! %-% etc.)

&ccept (or reject) based on acceptance criteria 8nderstand the basics of "inancial %lanning

8se +cel for financial planning and %roject &ppraisal

My 'eaching Philosophy

It is important to me that each of you is successful in this course in terms of learning and in terms ofgrades. ;owever it will depend on yourattitude) hard $ork and desire to learn and e*cel+ I do notbelie#e in spoon feeding and $ill e*pect you to take initiati#e+ Coe prepared in the class) gothrough assigned readings and coplete all the tasks and assignents gi#en to you+ I $ill try topro#ide a conduci#e to learning en#ironent in the classroo+ I encourage interaction and

discussions+ :o not hesitate to ask or to contact me if you have a uestion. :on9t wait until the lastminute to work on assignments or prepare for the eams. :o not procrastinate. %rocrastination insemester system is a sure way to failure. +ams and &ssignments will be due before you think they will

be.

Assessent Schee

Courseworks $ Class participation #id6term eamination 8nseen three hour eamintion =?>

%eading Materials

Core Text:

@. 4elected Chapters from "I1&1CI&5 #&1&A+#+1T T;+32 &1: %2&CTIC+ by -righamand +hrhardt! @


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Being prepared for class:you should be ready to discuss any assigned readings and

to answer any assigned uestions for each day0s class! including being ready to open a caseassigned for that day.

Pro0ect1Case Studies

ou will be given a case study/project that you will have to work on and complete in group (


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Course "utline:

,eeks 'opics co#ered (e#els2ui3es)

Assignents)Case studies

Feek @

(ecture 4 5 6: Pro*ect Appraial #ec+ni,ue

%eadings: Chapter @@* -asics of Capital -udgeting

;andouts from selected tet

"ormation ofgroups (


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&djusted %resent 'alue

#odified Internal 2ate of 2eturn

Comparing projects of uneual lives (replacementchain method! euivalant annual annuity method)

Capital 2ationing (hard and soft! single and

multiperiod)

Feek =

(ecture = 5 4>: Pro*ect Appraial #ec+ni,ue%eadings: ;andouts from selected tet

7ui

Documents

CB Module Handbook