Investment Evaluation

Course details

So you want to start saving money and investing in your future. How do you make sure you make smart decisions? While there is always an element of risk when it comes to investments, you can make more informed choices with some simple statistical techniques. This course teaches the basics you need to evaluate opportunities and get the most value out of every dollar. Instructor Yash Patel is passionate about empirical and data-driven decision making, and here he turns its power on the world of finance. Learn about the components of an investment and fundamental concepts such as time value, opportunity cost, and the difference between capital and wealth. Review the different types of investments and three different methods of evaluation: discounted cash flow (DCF), net present value (NPV), and internal rate of return (IRR). For each method, Yash lists the pros and cons, offers examples and challenges, and provides a "real talk" summary that will help anyone—not just business owners and CFOs—make smart, strategic decisions about money.

Learning objectives
Investment types
Present, future, and terminal values
Opportunity cost
Calculating DCF
Calculating NPV
Calculating IRR
Calculating the payback period

Concepts

0. Introduction

01 - Welcome
02 - Course requirements and structure

1. Investment

03 - Components of an investment
04 - Investments and economic capital
05 - Types of investments
06 - Opportunity cost
07 - Time value of money
08 - Present, future, and terminal values
09 - Challenge 1 - Determine present, future, and terminal values
10 - Solution 1 - Determine present, future, and terminal values
11 - Real talk - Investments and opportunity costs
12 - Evaluation methods

2. Discounted Cash Flow (DCF)

13 - What is DCF
14 - Solve for DCF
15 - Challenge 2 - Calculate DCF over 30 years
16 - Solution 2 - Calculate DCF over 30 years
17 - Pros and cons of DCF
18 - Real talk - Discounted cash flows

3. Net Present Value (NPV)

19 - The net present value equation
20 - NPV using tables
21 - Challenge 3 - Calculate NPV using table values
22 - Solution 3 - Calculate NPV using table values
23 - A fully worked out example
24 - NPV using a Microsoft Excel formula
25 - Challenge 4 - Calculate NPV using Microsoft Excel
26 - Solution 4 - Calculate NPV using Microsoft Excel
27 - Pros and cons of NPV
28 - Real talk - Net present value

4. Internal Rate of Return (IRR)

29 - What is IRR
30 - IRR calculation the long way
31 - The case of no IRR
32 - The case of multiple IRRs
33 - IRR using the Microsoft Excel formula
34 - Challenge 5 - Calculate NPV and IRR
35 - Solution 5 - Calculate NPV and IRR
36 - Pros and cons of IRR
37 - Payback period
38 - Payback period in Microsoft Excel
39 - Challenge 6 - Choose a project based on NPV, IRR, and payback period
40 - Solution 6 - Choose a project based on NPV, IRR, and payback period
41 - Real talk - IRR and payback period

Conclusion

42 - Next steps

Investment Evaluation

Authors

Yash Patel