- CFA Exams
- 2023 Level I
- Topic 4. Corporate Issuers
- Learning Module 19. Capital Budgeting
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Learning Outcome Statements PDF Download
| 1. Cash Flow Projections a. calculate the yearly cash flows of expansion and replacement capital projects and evaluate how the choice of depreciation method affects those cash flows; | |
| 2. Dealing With Inflation b. explain how inflation affects capital budgeting analysis; | |
| 3. Project Analysis and Evaluation c. evaluate capital projects and determine the optimal capital project in situations of 1) mutually exclusive projects with unequal lives, using either the least common multiple of lives approach or the equivalent annual annuity approach, and 2) capital rationing; | |
| 4. Risk Analysis of Capital Investments - Stand-Alone Methods d. explain how sensitivity analysis, scenario analysis, and Monte Carlo simulation can be used to assess the stand-alone risk of a capital project; | |
| 5. Real Options e. describe types of real options relevant to a capital project; | |
| 6. Common Capital Budgeting Pitfalls f. describe common capital budgeting pitfalls. |
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