• The Open University

Corporate Finance: Appraising Projects

Learn how to estimate the cost of capital and select an appropriate discount rate for a project or company.

Investment appraisal

  • Duration

    3 weeks

  • Weekly study

    14 hours
Overview
Requirements
Educators

In this course, you will calculate an appropriate cost of equity and WACC (discount rate) that reflects the risk of the project design. You will look at investment appraisal models that cope with uncertainty. You will use investment appraisal models to assess project risk. Financing issues will need to be evaluated in a variety of investment appraisal scenarios, including leasing. Valuation is an important but not exclusive part of the investment appraisal process. Strategic issues also need to be addressed, as well as whether appropriate financing is available.

What topics will you cover?

  • Project discount rate
  • Profitability index
  • Equivalent annual cost
  • The lease or buy decision
  • Public and private financing partnerships

Learning on this course

On every step of the course you can meet other learners, share your ideas and join in with active discussions in the comments.

What will you achieve?

By the end of the course, you‘ll be able to...

  • Calculate an appropriate cost of equity and WACC (discount rate) that reflects the risk of the project
  • Design and evaluate investment appraisal models that cope with uncertainty
  • Assess ‘make or buy’ and ‘lease or buy’ decisions in project appraisal
  • Evaluate the financing issues of leasing, project finance and public–private partnerships
  • Compare investment appraisal models for assessing project risk
  • Apply capital rationing in project appraisal decision making

Who is the course for?

This course is aimed at everyone who works in areas such as investment banking, portfolio management, corporate finance, treasury, law and consultancy.

What software or tools do you need?

A computing device with a browser and broadband internet access is required for this module. Any modern browser will be suitable for most computer activities. Functionality may be limited on mobile devices.

Any additional software will be provided or is generally freely available. However, some activities may have more specific requirements. For this reason, you will need to be able to install and run additional software on a device that meets the requirements below.

A desktop or laptop computer with either:

  • Windows 7 or higher
  • Mac OS X 10.7 or higher

The screen of the device must have a resolution of at least 1024 pixels horizontally and 768 pixels vertically.

To join in the spoken conversation in our online rooms we recommend a headset (headphones or earphones with an integrated microphone).

Who will you learn with?

Henry Lahr

I am a Senior Lecturer in Finance at the Open University and lead its MSc in Finance. My research is on the financing of innovative businesses, venture capital and frictions in financial markets.

Kevin Amor

I am a Chartered Accountant who, before moving into teaching, worked in the real estate investment and development sector. I have also been a director on a number of investment funds.

Who developed the course?

The Open University

As the UK’s largest university, The Open University (OU) supports thousands of students to achieve their goals and ambitions via supported distance learning, helping to fit learning around professional and personal life commitments.

  • Established

    1969

  • Location

    Milton Keynes, UK

  • World ranking

    Top 510Source: Times Higher Education World University Rankings 2020

Learning on FutureLearn

Your learning, your rules

  • Courses are split into weeks, activities, and steps to help you keep track of your learning
  • Learn through a mix of bite-sized videos, long- and short-form articles, audio, and practical activities
  • Stay motivated by using the Progress page to keep track of your step completion and assessment scores

Join a global classroom

  • Experience the power of social learning, and get inspired by an international network of learners
  • Share ideas with your peers and course educators on every step of the course
  • Join the conversation by reading, @ing, liking, bookmarking, and replying to comments from others

Map your progress

  • As you work through the course, use notifications and the Progress page to guide your learning
  • Whenever you’re ready, mark each step as complete, you’re in control

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